Why innovate?
“No matter what anybody else tells you: corporations achieve
competitive advantage through acts of innovation.”
Peter Drucker
According to the Boston Consulting Group 2006 survey Result, 72% of the executives
rank innovation as a top-three strategic priority, up from 66% in 2005.
72% of respondents said their companies would increase spending on innovation in 2006.
At the same time, many executives—nearly half of those surveyed—remain unsatisfied
with the financial returns on their companies’ investments in innovation.
Does that sound familiar to you?
Why is innovation so important to CEO s?
In the past, there has been a major trend among companies to reduce cost.
6-Sigma tools were so efficient for cost-cutting in transactional areas, as well as in technical areas,
that their reputation has reached every big company.
What they want: To gain money!
This rigorous approach allows you to increase your margin by the given formula:
Profits = Revenues – Costs
Big profits can for sure come from decreasing your costs. But, in the end, even if a company has
become the most efficient one on earth, it doesn’t mean it will be the most profitable.
Why? Because the revenues will stay fixed, and more, will decrease year after year as the customer
gets used to the product, and because competitors will launch some new, audacious products
to compete with it!
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