By Daniel Hunter
While technology and telecommunications companies continue to dominate the top ten spots on The Boston Consulting Group’s list of most innovative companies, many traditional companies–most notably industrial and automotive companies but also diversified conglomerates–have joined the list, staking out their places alongside the usual tech suspects.
Since 2004, BCG has surveyed more than 1,500 senior executives in a wide range of countries and industries to help illuminate the state of innovation. In a new report titled The Most Innovative Companies 2012: The State of the Art in Leading Industries, the firm reveals the 50 companies that global executives ranked as the most innovative.
Coinciding with the start of BCG's fiftieth anniversary celebration, the report is part of its Game-Changing Initiative, a year-long effort to focus decision makers on the opportunities the seismic shifts in the global economy are creating.
“In today's fast-changing world, innovation is more important than ever to driving organic growth and achieving competitive advantage,” noted Andrew Taylor, a Chicago-based partner and a coauthor of the report “Both are critical to generating sustained, above-average returns, especially in a turbulent economic environment.”
The tech and telecom industries continued to take the lead on innovation, earning seven of the top ten places on BCG's list. Many of these companies have demonstrated impressive staying power in the top rankings:
- Apple has been number one every year since 2005.
- Google has been number two every year since 2006.
- Microsoft has been in the top ten every year since 2005.
- IBM and Sony have been in the top ten nearly every year since 2005.
But the world of bits and bytes no longer comes exclusively to mind when executives think of innovation. In a notable development, traditional industries such as industrial products and automotive together made up 40 percent of the list, comparable to the percentage that the technology industry held in 2010. Automotive companies made up 7 of the top 25 companies in 2012, for example, and 5 diversified industrial companies entered or returned to the rankings.
Industry-level shifts do not begin to describe all the changes going on in the innovation environment. The world of innovation may be a place where the small and nimble succeed, but it is also a place where the biggest and most diversified companies generate measurable advantages in scale and scope. These “premium conglomerates” have built their innovation capability so that they add value from the center to the diverse business units that they own. In all, 11 of the top 50 most innovative companies were diversified conglomerates.
Meanwhile, the usual pure-play life-sciences companies failed to achieve a spot in the rankings. Since 2007, only one pure-play health care company has placed in the rankings, and none has placed since 2009.
BCG also asked executives a host of questions to assess the current and future robustness of the innovation environment. Among the many indicators used, two of the most critical were the relative priority of innovation and the outlook for increased innovation spending over the coming year (2013). Executives rated these indicators at their highest levels in more than five years.
In addition, the report details the major industry and company trends that have emerged since the survey began and maps the innovation landscape in four major industries that dominated the list in 2012–industrial products and processes, automotive, consumer and retail, and technology and telecommunications–as well as in an industry that has struggled to regain its place: health care.
Finally, the authors examine six practices of the most innovative companies and explore how those practices have played out at innovation leaders across a range of industries.
“Billions in profits are at stake for companies that can crack the code and deliver meaningful advantage from innovation, as we’ve seen from the ever-changing list of most innovative companies,” said Kim Wagner, a New York-based senior partner and a coauthor of the report.
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