Arthur D. Little: Good Innovation Management Increases Profitability by 13%


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Despite worsening performance, companies increasingly satisfied

London, 26 February 2013
Innovation performance is now significantly worse than three years ago, yet
top innovators still regularly achieve up to 13% points more EBIT than
average performers. These are key findings from management consultancy
Arthur D. Little’s (ADL) 8th Global Innovation Excellence Study, a
cross-industry survey of trends and best practice in innovation management.

Drawing on over 650 responses from CxOs, the study shows a strong
relationship between using best practice management approaches (measured
using ADL’s Innovation Excellence Model) and achieving higher innovation
performance. Comparing top quartile performers against the rest of the
sample, there is a significant gap of up to 13% points in terms of EBIT from
recent product & service introduction and a 30% gap in terms of
time-to-break even. However, “The range between the best and worst
performers has narrowed since 2010, suggesting underperformers can and do
catch up, and that maintaining a lead in innovation performance is getting
harder” says John Brennan, Managing Director of ADL Americas.

The study identifies four cross-industry innovation management practices
which have the biggest impact on strong innovation performance:
understanding the contribution of important technologies to corporate goals;
structured use of external sources of business intelligence; reacting to
changes in targeted segments by reviewing the product/service portfolio; and
mobilizing the whole organization to develop new ideas.

The study also shows a significant decrease in innovation performance of up
to 25% since 2010, yet satisfaction with the level of innovation achieved
has increased significantly from 25% to 42%. This may be driven by the tough
market conditions which have forced companies to focus on short term

“Understanding which innovation management techniques to invest in is
crucial to achieving a better return on innovation investment as some
practices have a much higher impact than others” says Enrique Guinand,
Principal in ADL’s Houston office. “We are concerned that over 80% of
companies thought that their tracking and monitoring of innovation
performance was unsatisfactory, particularly when the study shows a very
clear link between the quality of innovation performance tracking and
innovation success,” adds Ben Thuriaux-Alemán, Principal in ADL’s London

ADL has made the toolkit developed for the study available for all firms
interested in exploring their own innovation performance. Please visit

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