Infographic: 2014 Global Innovation 1000: Automotive industry findings
In the 2014 Global Innovation 1000 study, Strategy& analyzed trends of the automotive industry. This infographic summarizes the automotive industry’s R&D spending over the last 10 years and compares its innovation strategy to other industries.
About the Global Innovation 1000: For the 10th year, Strategy& analyzed R&D investment at the 1,000 biggest spending public companies in the world. In addition to undertaking our recurring analysis of R&D spending trends, we interviewed and surveyed more than 500 R&D executives and innovation leaders to get their perspectives on changes in innovation at their companies over the last decade and what they expect in the 10 years to come.
2014 Global Innovation 1000
Automotive industry ﬁndings
Automotive spending on innovation has generally risen over the past decade
89 71 2005 2010
99 87 103 105
86 70 68 74
Sources: Bloomberg data; Capital IQ data; Strategy& analysis. Results reﬂect the previous ﬁscal year, as of June 30 of the respective year shown. More information about our methodology is available on p. 15 of our strategy+business (Issue 77, Winter 2014) article, “Proven Paths to Innovation Success.”
Automotive companies rank #3 in innovation spending
Together the Global Innovation 1000 invested around US$647 billion last year. Of that, nearly US$105 billion was spent by automotive companies. Only computing and electronics and healthcare companies invested more.
Percentage of the total R&D spend for all sectors
Computing & electronics
Software and Internet
Aerospace & defense
Average % of revenue spent on R&D
11% 7% 4% 2%
Industrials Software and Internet
Aerospace & defense Consumer
Computing & electronics
Sources: Bloomberg data; Capital IQ data; Strategy& analysis. Results reﬂect the previous ﬁscal year, as of June 30 2014.
…but being great at innovation takes more than cash
We asked survey participants which companies they believe are the most innovative to create our 10 Most Innovative companies list. Their responses and our list of Top 10 R&D Spenders match less often than you might expect. Indeed, Toyota has been the only automotive company to ever make both lists – in 2010-12. More recently, in 2013 and 2014, Tesla Motors has been the one automotive company to make the 10 Most Innovative list, despite investing far less on R&D than the industry’s biggest spenders.
Top 10 R&D spenders
Proctor & Gamble Tesla
Johnson & Johnson
10 most innovative
US$10bn US$5bn US$1bn
Source: Bloomberg data; Capital IQ data. Results reﬂect the previous ﬁscal year, as of June 30. More information about our methdology is available on p.15 of our Strategy + Business (Issue 77, Winter 2014) article, “Proven paths to innovation success.”
Moving in the right direction
Regardless of spending trends, executives in most industries think their companies are moving in the right direction when it comes to improving their innovation efforts. That’s especially true for automotive executives. Ninety percent say they’ve gotten better at innovation and almost half say they are performing ﬁnancially better relative to their peers.
Performing better ﬁnancially
Getting better at innovation
My company is performing better than the competition in ﬁnancial terms
My company is better at innovation today than it was ten years ago, on the basis of the share of speciﬁc product or service ideas that have met commercial goals
better alignment getting closer to the customer
Note: Analysis is based on survey questions “How much better, if at all, is your company at innovation today than it was 10 years ago, on the basis of the share of speciﬁc product or service ideas that have met commercial goals?” (base:30) and “How do you perceive your company’s current overall ﬁnancial performance relative to competitors’?” (base:28) Sources: Strategy& 2014 Global Innovation 1000 survey data and analysis
Aligning innovation with business strategy
Our overall research has shown that companies which closely align their innovation and business strategies perform better than those that don’t. The automotive industry’s performance in this regard mirrors the average across all industries, but there is room for improvement – roughly a third of companies across all industries say their innovation and business strategies are not highly aligned.
My company’s innovation strategy is not highly aligned with its business strategy
My company’s innovation strategy is highly aligned with its business strategy
innovation strategy business strategy
innovation strategy business strategy
Note: Analysis is based on survey question “How closely aligned is your company’s innovation strategy (or approach to innovation) with its overall business strategy?” (Base: 28) Responses of 1, 2, or 3 were deﬁned as “Not Highly Aligned”, while responses of 4 or 5 were “Highly Aligned”. Sources: Strategy& 2014 Global Innovation 1000 survey data and analysis
Customer needs should guide the innovation focus
Most automotive executives (86%) believe they understand customer wants and needs better than they did 10 years ago. In fact, one third of survey respondents say their knowledge of customers has even become much more detailed. Digital advances are of course making it easier to get comprehensive data on customers in all industries. In the automotive industry, social media in particular has improved understanding of the customer as has analyzing data from drivers more directly.
My knowledge of customers has become much more detailed
My knowledge of customers has become more detailed
Note: Analysis is based on survey question #18 “How, if at all, has your company’s understanding of your customers’ wants and needs changed over the past 10 years?” (Base: 50) Sources: Strategy& 2014 Global Innovation 1000 survey data and analysis
How are companies getting closer to customers – and what’s coming next?
The connected car Getting social
Cars are getting more and more digital, from internal sensors monitoring critical engine functions to external sensors scanning the roadway for tra c backups and safety hazards are becoming more commonplace. Onboard entertainment and communications interfaces connect with the Internet. Autonomous driving features help with basic functions like parking and keeping a safe distance. And that’s just the beginning. Keys to success: A strong handle on data security; ability to collaborate with players in other industries. The next step: The networked mobility market is likely to quadruple in size to more than €115 billion (US$148 billion) globally by 2020. The increase will be driven not only by demand for connected-car components, but also by the rise of entirely new digital business opportunities.
Customers, dealers, suppliers and prospects are discovering, connecting and sharing their experiences with automotive brands through social media and digital platforms. Brand advocates and detractors now share their purchase and ownership experiences through text, photo and video postings on their personal networks. That’s having an impact on the cars consumers buy – and driving the need for more innovation in organizational design. Keys to success: Strong management of all digital touch points, whether they be company-managed, co-owned, or even just loosely afﬁliated; maintaining a user-centered focus. The next step: A fully developed and coordinated “digital ecosystem” that pulls together automakers, dealers, and drivers in real time.
Sources: Strategy& Racing Ahead: The Connected C@r 2014 Study; PwC, Social Selling: A Digital Blueprint for the Automotive Industry
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