Here is an excerpt from an article by Barry Jaruzelski, Robert Chwalik, and Brad Goehle for Strategy+Business, published by certain member firms of the PwC network. To read the complete article and check out others, please click here.

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With careful attention to six key areas, companies can make the most of their R&D investment and outpace the competition.

A project team from Stanley Black & Decker, a US$12.7 billion diversified manufacturing firm, noticed something problematic when observing customers using the company’s products at construction sites. Tools such as miter saws and table saws needed higher voltage than the 20-volt systems commonly used for hand tools such as drills and circular saws. As a result, contractors were using extension cords or gasoline generators. But the former were inconvenient and created hazards, and the latter brought noise and pollution. After making these observations, Stanley Black & Decker developed the DeWalt line of “FlexVolt” cordless power tools and battery packs. They’ve been quickly embraced by professional contractors — generating $300 million in incremental sales since the line’s 2016 introduction.

“Cords are one of the biggest pain points on a construction jobsite,” says Stephen M. Subasic, vice president of human resources at the company’s global tools and storage unit. “Our customers were telling our teams they wanted more cordless options.” But end-users had an additional constraint: They had made large investments in existing 20-volt tools and were unwilling to give them up. The FlexVolt system solved the problem. “We were able to marry some emerging technologies in motors and batteries so that the FlexVolt system automatically adjusts to the voltage of the tool,” says Subasic. “It’s a single-battery platform that addresses the pain point, and spans both the next generation and the current generation of tools.”

Few companies are able to bring this kind of rapid breakthrough innovation from concept to market success. But Stanley Black & Decker has consistently developed winning products for years, and has been doing so while spending its R&D dollars more efficiently than its industry peers. In this year’s Global Innovation 1000 study — our annual analysis of the 1,000 publicly held companies that spend the most on research and development (R&D) — we look at a subset of companies like Stanley that we call “high-leverage innovators.” These are companies that outperformed their industry groups on seven key measures of financial success for the previous five years, while at the same time spending less on R&D as a percentage of sales.

Achieving high performance is difficult in any given year, and remarkably difficult to sustain. But the success of these high-leverage innovators reaffirms a finding of our study that has held true over time: There is no long-term correlation between the amount of money a company spends on its innovation efforts and its overall financial performance. Instead, what matters is how companies use that money and other resources to create products and services that connect with their customers. Also important is the quality of companies’ talent, processes, and decision making.

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Here is a direct link to the complete article.

• Barry Jaruzelski is a thought leader on innovation for Strategy&, PwC’s strategy consulting business. Based in Florham Park, N.J., he is a principal with PwC US. He works with high-tech and industrial clients on corporate and product strategy and the transformation of core innovation processes. He created the Global Innovation 1000 study in 2005, and in 2013 was named one of the “Top 25 Consultants” by Consulting magazine.
• Robert Chwalik is an advisor to executives in the automotive, industrials, and oil and gas sectors for Strategy&, helping them improve both top-line growth and bottom-line performance in such key operational and strategic areas as global engineering and product innovation. He is a principal with PwC US and is based in New York.
• Brad Goehle is an advisor to executives on innovation and product development for Strategy&, helping companies in the aerospace and defense, automotive, and industrial sectors with product and portfolio strategy, engineering, and enterprise transformation. He is a managing director with PwC US and is based in Arlington, VA.