by Elana Varon

An Innovation is No Good if You Can’t Sell It

Mar 07, 20063 mins

The historic disconnect between IT and marketing may be sapping any of the benefits you get from throwing money at innovation.

Innovation (or the lack thereof), is once again the economic problem du jour in Washington, judging by all the proposals for improving U.S. competitiveness. There’s one thing these proposals have in common that’s worth noting: to one extent or another, encouraging innovation involves throwing some money around.

Companies, too, throw money around when it comes to innovation. Who, these days, doesn’t think it’s a good idea to spend more after so many years of making do with less?

But the devil is in the details. I’m reminded of a study that came out a few months ago by Booz Allen Hamilton, which found no correlation between high levels of corporate spending on innovation and financial performance. The top 10 percent of spenders did no better than the middle 80 percent. The performance of the bottom 10 percent was worse than the rest, but the overarching conclusion of the study was that how you spend your innovation budget is more important than how much you spend (among the top 10 spenders in the study is struggling General Motors). Even in cases where R&D improved companies’ gross margins, expenses for marketing, sales and G&A ate up the benefits.

There’s more in the study about the characteristics of successful innovators (they align innovation with corporate strategy, they manage their projects and business models as a portfolio, they have consistent decision making processes, among others) that lead one to conclude that any well-managed company can innovate successfully. That’s comforting, in a way—building the management capacity for innovation within IT requires doing some things you know you should be doing anyway. But there’s a warning, here, too: it takes more than good IT decision-making to create an innovation that sticks.

From another survey, of European companies, Booz Allen  finds the most critical relationship in an innovative organization is between the R&D group and marketing. But more than half of respondents said they were dissatisfied with this relationship in their own companies. The disconnect between IT and marketing is nothing new, either. More than a year ago, CMO Magazinetook note of a Forrester Research reportthat found only 31 percent of marketers had a strong relationship with IT.

How is marketing involved in the development and delivery of innovation at your company? What would you change?