Sunday, April 20, 2008

Vital Signs: BusinessWeek's 2008 Most Innovative Companies

BusinessWeek recently released its annual "Most Innovative Companies" issue and its list of The World's 50 Most Innovative Companies Interactive Scoreboard

Apple (AAPL) again leads our list. [Link to Apple brief here]But the added metrics and more global nature of our respondents produced new names. Tata Group and Nintendo both landed in the top 10 for the first time. And dark horses like struggling General Motors (GM) received a surprising number of votes, thanks to concept cars like the electric Volt and a renewed focus on design.
BW explains its methodology:

To determine our 2008 list of the 50 most innovative companies, the Boston Consulting Group once again asked executives to vote for the most pioneering companies in the last year. In a climate when innovation will be scrutinized more than ever, we added three financial measures. For 2008, votes cast in the BusinessWeek-BCG survey got an 80% weighting, while three-year revenue and margin growth each got 5% and stock returns were weighted 10%.

BCG sent the 17-question survey electronically in November to the 2,500 largest global corporations by market value. More than 2,950 executives responded, our largest sample ever. BCG also sent it to readers in senior management, including members of the BusinessWeek Market Advisory Board. Participation was voluntary and anonymous, and self-votes were eliminated. To compare financials of private companies, we used metrics equal to industry performance.
The survey itself isn't published but of particular interest in the scoreboard are the categories used to assess innovativeness in addition to the 3 key quantitive measures of revenue growth, margin growth and stock returns over the 2004-2007 period.

Survey Categories:
  1. Products
  2. Customer Experience
  3. Processes
  4. Business Models
Notably, Google was number 2 with a focus on online office software and upcoming video ads.

The issue provides some other interesting insights including a description of ING's approach:
The online banking arm of this Dutch financial giant, ING Direct, was a pioneer in consumer finance, with high-interest savings and no regular branches. In its U.S. ING Direct business, executives are frequently moved from one function to another to promote collaboration; the unit's internal "Innovation Pipeline" site offers a place for employees to swap and vet creative ideas.
The issue also notes that Starbucks has implemented its as I have blogged previously here.

Finally, it was interesting to see Facebook make it on the list for the first time!

In future posts, I'll profile the most innovative companies in more detail.