Innovation behaviour of hidden champions

Abstract

Peter Drucker (1986) once wrote that a company has two basic functions: marketing and innovation. To win customers and stay ahead of the competition, to survive and compete, innovation is critical (Chesbrough 2003; Drucker 1986). The ability to innovate, and do so both effectively and efficiently, is required to achieve and maintain world market leadership. Outstanding and continuous innovative performance is the competency that firms have to master. The amount of money put into research and development (R&D) depends on the dynamics of the industry and the markets, yet it is not an indicator of success. In the early 2010s there are examples of key Western companies whose R&D expenditure is not related to profitability. For example Apple, doubtlessly a leader in the smartphone market, invests only 5.9 % of its profits in R&D, whereas the industry's average is 7.6 %. As Procter and Gamble, a world leader in personal care and household items, decreased its investment in R&D from 4.8 % to 3.4 %, its product success rate rose from 35 % to 75 %.