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 global study of 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 has also been pursued. Near the average amount of R&D spending have been invested but this led to greater number of minor product line extensions with often diminishing returns.

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, which commits 5.9% of sales to R&D, less than its industry’s 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.

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.

This framework provides an in-depth discussion on Return on Innovation Investment or ROI2 Approach and the Innovation Effectiveness Curve. The Innovation Effective Curve has 3 core properties.

1. Comprehensive
2. Stable
3. Correlated to Growth

The 3 core properties of the Innovation Effective Curve make the curve a most powerful analytical tool. Raising the Innovation Effectiveness Curve can increase organic growth rates that is persistent over time.

This deck also includes slide templates for you to use in your own business presentations.

Got a question about the product? Email us at [email protected]. If you cannot view the preview above this document description, go here to view the large preview instead.