Apple (News - Alert) has been named the most innovative company globally again – even though it spends less than many key rivals on research and development.
Booz & Co. named Apple the “most innovative” company for the third straight year in an annual survey of 700 companies.
Fortune estimated that Apple spent half of what Google and IBM spent, and one third of what Samsung (News - Alert) and Microsoft spent on R&D.
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Yet, Apple, Google (News - Alert) and 3M remained in the number one, two and three spots, respectively, on the list, according to TMCnet.
Booz & Co. says there is a lesson here.
"It is not how much companies spend on research and development that determines success — what really matters is how those R&D funds are invested in talent, process, and tools," the consulting firm said. “The most innovative companies are seldom the biggest spenders, the study confirms.”
“Apple’s innovation focuses on bringing together different parts of an ecosystem and tightly integrating them together with meticulous attention to detail,” Reticle Research analyst Ross Rubin (News - Alert) explained to Wired. ”They refine consumer capabilities in an approachable offering with broad appeal.”
“I think Apple is a leading innovator among tech companies — but innovation comes from many companies, and it’s easy to point to clear examples from many of Apple’s competitors,” Forrester analyst Charles Golvin added in a statement. “A big distinction for Apple is the breadth of areas in which it innovates: hardware, industrial design, software, usability, retail. Many of its competitors are strong in one or more of these areas but not across the board.”
Apple’s R&D expenditure put it in 16th place among the list of companies.
“R&D spending does not ensure increased financial gains, nor does it guarantee innovation success,” John Loehr, partner at Booz & Company, said in the statement. “Case in point: Apple, Google, and 3M (News - Alert) ranked 53rd, 26th, and 86th, respectively, in R&D spending among the Global Innovation 1000 companies.”
In a related matter, R&D spending in 2011 edged up 9.6 percent to $603 billion, according to Booz & Company. That is a record amount.
It was also shown that companies in consumer-oriented industries, such as software and Internet, computing and electronics, and consumer goods, were twice as likely to use social media when looking for new ideas compared to companies in industrial sectors, the study adds.
“Companies’ reliance on traditional sources for the majority of new ideas, despite the attention paid in recent years to more open innovation processes, is one of the more interesting discoveries from this year’s study,” Richard Holman, partner at Booz & Company, said. “The key takeaway for businesses is that the most successful innovators in all industries employ ideation practices that are well aligned with their innovation strategies.”
Edited by Brooke Neuman