It's an old technology saying if you can't predict the future then you have to invent it! I always thought research and development would be the best way to measure innovation. Yet looking at research and development spend as a % of sales. Apple the most innovative company over the past ten years spends very little. The productivity of spending is key. Find out more at (VIEW LINK)
Interesting article. Counter-intuitive at first maybe, but not very surprising when you really think about it. Quality is always more important than quantity though. I would think after reading this that return on incremental capital should be a better indicator for these companies as it would give a clearer idea of how much of the R&D they're turning into profit growth.
I think it also highlights the importance of businesses that have high barriers to entry. In the case of Apple they have created a whole ecosystem around their products that make it very difficult to leave. They were early to innovate and this early innovate allowed them to capture a massive portion of the market. The trick with Apple is they have done an exceptional job and keeping their user base captive and feeding them new products as they are incrementally developed.