The 50 Most Innovative Companies (2010)

Since 2005, Bloomberg Business Week has published a table each year displaying the ‘50 Most Innovative Companies’. The data is gathered by Boston Consulting Group (BCG). The consultancy gathers this data using various techniques. In December 2009, senior executives were emailed around the world asking which companies, in their view, were the most innovative operating outside their industry. With this data, BCG then took consideration of the financial performance for these highly ranked companies. For the final list, survey results account for 80%, 10% from stock returns and 5% for 3 year returns, as well as margin growth.

For the 2010 report, the survey distribution strategy was altered to improve the reflection of each country's share in the world economy; decreasing or increasing the number of questionnaires sent to different countries. The survey was also translated into different languages in an attempt to increase the response rate leading to more representable data.

It seems to be the case that Asian companies are becoming more established in the global market and significantly increase their market share as “In the past decade, as the U.S. was losing an estimated 2.4 million factory jobs to China” (Bloomberg Business Week [online], Accessed: 9/11/11).

As found in the 2010 Bloomberg Business Week report, 15 of the Top 50 are Asian; a significant increase from the figure in 2006 of five. This is evident today where China are trying to export technologies such as wind turbines and high-speed bullet trains to the United States. However, despite the number of companies from outside the US appearing in the Top 25 of the 2010 table, Apple remains number one (as it has done for the past 5 years) with Google as runner-up; firmly representing America.

With an increased amount of Asian companies claiming spots in the Top 25, many other companies from the US and Britain have been pushed further down the table; some even wiped off completely (AT&T).

HTC, a recently well known Asian smartphone brand, was founded in 1997 and produced its first phone using Google’s Android software in 2008. In January 2010, it launched the Nexus One which was the start of many smartphone innovations for the company. HTC is now selling its own smartphones and “roughly a quarter of the company's 8,000-person workforce hold engineering-related jobs” (Bloomberg Business Week [online], Accessed: 9/11/11). This reflects the demand and supply for their products and how they have expanded since being founded. HTC Chief Executive, Peter Chou, believes that “Innovation is not a one-time job—innovation is a journey” (Bloomberg Business Week [online], Accessed: 9/11/11). We are likely to see many more innovative products from this company in years to come – will they ever be able to compete with the likes of Apple? An unanswered question.

As China suffers from its highly polluted air filling the environment, the government is willing to promote the use of eco-friendly cars; helping to make this a viable venture. In addition, the government is also encouraging overall generation in the country. “Beijing has implemented new procurement policies to promote what it calls "indigenous innovation" by requiring locally made technology in certain government purchases” (Bloomberg Business Week [online], Accessed: 9/11/11).

According to statistics, 95% of executives in China said innovation was the key to economic growth compared to 90% in South America and 89% in India. In the U.S., only 72% said innovation was important.

As the recession presses on with tough economic conditions and squeezed budgets, many countries are suffering to finance their innovations; possibly explaining why the innovation budget of the US has fallen to 48%. However, 88% of China executives, 82% in South America and 73% in India said they were raising their innovation budgets this year. In Japan, only 34% of executives aimed to increased their innovation spending. This lack of innovation by the US could be detrimental to their future place in the Innovative Companies table.

Many critics believe that:

“China, Korea, and India aren't all that innovative. Their domestic economies are growing so quickly—and there are so many opportunities to launch tried-and-true business models—that these companies don't need to come up with the Next Big Thing. Sticking with the Same Old Thing suits many companies and investors just fine” (Bloomberg Business Week [online], Accessed: 9/11/11).

There’s no doubt that the recession has been very tough for companies to survive within; especially due to the unstable and unpredictable market conditions; “72% of companies see innovation as a "top three" strategic priority, and 61% of respondents are planning to increase the amount they spend on innovation” (Bloomberg Business Week [online], Accessed: 9/11/11).

For many companies, priorities have shifted whereby innovation has become the lowest priority than it has done so far as focus is now aimed at cost-reduction, increasing productivity and incremental changes (rather than radical).

References:

Bloomberg Business Week [online], Available from: http://www.businessweek.com/interactive_reports/innovative_companies_2010.html, Accessed: 9^th November 2011

Bloomberg Business Week [online], Available from: http://www.businessweek.com/magazine/content/10_17/b4175034779697.htm, Accessed: 9^th November 2011

Bloomberg Business Week [online], Available from: http://www.businessweek.com/magazine/content/10_17/b4175043789498.htm, Accessed: 9^th November 2011