Companies which invest most in R&D do not necessarily perform best - According to the third annual survey by consultants Booz Allen Hamilton on the top 1000 most innovative companies in the world, the companies which spend most on R&D are not necessarily the most innovative. There are several companies which excel in the quality of their innovation processes and yet their R&D budgets are lower than those of their competitors. Their performance indicators exceed the average for their respective sectors and they have therefore been able to get higher returns on their R&D investments over the last five years. They do not necessarily offer a broad range of products or services, but they profit more from their investments and have better control over their innovation processes. They have already rationalised their R&D spending, have gone global, and rely on sub-contracting and partnerships to be more efficient. The automobile sector is most representative of this. It is one of the sectors with the lowest growth in R&D (even showing negative growth of -0.2% in 2006) and yet its rate of development is very high. R&D represents, for example, 3.7% of the turnover of Toyota, 4.5% of that of Ford and 3.5% of that of DaimlerChrysler. By contrast, R&D spending has increased the most in the last year in the pharmaceutical sector, by 11.3% on average. Merck alone has increased its budget by 24.3% to $4.7 billion in 2006. The R&D budget to turnover ratio of pharmaceutical groups is high: around 15%. “Global Innovation 1000” analysed the influence of R&D spending on the performance of the 1000 stock market quoted companies which invested most in their R&D budgets in 2005. In total, the R&D spending of the companies surveyed was $447 billion last year, compared to $407 billion the previous year. The combined turnover of the 1000 companies grew by 10% compared to 2005, to $11 800 billion. The main results reveal that: 1) money cannot always buy happiness: there is no clear statistical link between companies' R&D budgets and the major indicators of performance, such as growth, profitability or improvement in shareholder returns. The sole performance indicator which seems to present a statistical correlation with R&D spending is gross margin; 2) less than 10% of companies spend efficiently: only 94 companies out of 1000 were able to maximise the returns on their R&D investments consistently over the last five years; 3) scale effects are real: a larger size brings undeniable advantages. The average R&D budget of the 500 largest companies, indexed by sector of activity, represents on average 3.5% of turnover, compared to 7.6% for the smallest 500 companies; 4) a multiplicity of patents does not generally mean higher profits: an increase in R&D budgets facilitates an increase in the number of patents held by the company, but there is no statistical relationship between the number or quality of these patents and economic performance; 5) the champions of the innovation value chain have a real advantage: the companies which optimise their R&D investments stand out not because of the amount they invest in the budget but by the quality of the processes whereby they generate ideas, select ideas, develop and market them; 6) R&D spending is very concentrated: the 1000 companies represent 85% of global R&D spending of companies in the private sector and 55% even when public sector spending is included; 7) the 2005 “Top 10” of investors in R&D, in descending order, is: Ford, Toyota, Daimler Chrysler, General Motors, Siemens, Johnson & Johnson, Microsoft, IBM and GlaxoSmithkline. 118 companies have also distinguished themselves as having drawn the greatest boost from their innovations; 8) R&D spending is concentrated within a few industrial sectors: in 2005, almost two-thirds of R&D investment was made in the sectors IT and electronics (26%), health (22%) and automobiles (17%); 9) in conclusion, two elements are regularly cited as success factors: an innovation strategy based on the business strategy, and emphasis on the consumer. (I.L.)