DIIG Current Issues No. 11: Aerospace & Defense: Inventing and Selling the Next Generation

“For innovation success,” wrote MIT researcher Michael Schrage, “do not follow the money.” He argued that while we can easily measure inputs such as research and development (R&D) spending, outputs and outcomes, such as R&D productivity or customers won or retained, tell us much more about the ability to innovate successfully.

He’s right, of course. In 2007, European aerospace and defense companies spent relatively more on research and development and invested relatively more in capital equipment, according to a recent European study. But this spending does not assure that future innovations will come from Europe. Higher R&D spending does not guarantee more creativity, higher profit or a greater market share.