On The Price of Innovation

May 16, 2011 - 0 Comments

So, I heard last week that some folks want to be known as innovators, which is certainly a laudable goal.  The thing is, innovation is the domain of engineers, not accountants and, sadly, not even marketing folks.  Face it, when accountants get innovative, we end up with things like Enron—not so good. Delivering meaningful innovation to the market starts as an organizational imperative that has to then be nurtured with an ongoing commitment of time and resources. You simply cannot fake it.

For example, let’s look at R&D spend last year some of the industry’s movers and shakers (all data is based on their respective FY10 annual reports):

As I noted in a previous post, I am pleased to note that Cisco remains near the top of the pile both in terms of R&D investment as a percent of revenue and in terms of absolute dollars.  For other folks, the numbers and the historical trends speak for themselves. Talk (and slides) are cheap. These are meaningful numbers because they represent both the commitment and the ability of a company to innovate and lead versus being forced to follow.

If you are a Cisco customer, this should please you because you know we are investing in your future, but, beyond that, why should you care?

Take a look at this slide that looks at some of the tangible results of our on-going R&D investment:

So, this is a subset of everything we have delivered over the years, but I picked these for a reason.  In this case, we did not just deliver better solutions to our customers, but we helped move the entire industry forward as our innovations evolved into or materially contributed to new industry standards (more thoughts on that here), which I think is a demonstration of true leadership.

Tackling new challenges demands new thinking and new solutions. Accountants are not going to fix the problem.  Marketers are not going to fix the problem.  Today’s technology, no matter how much you discount it, is not going to fix the problem. Engineers and a culture that prizes R&D are going to fix the problem.

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