In 2021, the PC company Lenovo announced a doubling of R&D investment over the coming three years and committed to hiring an additional 12,000 R&D professionals. This came after the company reduced R&D expenditures between 2016 and 2018 by the rates of 9%, 7%, and 1% respectively. (The company also saw a decline in revenues and net profit during this time.) The 2021 increase was based on a suddenly strong business performance (27% year-on-year growth) and the highest net profit margin in years. The R&D increase aimed to transform the device company Lenovo into a global technology company offering also services and solutions.
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Too often, companies do a poor job of making innovation transparent to investors.
October 30, 2023
Summary.
Although financial analysts widely acknowledge that innovation is a key driver of business growth and business sustainability, the financial markets do not reward innovation investments, largely because companies do a poor job of making innovation transparent to investors and analysts. There are legitimate reasons for being careful with information but the authors argue that companies could benefit from sharing progress with their project pipelines and communicating their decision-making progress.
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New!
HBR Learning
Innovation and Creativity Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Innovation and Creativity. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Unlock your team's curiosity and willingness to take smart risks.