Innovation = Market Cap?

Does the use of any particular tool lead to recognition by the stock markets? During the opening sessions of the Invention Machine User Group meeting yesterday, VP Marketing Jeff Boehm said that the combined market cap of companies attending the event grew 4.2% in the last year, while the Dow declined 7.3% over the same period. His point, of course, is that companies using Invention Machine’s Goldfire product innovate more efficiently, leading to all sorts of successes that inspire higher market values.

It’s the right tone for a user conference: making loyalists comfortable with their choice, helping those looking for guidance to believe that persevering in their implementation is worth it in the end …

But, in general, it’s not a great argument. No one thing can claim to cause an increase in market cap; that’s caused by a combination of a culture that brings great products to market, solid business execution, interested buyers, and investors with money to invest. Perhaps the best way to look at it is that companies investing in tools to systematize innovation are also likely to search out best practices for business execution, seek more customer input, look for new markets and the like.

From the users I spoke with at the event, the combination of Goldfire and process changes undertaken in parallel to the software implementation enabled them to incorporate more inputs into their new product development process, systematize more of the innovation process — but most important, give broader access to corporate knowledge previously held in desktops and on servers. Hard to measure.