BUSINESS INNOVATION
Visualizing the Most Innovative Companies of 2021
The ranking of the top 50 companies was formulated by using data from a poll of 1,600 global innovation professionals
One thing that hasn’t changed with the pandemic-induced priorities is innovation and the development of highly successful mRNA-based vaccines is a testament to the fact why it is so important. If anything innovation has become a priority for global corporations. Keeping that in mind Boston Consulting Group (BCG) has ranked the top 50 most innovative companies in 2021. The ranking was based on a poll of 1,600 global innovation professionals.
BCG used four key metrics to create the ranking (infographic above):
❶ Global “Mindshare” — Voting numbers from all innovation executives
❷ Industry Peer Review — The number of votes from executives in a company’s industry
❸ Industry Disruption — A diversity index to measure votes across industries
❹ Value Creation — Total share return
Although research and development (R&D) and innovation are usually synonymized — the former is just one aspect of the larger innovation process. Companies also employ other tools like streamlining processes to increased efficiency. With that in mind, let’s review some of the main findings of the report.
- For the second year in a row, the smartphone giant Apple retained the top spot on the list. In fact, with a market cap of over $2.4 trillion currently, the company compares as the 8th largest economy in the World.
- The top 10 innovators in the business world were overwhelmingly American — seven companies called the U.S their home, while Samsung (№6), Huawei (№8) & Sony (№9) were the international representations. All the big techs are included in the Top 10 including Tesla.
- Of the exhaustive list of 50 companies, 27 came from the U.S (54%) while the rest were from other countries —Germany (5), Japan (4), China (4), South Korea (3), Netherlands (2), Switzerland (2), UK (1), Hong Kong (1), & Spain (1).
- It was interesting to see all the four mainstream vaccine makers making it to the list — Pfizer, Moderna, Johnson & Johnson, and AstraZeneca. Pfizer is a returnee from previous years that ranked 10th in this year’s ranking. The first three are U.S based while AZ is from the UK.
- Coca-Cola & Toyota were the biggest gainers on the list — where the latter’s move was signified by its $400 million investment into a company set to build flying electric cars. While the beverage giant pivoted towards streamlining its business by cutting the brand list from 400 to 200 global brands.
- Other major gainers included Salesforce, Proctor & Gamble and Novartis, which gained 13, 12 and 11 spots respectively from last year. On the other hand, China’s Tencent & Germany’s SAP lost 12 and 13 spots respectively.
- Sector-wise technology & consumer goods companies were the leaders in innovation with a 32% share each in the innovation ranking. Healthcare followed with 20% (top chart, right).
One thing which has manifested itself strongly this year in particular, and generally for the last two decades has been the relationship between innovation and value. As seen in the investment returns chart (middle right) — a portfolio that was theoretically invested in BCG’s most innovative companies would have performed 17% better than the MSCI World Index — which wasn’t the case back in 2005.
More specifically, the divergence in returns between BCG’s most innovative companies and MSCI World Index has increased significantly in the last couple of years. Another interesting analysis by BCG showed that only 20% of companies surveyed were ready to scale on innovation (bottom chart, right). The most significant gap seems to be in what BCG calls innovation practices — things like project management or the ability to execute an idea that’s both efficient and consistent with an overarching strategy.
Needless to say, companies with sound innovation strategies are edging out the competitors, and in the post-pandemic world, this might be the most distinguishing factor.
