In the past 30 years, companies that can effectively innovate and make the most of their R&D budget have become coveted companies, but the market has not paid attention to them. Although the market can quickly jump to the latest craze and push some of the speculative stocks to new heights, companies that are effectively innovating do not always get the treatment they deserve afterwards. Most of Wall Street, because it is relatively difficult to quantify, often does not properly value innovative companies. Since innovation is not generally measurable in the same way as profits, income, and cash flow, most investors tend to evade analysis of innovation.
Innovation is often the most valuable asset a company has in return, and has been considered Apple for the past 15 years, but this value is rarely taken into account if not properly quantified. Investors are uncomfortable with the possibility of uncertainty in R&D, but analysts have found that using the performance records of the past five years as a relative guide can predict their value. Companies with large R&D expenditures are often considered more innovative, and the past is often a very good predictor of their future success. Typically, these companies with a record of innovation success over the past few years will exceed 7% per quarter compared to their competitors. This translates into huge profits from innovative methods.
While Wall Street may be hesitant to make decisions based on these studies, there is no doubt that the innovation process may be a differentiating factor between competitors. Increasing R&D spending without tightening the innovation process may be one of the reasons why many companies have not put together innovation records. Innovation can also be volatile, because even top companies can have a poor two-year R&D performance, but most companies that focus on processes and continue to add innovative gifts see financial gains before Wall Street.
Whether you want to increase your company's innovation spending or tighten your innovation process, you can get good indicators from Wall Street trying to quantify innovation. By providing data that can be used to analyze your company more effectively, you can tune the same information for your company to measure process success and improve results. If they are willing to use these metrics, most companies will benefit from these metrics even beyond Wall Street.
Orignal From: Wall Street just doesn't understand innovation
No comments:
Post a Comment