Academic Article-Business Analysis-Innovation and Strategy

Booz Allen Hamilton is an American consulting firm that administers the Global Innovation 1000, a survey of the world’s 1000 biggest research and development spenders.

The article begins by discussing the effects of companies being able to spend more on research and development as opposed to those that cannot. It states that if companies continue to spend more on R&D, their financial performance would get better.  Although Booz Allen’s vice president himself has claimed this, their actual findings say otherwise. Findings indicate that there is no correlation between how much a company spends on R&D and corporate financial performance. So how do companies like Apple and Google continue to underspend in R&D in comparison to their competitors and still manage to have innovative success?

According to Global Innovation 1000 results, the answer lies in strategic alignment, “the degree to which innovation efforts are driven by and emerge from the overall corporate strategy and corporate culture.” (Gobble 63) Innovators must step back and see the broader picture and be able to decide how their innovations fit in with the corporate structure. They need to have an understanding of strategy to try and figure out what will work and what won’t work.

The article then goes on to discuss Michael Porter’s core concepts: the five forces model, the value chain model, and competitive advantage. In Porter’s mind, success is measured in profits and not about which company is the best. The author goes on to discuss about the importance of the value chain model and how the success of a company is directly tied with suppliers, customers and collaborators.

There are those who view Porter’s value chain model as irrelevant in today’s world. With the way social media has evolved, the relationship between consumer and companies has changed as well.  The author goes on to argue that although the value chain model may seem irrelevant, it is still needed in a companies corporate structure. It may not be the same as Porter’s model but every company has one and must understand it if they are to be successful. In the end the author suggest that innovators need to understand strategy in order to be able to mold it in a way that will benefit their corporate structure.

Source:

Research Technology Management; May/Jun2012, Vol. 55 Issue 3, p63-67, 5p