For the 11th consecutive year, Apple Inc. (NASDAQ: AAPL) has been named the world’s most innovative company by The Boston Consulting Group (BCG). In nine of those years, Google/Alphabet Inc. (NASDAQ: GOOGL) has finished in second place. This year’s third-ranked innovator is Tesla Inc. (NASDAQ: TSLA), which moved ahead of Microsoft Corp. (NASDAQ: MSFT) last year.
The top 10 innovative list is heavy with technology firms. Rounding out the top of the list are Amazon.com Inc. (NASDAQ: AMZN) at number five, Netflix Inc. (NASDAQ: NFLX), Samsung Group, Toyota Motor Corp. (NYSE: TM), Facebook Inc. (NASDAQ: FB) and International Business Machines Corp. (NYSE: IBM).
BCG notes two challenges for innovators: finding something new and developing that something into a marketable product. Serendipity aside, the rise of data analytic tools offers innovators a way to look at more possible opportunities than ever and even to help put together a business model that is itself innovative.
Ultimately, BCG says, innovation is all about creating value, and cites Under Armour Inc. (NYSE: UAA) (number 22 on this year’s list) as an example:
Under Armour innovates on the idea of making athletes better. It uses technology in all aspects of its business. This approach has led it from the high-performance fabrics that were the company’s genesis to connected fitness devices and wearables and, most recently, to a new venture, Under Armour Connected Fitness … [which] has 175 million users … and reports … adding 125,000 new users every day.
The eight companies that moved up the top-50 list by at least 10 places year-over-year in 2016 are Netflix (from 21st to sixth), Facebook (28th to ninth), General Electric Co. (NYSE: GE) (27th to 15th), E.I. du Pont de Nemours and Co. (NYSE: DD) (37th to 18th), Dow Chemical Co. (NYSE: DOW) (32nd to 19th), Pfizer Inc. (NYSE: PFE) (43rd to 26th), JPMorgan Chase & Co. (NYSE: JPM) (44th to 28th) and Nike Inc. (NYSE: NKE) (46th to 33rd).
Interestingly, half of the big movers — GE, Pfizer, JPMorgan, and Nike — are components of the Dow Jones Industrial Average index, as are three of the top 10 innovators — Apple, Microsoft and IBM.
This year for the first time, BCG included startups in its list of the 50 most innovative companies of 2016. Because the rankings are based on a survey of corporate executives and a total shareholder return metric devised by BCG, the firm assigned a total return number.
There are 10 new entrants among the top 50 this year. The two highest-ranked — Uber, at 17th and Airbnb at 21st — are both startups. The other eight are Under Armour (22nd), Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) (24th), Expedia Inc. (NASDAQ: EXPE) (32nd), SpaceX (another startup at 34th), Hilton Worldwide Holdings Inc. (NYSE: HLT) (37th), NTT Docomo (39th), Orange (44th) and Bristol-Myers Squibb Co. (NYSE: BMY) (47th).
For a more complete explanation of the ways the survey has changed over the years, see the appendix to the full report.
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