Ranking Innovation: Who’s Number 1?

Investing

Published: November 7, 2012 2:49 pm

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In its third annual ranking of the world’s most innovative companies, analysts at Booz & Co. created two lists: one based on dollars spent and the other based on asking those surveyed to name their top three innovators. The lists don’t match up as well as we might expect.

The top spender was Toyota Motor Corp. (NYSE: TM), which coughed up $9.9 billion in 2011 for research & development spending. Drug companies Novartis AG (NYSE: NVS), Roche Holding, and Pfizer Inc. (NYSE: PFE) followed with $9.6 billion, $9.4 billion, and $9.1 billion in R&D spending respectively. Microsoft Corp. (NASDAQ: MSFT) and Samsung tied for fifth, with spending of $9 billion each.

So much for the objective part of the rankings. The top five companies when ranked by those surveyed were Apple Inc. (NASDAQ: AAPL) at the top, followed by Google Inc. (NASDAQ: GOOG), 3M Corp. (NYSE: MMM), Samsung, and General Electric Co. (NYSE: GE). Microsoft finished sixth, Toyota seventh, with Procter & Gamble (NYSE: PG), International Business Machines Corp. (NYSE: IBM), and Amazon.com Inc. (NASDAQ: AMZN) rounding out the top 10.

The most innovative company, Apple, spent only $2.4 billion on R&D in 2011, ranking 53rd on that metric. So, not only did Apple spend about 75% less than Toyota, but it beat the Japanese carmaker in the overall rankings. Only P&G and 3M spent less on R&D than did Apple.

As a percentage of sales, Apple’s R&D spending came in far below the average of 6.5%. Apple spent just 2.2% of sales on R&D, with P&G the next lowest at 2.4% of sales.

Lists, like water, are for fighting over. Here’s the Booz & Co. report.

Paul Ausick

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