{"id":5225,"date":"2019-07-09T07:41:42","date_gmt":"2019-07-09T12:41:42","guid":{"rendered":"http:\/\/flevy.com\/blog\/?p=5225"},"modified":"2020-12-20T21:55:20","modified_gmt":"2020-12-21T02:55:20","slug":"leveraging-the-innovation-effectiveness-curve-your-key-to-growth","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/leveraging-the-innovation-effectiveness-curve-your-key-to-growth\/","title":{"rendered":"Leveraging the Innovation Effectiveness Curve: Your Key to Growth"},"content":{"rendered":"

For many companies, developing new products is a hit-or-miss proposition. Successful innovation<\/a>–the kind that leads to customer\"\" engagement and profits–is rare and hard to achieve. Some have tried investing intensively in research and development.<\/p>\n

In a recent study conducted by booz&co.<\/a> on public companies representing almost 60% of global R&D expenditures, it was found out that there is generally no correlation between R&D spending and financial metrics such as sales or profit growth. Open innovation has been resorted to by some companies but this, too, does not necessarily lead to higher innovation returns. A strategy of tacit benchmarking<\/a> has also been pursued. Near the average amount of R&D spending has been invested but this led to a greater number of minor product line extensions with often diminishing returns.<\/p>\n

On the other hand, there are companies that do best at dreaming up great new products while spending less to do it. One of these is Apple<\/a>, which commits 5.9% of sales to R&D, less than its industry\u2019s average of 7.6%. This shows that, when it comes to innovation investment, the key question is not how much to spend but how to spend it.<\/p>\n

Indeed, innovation success depends on mysterious factors. But there are companies that can overcome these hurdles and regularly product high-yield innovations. The answer is the use of the best approach in determining which innovation success and why others fail.<\/p>\n

What is Innovation Effectiveness Curve<\/h2>\n

The Innovation Effectiveness Curve<\/a> is the marginal return on innovation investment. It represents the individual innovation profile of the company. It is the value and quality of a company\u2019s innovation portfolio.<\/p>\n

The Innovation Effectiveness Curve is done on a project-by-project basis. It contains data about every active project in the pipeline of the company. Each point represents a return on innovation investment for a particular project.<\/p>\n

Organizations must be able to understand their project portfolio and diagnose their innovation practices and capabilities to be able to create an Innovation Effectiveness Curve. This is essential as the height of the curve provides a definitive verdict on the power of the innovation capability to drive returns and generate growth.<\/p>\n

\"\"<\/a><\/p>\n

The 3 Core Properties of an Innovation Effectiveness Curve<\/a><\/h2>\n

An Innovation Effectiveness Curve must be Comprehensive, Stable, and correlates with Growth.<\/p>\n

    \n
  1. Comprehensive<\/strong>
    \nAn Innovation Effectiveness Curve that is comprehensive has a holistic view of R & D, marketing, strategy, and operations. These are activities that directly bear upon the creation and launch of new products.<\/li>\n
  2. Stable<\/strong>
    \nWhen the Innovation Effectiveness Curve is stable, it remains consistent over time. The overall shape of the curve remains the same despite changes in innovation projects.<\/li>\n
  3. Correlated to Growth<\/strong>
    \nAn Innovation Effectiveness Curve must correlate to growth. There should be an established connection between the effectiveness of innovation efforts and the     growth of the company<\/a>.<\/li>\n<\/ol>\n

    When the 3 Core Properties are in place, this makes the Innovation Effectiveness Curve a very powerful analytical tool. On the other hand, when these core properties are not in place, the Innovation Effectiveness Curve falters. This is a signal that growth is slow or may slow down. This is one occurrence not one organization would like to happen.<\/p>\n

    Interested in gaining more understanding of Innovation Effectiveness Curve and how your organization can strategically use it as a powerful analytical tool<\/a>? You can learn more and download an editable PowerPoint about Innovation Effectiveness Curve<\/strong> here<\/a> on the Flevy documents marketplace<\/a>.<\/p>\n

    Do You Find Value in This Framework?<\/h2>\n

    You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library<\/a>. FlevyPro<\/a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:<\/p>\n

    “My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today\u2019s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”<\/p>\n

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    “As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”<\/p>\n

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    “FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight \u2013 it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”<\/p>\n

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    “Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”<\/p>\n

    \u2013 Omar Hern\u00e1n Montes Parra, CEO at Quantum SFE<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

    For many companies, developing new products is a hit-or-miss proposition. Successful innovation–the kind that leads to customer engagement and profits–is rare and hard to achieve. Some have tried investing intensively in research and development. In a recent study conducted by booz&co. on public companies representing almost 60% of global R&D expenditures, it was found out… Leveraging the Innovation Effectiveness Curve: Your Key to Growth<\/span><\/a><\/p>\n","protected":false},"author":111,"featured_media":5237,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[81],"tags":[1687,1686],"class_list":["post-5225","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-strategy","tag-3-core-properties-of-an-innovation-effectiveness-curve","tag-innovation-effectiveness-curve"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/5225","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/111"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=5225"}],"version-history":[{"count":8,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/5225\/revisions"}],"predecessor-version":[{"id":8113,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/5225\/revisions\/8113"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media\/5237"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=5225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=5225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=5225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}