Apple and Google Top 2015 'Most Innovative Company' Rankings

What an awesome way to start a brawl!

First, assume that you can get any two people in tech to agree on the essential factors driving innovation, let alone successful innovation. Then presume to create a ranking of the most innovative companies in the world based on those criteria.

But seriously, folks. It is useful to stimulate discussion about what does, in fact, stimulate innovation, if only to get those ostensibly involved in doing so - whether entrepreneurs, corporate execs, investors or government officials - to actually think about it. JL

Steve Lohr reports in the New York Times:

Two themes seem most prominent: speed and technology. Asked which of more than a dozen “areas of innovation, research and development or product development will have the most impact on your industry over the next three to five years,” the top three choices were “speed of adopting new technology,” “big-data analytics” and “technology platforms.”

Innovation is an essential yet elusive ingredient in corporate success, and one that is notoriously difficult to measure.

But for the past decade, the Boston Consulting Group has picked up the challenge, publishing a ranking of the 50 most innovative companies in the world and an accompanying analysis of successful innovators. The 2015 ranking and report shows the top two companies, Apple and Google, are the same pair as last year.

American corporations account for six of the top 10. In addition to Apple and Google, they are Tesla (ranked third), Microsoft (fourth), Gilead Sciences (eighth) and Amazon (ninth). But the company that has climbed the most since last year, up 35 places to the 12th spot, is the Chinese company Tencent.

Technology companies occupy the most slots at the top of the list, but car companies are a rising presence. Besides Tesla, the top auto innovators include Toyota (sixth), BMW (seventh) and Daimler (10th). The automotive ascent on the list has been evident for the last three years, said Andrew Taylor, a senior partner at Boston Consulting Group and co-author of the report.

“Cars have become delivery systems for technology,” Mr. Taylor explained, including hybrid and electric power systems, driver-assisting safety features, heads-up displays and touch screens for entertainment and information. “The amount of consumer-facing technology is incredible compared with five years ago,” he added.

The rankings are determined largely by a survey of 1,500 chief executives and senior executives worldwide. They are asked what companies in their own industry and in general they consider most innovative. They can’t name their own company. The rest of the ranking formula, 40 percent, is based on a company’s total return to shareholders over five years.

But the ranking questions are only a few of the dozens included in the annual survey. The Boston Consulting Group report is grounded mainly in answers to the wider set of responses, supplemented by the management consultant’s other research.

Reading the report, two themes seem most prominent: speed and technology. The executives were asked which of more than a dozen “areas of innovation, research and development or product development will have the most impact on your industry over the next three to five years?” The top three choices were “speed of adopting new technology,” “big-data analytics” and “technology platforms.”

In the survey and in follow-up interviews with executives, Mr. Taylor said, “The word that keeps coming up is speed” — accelerating traditional innovation processes to rapidly develop products and experiment with ideas.

Technology, Mr. Taylor noted, opens the door to faster innovation — as even industrial companies, for example, use sensors and software to build more intelligence and flexibility into their products. And techniques originally employed by software engineers, like agile programming and quickly building prototypes and testing them on customers, are being embraced in many industries. “It’s all about learning fast,” Mr. Taylor said.

However achieved, innovation seems to be increasingly valued by senior executives. This year, 79 percent replied that innovation was either their company’s top priority or among the top three. That is the highest percentage since the survey began in 2005, when the innovation priority share was 66 percent.

Have they just browbeaten by the term over the years, so that nearly everyone would say yes? That is not the explanation Mr. Taylor offered.

Instead, he suggested that so many of the other steps to create higher corporate value — like acquisitions, cost-cutting and outsourcing, restructuring and financial engineering — have run their course at many major companies. “As the toolkit gets narrower, innovation rises to the top,” he said. And Wall Street investors, he added, bid up the shares of companies that produce strong organic growth through innovation, like Apple and Google.