Myth: Expensive research and development creates innovation
The truth: spending hardly correlates with innovation
Money makes money.
While this adage is true, it does not apply to innovations, let alone the returns they generate.
Many believe that the more money you invest in research and development, the more likely they are to be innovative.
Unfortunately, that is far from the truth.
Although the R&D department earns significant spending, it does not fully correlate with innovation. In 2018, Apple Inc. was ranked as the most innovative company in the world, while its R&D spending was actually the lowest among its competitors like Amazon, Google, Microsoft, Samsung, etc.
Several experts in the field have made it on record that the phrase "spend more leads to more innovation" is an introduction logical fallacy.
According to experts, you shouldn't be focusing on the resources you are spending measuring how effective an innovative approach is. Instead, it is the novel benefit customers derive from an effort that tends to make the difference between being truly innovative and completely wrong.
In addition, extravagant spending on research and development is no guarantee of financial success. In fact, a survey by Booz & Company found that the top 10 companies with the highest R&D spending lagged behind their peers in terms of market capitalization and revenue growth.
Therefore, it is imperative to shift the focus from R&D spending as a measure of innovation or related returns and to focus on customer value creation.