How important is innovation on your sales? This important:

Just stumbled upon a report by about innovation and R&D in Europe (PDF). The report is from the European Commission, and it’s based on a survey among 187 innovative European companies. Specifically, the report answers the question: how important is R&D and innovation on your sales? It turns out that it’s significant.

For most companies, innovative products account for more than 10 percent of their annual sales. For almost half of the industries (7 out of 16), annual sales are based on new products for 20 percent or more. That’s huge.

Impact of innovation on annual sales

Impact of innovation on annual sales

What is surprising is that the impact of innovative products in the pharmaceutical sector is so low – barely 10 %. I wonder why that is (if you know, please enlighten me). Even the food industry scores better than pharmaceuticals.

innovation impact sales

How much impact does innovation and R&D have on your sales?

A few other tidbits that can be found in the report about innovation:

1. Genentech, Intel, Roche, Texas Instruments are considered innovation leaders

Almost half of the 120 respondents named themselves as the innovation leader in the sector (it’s like asking people if they’re a better driver than others!). Among those naming a different company, Genentech, Intel, Roche and Texas Instruments were most frequently named.

2. R&D spending is correlated to innovation leadership

And an interesting link between innovation and R&D expenditures: your colleagues and competitors are more likely to think you’re an innovation leader if you spend more on R&D. In industries like pharmaceuticals & biotech, technology, aerospace and fixed-line telecommunications, the majority of companies surveyed named one of the top five R&D investors as the innovation leader.

3. National fiscal incentives and grants the most positive effect on innovation

Direct support (especially fiscal incentives and national and EU grants) is seen by companies as the main positive factor for a company’s innovation activities. It’s followed closely by public-private partnerships (both at national and EU level).

4. Access to VC money is a minor factor for companies

The indirect measures, like cooperation policies, loans and guarantees, and cooperation and human resource exchange policies, were seen as less positive for innovation than the direct ones. Availability of qualified personnel (scientists, engineers, designers and technology transfer experts) was also considered to promote innovation. Respondents from companies in France, Italy and Spain saw a much stronger positive impact of EU and national direct and indirect policy measures than the average on innovation activities

Access to risk and venture capital played a minor role. This might have to do however with the sample: apparently mostly large corporations were surveyed (average turnover of €10 billion, 25,500 employees, and 1,500 employees in R&D.) Of course, companies like these are less dependent on venture capital than startups to work on innovation.

Photo: IRRI Images, Flickr

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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