Business Strategy

What Price Innovation?

How many of you are really investing in innovation? What percentage of your total budget goes into innovation? What is the correct percentage?
Conventional wisdom is that a 4-6% investment in R&D shows an innovation driven company. Is you IT investment in “finding the next killer app” 4-6% of your IT budget?
Before you get dejected and hit the bottle – or kick your dog – please focus on your situation not what the pundits deem “conventional” wisdom. If we all lived by convention we would still be walking on all fours if you know what I mean. So let us thank that activist who first dared to walk to her feet and gave us a meaningful life. But we digress!
I have never taken “driving fast” versus “driving slow” as absolutes. When assessing safety, I focus on the driver; the car; the conditions. In other words, it is the complete equation – with all the variables – that helps determine the answer.
So, what is the equation for IT Innovation?
What is your industry situation? Are you in a stable and grind it out industry like paper and plastics? Then what are you doing trying to compete with IBM’s investment in innovation?
What is your business model? Are you the innovator in your industry or the grunt who collects everybody else’s intellectual capital and adds value in distribution or manufacturing or some other process? Are you the “we do not make it” we “make it better” company? Then what value does innovation investment add to your bottom line?
What is your company’s competitive situation? Are you leading by a mile and believe this extra “innovation” boost will help? Or are you trailing and want to leapfrog the competition?
What is your organization’s culture? Are you mavericks and have processes that foster this “leading edge” entrepreneurial thinking or are these buzz words your CEO uses at press conferences before he goes back to his office to sleep or perfect his putt?
I have named only a few variables. There are more. The issue here – and in IT investment in general – is to focus on the “big picture” and see what makes sense. So fold that book that you bought on IT value and use it as a paper weight or a pillow to go to sleep. When you wake up, focus on getting you complete “equation.” Then and only then make your next move.