A new study commissioned by Terem has analysed Australia’s top 100 companies to establish whether claims of innovation boost a company’s bottom line. The study’s key findings point to a deep market scepticism around innovation activities which are not backed by tangible results.
The study’s snapshot of the ASX100’s innovation profile showed the following:
- Less than 41% have a publicly announced innovation lab
- Only 23 % have a venture fund
- 69% account on their financial statements for innovation (or something related, like technology
Importantly the study revealed that the innovation ‘trappings’, including an innovation lab, a venture fund and an innovation-related budget ring-fenced on the balance sheet are not being rewarded by the share market.
Clearly the bubble has burst on innovation hype and just having a public commitment to innovation is not rewarded by shareholders:
- Companies which communicated a large innovation footprint did not out-perform companies which did not.
- Companies producing tangible innovation results are rewarded even when they do not trumpet innovation.
- Shareholders are not rewarding “innovation by press release”.
“Companies can’t talk their way to growth”, says Scott Middleton, CEO of Terem. “For innovation to have an impact on a company’s performance, it must move the company into a significant, growing market. This takes time and commitment. Innovation around process is important but these days it’s just table stakes.”
You can download the report here.