Tibor Dőry

Innovation and excellence

Management methods for innovation transformation

Innovation or R&D?

The question may seem provocative, but we have no intention of putting those involved in research and development in an uncomfortable position. At the same time, surveys, scientific analyses and expert opinions have confirmed that even though companies invest millions or even billions in research and development, these investments do not bring a guaranteed return. An examination of the financial indicators of global top innovator companies has shown that there is no real connection between R&D expenditure and innovation. How and for what purposes R&D resources are used is much more important than the size of the expenditure. That is why it is instructive to take a look at the international comparison showing the types of expenditure for innovation. A publication by the Hungarian National Research, Development and Innovation Office in 2020 clearly shows that companies in EU countries with lower innovation performance spend significantly more on machinery, technology and software than leading innovation countries such as Denmark, Sweden and Belgium. Companies in Hungary and the southern and central-eastern European countries are less likely to engage in R&D and innovation activities aimed at developing new products and services, and are much more likely to carry out developments related to production processes (NKFIH, 2020).

Returning to the most innovative global companies, it is striking that Apple, which tops the list, spent less on R&D as a percentage of revenue in 2018 than eight of the other nine companies considered most innovative by respondents. Apple allocated only 5.1 per cent of its revenue to R&D, compared to 20.9 per cent for Intel, 19.1 per cent for Facebook, 14.6 per cent for Alphabet and 12.7 per cent for Amazon. Nevertheless, the ten most innovative companies globally outperformed the ten companies with the largest R&D budgets in terms of revenue growth, profit margin and market value growth (Jaruzelski et al., 2018).

One of the most remarkable companies on the list is Tesla, which has achieved outstanding success despite not being among the ten automotive companies that spend the most on innovation or research and development. The companies with the highest R&D expenditure include Daimler, Honda, BMW, Nissan and the Fiat Group. This shows that even against better-funded competitors, a disruptive innovator can gain significant market share if it has the right value proposition for customers and finds the right business model. Traditional companies can devote their vast resources to technology, science and product innovation, while startups receive funding and encouragement to find business models that work.

A study of global top innovators also reveals that companies reporting high innovation performance have six key characteristics. The first five are widely known, although they are applied to varying degrees, but the sixth is something that only the best innovators implement (Jaruzelski et al., 2018):

They closely align their innovation strategy with their business strategy.
They create a company-wide culture of innovation and a supportive atmosphere of trust.
Members of senior management are heavily involved in the company's innovation programmes.
They base innovation initiatives on direct insights and needs from end users.
They rigorously screen projects in the early stages of the innovation process.
They excel in all five characteristics and are able to integrate them to create unique customer experiences that can change and significantly transform their market.

It therefore matters what a company spends its resources on and how many irons it has in the fire. The R&D departments of large companies are quite technology-oriented and typically take a very long time to bring their new products and services to market. The scale and rapid pace of change we are seeing today, combined with intense competition in various industries, presents a serious challenge to faster, more flexible and more customer-focused competitors. In addition, it is also a major challenge for traditional companies to focus on only a few key R&D projects at a time. This means that in order for the organisation to achieve its goals, virtually every single one of these projects must be highly successful.

However, anyone who has ever been involved in research, development and innovation projects knows that automatic success is highly unlikely, as most innovation initiatives fail. Of course, there are always excellent companies that invest large sums in research and development and turn these investments into successful innovations with amazing success rates, but it seems that over time there are fewer and fewer such companies on a global level.

Tartalomjegyzék

Kiadó: Akadémiai Kiadó

Online megjelenés éve: 2026

ISBN: 978 963 664 182 5

Menedzsment

The aim of the book "Innovation and Excellence" is to inspire and encourage company leaders, managers, and experts to initiate and implement innovation transformations with the help of professional literature and corporate case studies. Another important goal is to help develop the innovation capabilities of small and medium-sized enterprises in particular by sharing simple, proven management methods that can be tested in practice.

The first part of the volume reviews the factors of corporate excellence and success, then highlights the possible sources of innovation, with a focus on the role of users and employees. The empirical section presents a detailed description of the supportive role of the workplace environment and creative working conditions based on corporate case studies (AUDI, BOSCH, MELECS). The volume concludes with a description of selected tested practical methods and management techniques that readers can try out in their own businesses.

Hivatkozás: https://mersz.hu/dory-innovation-and-excellence//

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