Innovation distinguishes between a leader and a follower. Steve JobsAbstractThere existed strong argument in Strategic management and marketing about the relationship of innovation and profitability of any business. The aim of the paper is either refute or accept the hypothesis stating that there is statistically non-significant relationship between innovation and profitability (Ho hypothesis), or prove the otherwise (Ha) to be true. The findings have been tested based on T-test at a=.95 level. There statistical methods have been used are 1) descriptive statistics 2) correlation analyses and 3) simple T-test statisticsIBM SPSS 23 statistical software has been utilized to obtain the results. Most of the date is up-to-date. However, more advanced methods (such as ANOVA or MANOVA) could have provided additional value and provide better results. However, implementing higher standard deviations would reveal better results, yet 5% statistical error (b=.05) is appropriate for strength test of the study. Key terms: strategic management, Correlation, t-test, Innovation, APPLE, Nokia, perceived innovation scoreExpected results: Several tests are carried out based on APPLE and NOKIA company mobile phone industry brand’s perceived innovativeness value. The results have been tested for significance with NOKIA brand which has less consumer perceived value (Table 1). Based on results, if perceived innovativeness score and profit margin shows strong correlation then, assumption that – “For more innovative product, there is the more scope to increase profit margin” perception holds true. Such stipulation would lead companies to innovate their brands to increase the bottom line. On the other hand, if the otherwise holds to be true, then strategic management and marketing should focus more on austere measures for innovation and concentrate on other aspects of business such as advertisement, marketing channels, training, quality of product or any other marketing aspect that will add consumer value. Actuality of the study:Over 30 years ago, Peter Drucker emphasized the importance of customer thinking to the success of a firm. He said that the purpose of a company is “to create a customer. Therefore, the business has two— and only two—basic functions: marketing and innovation. Marketing and innovation produce results: all the rest are costs.”22Introduction:Businesses are living in the time of turbulent globalization, change and alteration. Considering the fact that the world is changing faster, ten percent change was enough for businesses to blossom in the past, yet it is not a sustainable solution in present century. It has been observed that there are four types of companies:1. Those that make things happen (market makers).2. Those that watch things happen and respond (market followers)3. Those that watch things happen and don’t respond.(laggards)4. Those that didn’t notice that anything had happened. (not vetted companies)Concerning to APPLE its innovation strategy involves terrific new products and innovative business models. Genius ergonomics make Apple products effortless to use. “Design is not just what it looks like and feels like. Design is how it works,” said Steve Jobs. Apple has repeatedly demonstrated with its innovation management what a success user friendliness and design can generate. In fact, “The heart and soul of the company is creativity and innovation” says Bob Iger Companies are constantly striving to find solutions through creativity, product/service differentiation aspiring to add costumer value to increase the bottom line. But the tasks are becoming so myriad that businesses have been experiencing business myopia and which is the tacit reality of the XXI century. BodyAccording to Harvard Business School professor Clayton Christensen, each year more than 30,000 new consumer products are launched and 80% of them fail. Furthermore, up to 90% of startups in the consumer packaged goods (CPG) industry fail, (https://www.publicity.com/marketsmart-newsletters/percentage-new-products-fail/) Thus, innovation is a safer bet to stand stillThere is no panacea to evil spells that businesses are confronting in the globalization time and the sort of approach that lead to breaking the stone like competition around the world. Such solution would have been too easy but not feasibleAnd yet, the XXI century managers seem to have found answer to such difficult dilemma through constant INNOVATION! Business innovation is holistic concept i.e. it considers marketing as a whole. According to Jack Welch – former CEO of General Electric (General Electric (GE) is an American multinational conglomerate corporation incorporated in New York5 with more than US$123.7 billion (2016)4 revenue) – change is the cure for all current problems that businesses experience. In fact, he puts it boldly “Change or die!” Mike Lazaridis, president and co-CEO of BlackBerry states, “I think we have a culture of innovation here, and engineers have absolute access to me. I live a life that tries to promote innovation.”26According to Philip Kotler companies that innovate are market drivers while companies that follow costumer needs are market driven. However, companies must make the first their choice. Gary Hamel holds that innovation can be a strategic capability, just like in some company’s quality is a discipline.38If businesses do not innovate they are destined to die! Even if they do innovate, there is a small chance to survive. No wonder the average company disappears within 20 years. Of the companies listed as best in the Forbes 100 of 1917, only 18 survived to 1987. And only two of them, General Electric and EastmanKodak, were making good money Philip_Kotler_Marketing_Insights_From_A_to_Z_80(BookFi) p 20 ConclusionAt the bottom line new technologies stimulate the economy’s growth rate. Unfortunately, the step between innovations an economy generally yet to be identified (which is the scope of this research). Understanding the scope of innovation provides advantage over competitors. The innovation process is long run process and its value must not be undermined. Companies differentiate themselves in the market through various methods (speed, efficiency, quality of service, after sale service or loyalty programs) which all require certain level of risk, yet innovation is considered to be the safest bet. Companies must instill innovation to the DNA of the business. ?Part BObjectiveBased on the knowledge above innovation has been mentioned a key aspect of survival of any business to gain competitive advantage. It has been long stated the existence of strong correlation between Innovation and business survival on one hand, and an innovation and profitability (the bottom line) on the other. The objective of this paper is to test the hypothesis that “weather innovation and profitability of a business are positively correlated.” Thus Ho –states that there is no relationship between innovation and profitability. On the other hand, Ha – alternative hypothesis states that there is a strong relationship between innovation and the bottom line of a business. The results have been tasted on two standard deviations (+/- 2 sigma) i.e. statistical error at 5% (b=.05) level. About APPLE companyApple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976. It was incorporated as Apple Computer, Inc. in January 1977, and sales of its computers, including the Apple II, saw significant momentum and revenue growth for the company. Within a few years, they had a production line. Apple went public in 1980 with instant financial success. Over the next few years, Apple shipped new computers featuring innovative graphical user interfaces. In Macworld Expo January 9, 2007 event saw the announcement of the iPhone9495 and the Apple TV.9697 The company sold 270,000 iPhone units during the first 30 hours of sales,98 and the device was called “a game changer for the industry”.99Boston Consulting Group has ranked Apple as the world’s most innovative brand every year since 2005.303 The following December, Apple’s chief operating officer, Jeff Williams, told CNBC that the “$1 billion” amount was “absolutely not” the final limit on its spending, elaborating that “We’re not thinking in terms of a fund limit. … We’re thinking about, where are the opportunities across the U.S. to help nurture companies that are making the advanced technology — and the advanced manufacturing that goes with that — that quite frankly is essential to our innovation”.427428Methodology The coefficient in equation (6.3) is known as the Pearson product-moment correlation coefficient or Pearson correlation coefficient (for a really nice explanation of why it was originallycalled the ‘product-moment’ correlation see Miles & Banyard, 2007) and was invented byKarl Pearson (see Jane Superbrain Box 6.1).2 Andy_Field_Discovering_Statistics_Using_SPSS_(In(BookFi)To identify authenticity of statistical method, two approaches have been carried out. First, the data has been collected based on questionary in the written form (the form has been attached as the appendix page) asking potential buyers to rate the innovativeness of two brands, namely APPLE and NOKIA. The prospects were asked to rate the product on 0-100 scale on how innovative they perceived the brand be. Firsts, based on score values, profitability and innovativeness scores will be tested for correlation. Secondly, more innovative product – APPLE’s margin will be compared to less innovative brand Nokia. The ideal result to accept the theory will be when there will be strong correlation between brand and its margin (as this would have proved the idea of strong correlation between brand innovation and the bottom line), as well as insignificant statistical t-test score (that would have underlined the assumption that the more innovative brand is, the more scope for to in our case it is APPLE, ) and when The results may vary depending on the strength of correlation and profit and perception of innovationAccording to Deborah J. Rumsey the correlation coefficient r measures the strength or direction of a linear relationship between two variables. The value of r ranges from +1 to –1. To interpret the value following scale may be appropriate:1. –1. perfect (negative) linear relationship2. –0.70. strong (negative) linear relationship3. –0.50. moderate downhill (negative) relationship4. –0.30. weak (negative) linear relationship5. 0 (zero). No linear relationship6. +0.30. weak (positive) linear relationship7. +0.50. moderate (positive) relationship8. +0.70. strong (positive) linear relationship9. Exactly +1. A perfect (positive) linear relationship• http://www.dummies.com/education/math/statistics/how-to-interpret-a-correlation-coefficient-r/On the second stage two brand’s perceived innovativeness scores were compared based on T-test. Possible outcomesThe results may provide an answer to the core research question “Weather innovativeness servers to increase brand equity and the bottom line” Should there be 1) strong correlation between perceived innovation score of the brand and its profitability (correlation analyses), as well as significant difference between brand’s profitability to the other (t-test), the theory brand equity and profitability will be undelined. On the other hand, for example weak correlation and insignificant t-test casts strong doubt to theory. Test Assumptions and constrains1. The first assumption made regarding t-tests concerns the scale of measurement. The assumption for a t-test is that the scale of measurement applied to the data collected follows a continuous or ordinal scale.2. The second assumption is that of a simple random sample is randomly selected and is a portion of the total population.3. The third assumption is that the data, when plotted, results in a normal distribution, bell-shaped distribution curve.4. The fourth assumption is that a reasonably large sample size is used. A larger sample size means that the distribution of results should approach a normal bell-shaped curve.5. The final assumption is homogeneity of variance. Homogeneous, or equal, variance exists when the standard deviations of samples are equal.Standard Deviations were calculated based on formulae for each brand. Person correlation coefficient was taken as base due to its aptness. Analyses A special form (see the appendix please) has been made to identify consumer perceived value for two brands: APPLE and Nokia. Mobile phone market has been targeted at Malika2222 trade center. 15 (fifteen) sales people were asked to rate (based on their experience) “How innovative the product is” and were asked to provide their margin for Apple brand, on one hand and the same procedure was followed for Nokia brand mobile phones, on the other. The data has been provided in Table 1. Table 1 Innovativeness score ID APPLE ? APPLE (%) Nokia ? Nokia (%)1 90 16 80 112 85 13 65 93 78 14 82 84 95 18 74 95 99 20 76 86 88 20 60 127 71 12 66 108 85 15 70 69 86 17 75 910 86 16 71 1011 93 17 61 812 97 21 68 913 81 18 67 714 78 15 70 715 80 14 75 9ThereAPPLE / Nokia– is the brand name? APPLE (%) – Profitability margin for the brand (compared to sales value)? Nokia (%) – Profitability margin for the brand (compared to sales value)Main Part Chart 1 As we can see from the Table 2 people perceive Apple brand to be more innovative. To be precise, Perceived Innovativeness scores were higher for the Apple brands (86.1 points) compared to Nokia (70.7 points). Apple brand’s margin was higher too. (Table 2). On the other hand, Descriptive Statistics provide data that Apple to be more volatile (1.1 points more compared to Nokia) with higher margins on average. Yet, volatility Perceived score for Nokia brand is less (that is approximately 18% compared to Apple), and minor compared to profitability (Table 2).Table 2 Descriptive Statistics Mean Std. Deviation NPreScoreInnovAPPLE 86.1333 7.81817 15MarginAppl 16.4000 2.66726 15PreScoreInnovNokia 70.6667 6.41056 15MarginNokia 8.8000 1.56753 15From Chart 1. One can see that there is a trend that as Innovativeness score increase so is the margin. Correlation analyses would shed better light.Correlations AnalysesFifteen respondents were given a form to provide their perception of brands’ innovativeness value. They were also asked to provide their profit margin for their products. Correlation analyses was carried out to identify if there is a relationship between perceived Innovation score and Profit margin. Such stipulation will identify the strength of relationship. All respondents provided the form answered. So there were no missing values. Table 3 PreScoreInnovAPPLE MarginApplePreScoreInnovAPPLE Pearson Correlation 1 .785** Sig. (2-tailed) .001 N 15 15MarginApple Pearson Correlation .785** 1 Sig. (2-tailed) .001 N 15 15 PreScoreInnovNokia MarginNokiaPreScoreInnovNokia Pearson Correlation 1 -.100 Sig. (2-tailed) .724 N 15 15MarginNokia Pearson Correlation -.100 1 Sig. (2-tailed) .724 N 15 15**. Correlation is significant at the 0.01 level (2-tailed).From Table 3 one can see strong correlation between Apple brand and profitability margin. On the other hand the same holds true for NOKIA brand i.e. one can confidently say that the more product is innovative the more probability to add margin Pearson’s correlation ExpectationsFuture prospective?5 “Company Search, EDGAR System, Securities and Exchange Commission”. header. Retrieved December 21, 2015.4 “Financial Statements for General Electric Company”. Google Finance. Retrieved February 4, 2017.26 Jena McGregor, “The World’s Most Innovative Companies,” BusinessWeek, April 24, 2006, pp. 63–74.22 22. Drucker, op. cit38 See Gary Hamel, Leading the Revolution (Boston: Harvard Business School Press, 2000).2222 malika trade center is the biggest domestic appliance market in Tashkent, the market has been targeted due to its abundance of consumer choices (in mobile market) and suitability to the posed research form 92 “Drop the Computer”. The Economist. Economist Group. January 11, 2007. Retrieved May 24, 2017.93 Jump up^ “What’s In A Name Change? Look At Apple”. Forbes. January 25, 2007. Retrieved May 24, 2017.94 “Apple Announces The iPhone”. MacRumors. January 9, 2007. Retrieved May 24, 2017.95 Jump up^ Arrington, Michael (January 9, 2007). “Apple Announces iPhone, Stock Soars”. TechCrunch. AOL. RetrievedMay 24, 2017.99. Oyedele, Akin (March 21, 2016). “Here’s how Apple shares do right after the new iPhone launches”. Business Insider. Retrieved May 24, 2017.303 Boston Consulting Group has ranked Apple as the world’s most innovative brand every year since 2005.303 427 Salinas, Sara (December 13, 2017). “Apple has a $1 billion fund for US manufacturers, but it’s ready to spend more, says COO Jeff Williams”. CNBC. NBCUniversal News Group. Retrieved December 14, 2017.428 Jump up^ Miller, Chance (December 13, 2017). “Jeff Williams says Apple is prepared to invest more than $1B in US manufacturers”. 9to5Mac. Retrieved December 14, 2017.?Objective of the questionary is to calculate perceived innovative value of the band to further How much do you percive innovative is the Apple brand?