Ever tried
Ever failed
No matter
Try again
Fail again
Fail better

- Samuel Beckett

It is a startling fact that R&D spending alone does not correlate to increased sales, according to an EU-sponsored analysis of the top 50 companies by R&D investment in Europe. The truth is that it ain’t what you spend; it’s the way that you spend it that makes a difference to the bottom line. Nevertheless, innovation is critical for ambitious companies. It is, after all, about looking at the future and smart innovation equips the company for future competitiveness.

The innovator’s dilemma

In his book, The Innovator's Dilemma, Clayton Christensen argues[ii] that truly disruptive – industry-changing – technology breakthroughs came from new entrants to a market and not from incumbents. Too often, established firms focus on refining existing products rather than creating wholly new ones. This is defensive innovation. Spending more on it may be a business necessity but it doesn’t revolutionise anything and it doesn’t create the big payoffs of more speculative risk innovation.

The novelist William Gibson said, “The future is already here, it is just unevenly distributed.” Ambitious companies seek out the future and commercialise it. Doing so requires that they embrace more uncertainty than their competitors do. There is an emerging charter for innovation around Kevin Kelly’s notion (expressed in his book "New Rules for the New Economy") of “imperfectly seizing the unknown rather than perfecting the known.”

Ambitious companies don’t fail safe, they fail better. They fail faster so that they can move onto the next project, the next breakthrough. They apply a portfolio model to their investments in innovation. Some are revolutionary but high risk. Others are evolutionary and more predictable. They know that innovation doesn’t end with a blueprint so they build multidisciplinary teams to exploit new developments. They measure and manage innovation performance to balance and fine-tune their portfolio and ensure a pipeline of new ideas over time. This requires an ambidextrous attitude to innovation so that companies learn to be adept at managing both incremental and radical innovation, even though this requires different and sometimes contradictory cultures, processes and leadership styles.

UK’s R&D performance

It is a commonplace that the UK is good at invention but bad at exploitation. This is partially borne out by government analysis of innovation in the UK. The science base is solid. The UK is second only to the US in share of world science and engineering publications and citations and leads the world on a per capita basis. However, we spend less on R&D relative to GDP than the US, France and Germany and we claim fewer patents per capita. This suggests that there is a genuine opportunity for UK business to compete by leveraging the UK’s science base.

Ambitious companies embrace change and seek innovation that creates new business opportunities, whether they come from inside the company, from acquiring smart start-ups or whether they come from academia. Or, as with Dyson, if they come from sheer bloody-minded frustration with the status quo.