Over the last 30 years, the companies that have been able to innovate effectively and make good use of their research and development (R&D) budgets have become coveted companies, but the market doesn’t value them accordingly.

1. WALL STREET JUST DOESN'T
UNDERSTAND INNOVATION
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2. www.InnovationGrow.com
Over the last 30 years, the companies that have been able to innovate
effectively and make good use of their research and development (R&D)
budgets have become coveted companies, but the market doesn’t value
them accordingly.
While the market can be quick to jump on the latest craze and push
certain hyped stocks to new heights, the companies that innovate
effectively aren’t always given their due until after the fact. Most of the
time Wall Street, tends not to properly value the companies on
innovation because of its relative difficulty to quantify.
With innovation not being something that is universally measurable in
the same way that profits, revenue, and cash flow can be, most
investors tend to shy away from the analysis of innovation.
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Innovation is often the most valuable asset that a company has when it
pays off, think Apple over the past 15 years, but without proper
quantification this value is rarely taken into account. Investors are
uneasy by the possibility that R&D is uncertain, but analysts have found
that using the track record over the previous five years as a relative
guide, can predict the value.
Within the companies that have a large R&D spend, that are generally
considered to be more innovative, the past tends to be a very good
predictor of their future success.
Often these companies that have a proven record of innovation success
over the previous few years will outperform their competitors by over 7
percent a quarter. This translates into big profits resulting from
theinnovative approach.
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While Wall Street may be hesitant to make their decisions based on
these studies, there is no doubt that the innovation process can be the
differentiating factor between competitors.
Increasing the R&D spend without tightening the innovation process
can be one of the reasons that many companies don’t string together a
good record of innovation. Innovation can also be fickle as even the top
companies can have a year or two of bad R&D performance, but most
companies that focus on the process and continually increase their
innovation spends see financial gains before Wall Street.
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Whether you are looking to increase your company’s innovation spend
or tighten the innovation process there are great metrics that can be
gained from Wall Street attempting to quantify innovation.
By providing data that they can use to analyze the companies more
effectively, you can adapt this same information for your company to
measure the success of your process and improve your results.
Most companies will benefit from these metrics as much as or even
more than Wall Street will, if they are willing to use them.
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6. GROWING BUSINESS WITH INNOVATION
For additional information about Business Innovation
please visit www.InnovationGrow.com