MIT Sloan Management Review Article on Are Innovative Companies More Profitable?

By at least one measure, the answer is yes.

Does a commitment to corporate innovation actually pay off? If so, how could you prove it?

We recently researched this question across five years of data from 154 companies. Because these companies all used the same ideation management software, we were able to seek correlations between their commitment to innovation and their public financial results, such as growth and profit. (The data about individual participants at each company and about the companies themselves remains private; this study analyzed only public financial information and anonymized company metadata.)

The companies in this study all used a platform that enables employees to share ideas in response to challenges created by management, or comment or vote on ideas shared by others. As we demonstrated in our previous research, the key variable that predicts successful innovation across these companies is ideation rate: the number of winning ideas generated per 1,000 active users. In this context, winning ideas means employee-generated ideas that were finally selected by management for active development and implementation.

About the Author

Dylan Minor holds an assistant professorship at the Kellogg School of Management. Paul Brook (@spigit) is the chief customer officer at Spigit, the largest provider of ideation management software. Josh Bernoff (@jbernoff) is the author of Writing Without Bullshit: Boost Your Career by Saying What You Mean and the coauthor of three business strategy books, including the best seller Groundswell.

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