The Boston Consulting Group has just released its 11th annual "Most Innovative Companies" report. The research ranks the world's 50 most innovative companies based on a survey of 1,500 senior executives representing a wide range of industries in every region.
BCG noted the increasing imperative for companies to bring in innovations from outside.
“Given faster-changing markets—and the fact that even in more traditional sectors technology is becoming a key differentiator—a not-invented-here mindset can be fatal,” said BCG partner and report coauthor Andrew Taylor. “Today’s most successful innovators strike a strategic balance between internal and external innovation. They are smart and efficient at scanning for external ideas—and deft at bringing them inside.”
The BCG research finds a gap between the strongest innovators and their weaker peers in the pursuit of external ideas. Strong innovators take a more analytical approach, BCG explains, with 65% reporting they find new ideas through social network and big data mining (compared with just 14% for weak innovators).
Strong innovators are also flexible in how they bring in innovations. For example, 66% say that they find new ideas through external partnerships often or very often (versus just 22% for weak innovators).
Here is a look at the top 10 companies in this list of innovation leaders.
IBM (IW 500/12) helped spawn the computer age and in recent years the company has shifted its focus from manufacturing to services. In 2016, IBM broke the U.S. patent record with 8,088 patents granted to its inventors. More than 2,700 patents were for inventions related to AI, cognitive computing and cloud computing. To fuel its business in the next four years, IBM CEO Ginni Rometty said in December that she plans to hire about 25,000 people in the U.S. and invest $1 billion.
In April, Facebook Founder and CEO Mark Zuckerberg showed off the company's 10-year technology roadmap, which ranged from products such as WhatsApp and Instagram to more ambitious efforts in artificial intelligence, connectivity and virtual and augmented reality. Business Insider recently reported that a "secretive hardware research division that Facebook created last year is developing 'brain-computer interface' technology that sounds a lot like the mind reading and telepathy of science fiction movies."
Car makers such as Toyota (IW 1000/6) are swallowing innovation with a firehose these days as new technologies such as autonomous driving develop alongside new mobility models offered by disruptors such as Uber and Lyft. But while Toyota is focused on innovation, it doesn't expect to see driverless highways just yet.
“It will take many years of machine learning and many more miles than anyone has logged of both simulated and real-world testing to achieve the perfection required,’’ said Gill Pratt, chief executive officer of the Toyota Research Institute, in a speech at CES, as reported by Bloomberg.
Samsung spent more than $13 billion on research and development in 2016, supporting 50,000 researchers and engineers at 42 locations globally. In June, Vice Chairman and CEO Dr. Oh-Hyun Kwon announced the company will spend $1.2 billion in the U.S. over the next 4 years on what it terms the "Human-Centered IoT." IoT technologies, he said, can be used to help people "age in their own homes" and can help keep millions of Americans "out of hospitals and nursing homes."
No less an expert than Harvard professor Clayton Christensen has deemed Netflix a prime example of "disruptive innovation." The streaming media company has branched into developing original programming for its 86 million members in 190+ countries. In 2017, Netflix will spend $6 billion on programming, creating over 1,000 hours of programming such as its hit series Stranger Things. Netflix continues to gain members in the U.S. but is putting increasing resources into its international expansion.
Amazon founder and CEO Jeff Bezos told Recode's Code Conference this past May that Amazon has the "gold standard culture for innovation and pioneering work.” John Rossman, a former Amazon executive and author of The Amazon Way on IoT, notes that Amazon is always focused on three things - improve the customer experience, drive operational effectiveness and develop new business models. Those goals are in evidence from the Prime membership to its 1-Click ordering service to its celebrated experiments with delivery by drone.
Only a few years ago, Microsoft (IW 500/10) was considered by many as a stodgy cash machine stuck in the PC era. But since CEO Satya Nadella took the reins of the company in February 2014, Microsoft is increasingly considered an innovator. One example: When Microsoft and Apple held product introductions a day apart last October, Mashable reported, many thought Microsoft had won the battle with "products like the Surface Studio and Surface Dial, Microsoft Edge and AR/VR Headsets."
"I'm interested in things that change the world or that affect the future and wondrous, new technology where you see it, and you're like, 'Wow, how did that even happen? How is that possible?'" Elon Musk, founder and CEO of electric car maker Tesla Motors (IW 500/227) told 60 Minutes in 2014. Musk has mixed grand ambition and technological savvy with extreme persistence and a workaholic schedule. Tesla increased its production of cars by 64% in 2016. The company is banking on its newly opened Gigafactory 1 in Nevada to provide batteries for 500,000 cars a year.
Few companies have had the impact of Google, the technology giant founded by Larry Page and Sergey Brin just over 20 years ago. Google, or more properly its corporate parent Alphabet, spends nearly $13 billion on R&D annually. The company's research interests extend far beyond its search and software products. Other Bets, the company's "moonshot" division, has projects ranging from smart thermostats to high-speed internet to self-driving cars. Though the division is a money loser, it reflects Google's corporate belief that "our constant dissatisfaction with the way things are becomes the driving force behind everything we do."
Apple (IW 500/2) tops BCG"s list of corporate innovators for the 11th straight year and remains the world's most valuable company. But while the Cupertino, Calif.-based firm continues to introduce new products such as Apple Watch and AirPods, there is growing concern that the company has lost its innovation edge under CEO Tim Cook and failed to introduce its "next big thing." What is being cooked up in Apple research facilities, where $10 billion was spent last year? Apple, as usual, is keeping mum. Stay tuned.
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