Now, despite all the interest in innovation, innovation is difficult.
For many organizations, innovation is an R&D expense.
It's a large capital investment, and in fact,
billions of dollars are spent annually in R&D.
80% of which, is spent by large established firms.
R&D is hard to calculate its return on investment.
There's a number of reasons for this.
It's hard to predict the net present value going forward,
a priori when deciding whether to make an investment in R&D.
Part of the problem is that the minimum efficient scale, MES,
for R&D tends to be relatively moderate.
Why is this problematic?
Well, it's problematic because it's not just simply about spending more dollars.
With capital investments, like say, building a new plant and
the like, it could just simply be if you put more dollars into it,
you can achieve more outcomes.
Not so with R&D.
It's not clear just putting more money into R&D will lead to more innovation.
And this is because breakthrough products are often not mandated.
They arrive unannounced and
they often come from far afield maybe from where you originally intended.
Once again, look at Gorilla Glass story and where it originally began.