Innovation, R&D not linked

More evidence from Strategy&Business of the disconnect between R&D spending and innovation. Citing research from Booz Allen Hamilton Global Innovation 1000:

Deep pockets can be dry wells.Analysis of the 2005 Global Innovation 1000 confirms the major finding from our initial study last year: Money simply cannot buy effective innovation. There are no significant statistical relationships between R&D spending and the primary measures of financial or corporate success: sales and earnings growth, gross and operating profitability, market capitalization growth, and total shareholder returns. Gross profits as a percentage of sales is the single performance variable with a statistical relationship to R&D spending (emphasis in the original).

Regarding research that is ultimately patented:

R&D spending does relate statistically to the number of patents granted, across all the industries we studied. However, when we compared the results of our analysis of the Global Innovation 1000 companies with data from ipIQ, a technology analysis firm known for its comprehensive patent database, we found no statistical relationship between financial performance and either patent counts or patent quality.

The report's use of the words "patent quality" reminded me of research linking ISO 9000 and similar quality controls to the kinds of patents being filed - namely incremental advances based on research previously known to the firm, not entirely new knowledge. It lead me to suggest that measuring everything wasn't a good innovation strategy.

As for the current report, see Smart Spenders: The Global Innovation 1000 for more.