The Most Innovative Companies 2013

The Most Innovative Companies 2013

          
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The Most Innovative Companies 2013

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  • Most companies continue to rank innovation as a top strategic priority. More than three-quarters of respondents placed it as either number one or among the top three, continuing a trend of the last several years. Even during the depths of the recession, two-thirds or more of companies placed innovation among their most important priorities. (See Exhibit 1.) More than 80 percent of respondents who put their companies in the top quintile of innovators assigned innovation a top-priority ranking for their organizations, while only 63 percent of those in the bottom quintile did so.

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    These attitudes are backed up by investment, which has been rising significantly in recent years. In 2013, 85 percent of strong innovators said they expect to spend more on innovation and new-product development than they did last year, compared with only 39 percent of weak innovators. Overall, 64 percent said they plan to increase spending, a 4 percentage point decline from last year. We believe this drop is partly due to companies’ increased focus and smarter spending. Significantly fewer respondents reported projects changing direction once they started. (See Exhibit 2.) Respondents also said that their companies are doing better than they did last year at the various components of innovation and new-product development. They said that they have the pieces of the innovation puzzle, from infrastructure to people to IP, mostly in place. (See Exhibit 3.)

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    Many of the companies—especially the technology companies—that have long occupied the top slots on the list of the 50 most innovative companies continue to do so. (See Exhibit 4.) Despite its recent stock-market travails, Apple retains the number-one ranking for the ninth consecutive year. Samsung pushed past Google for the number-two position, and Microsoft remains at number four. Joining Toyota in the top ten are two additional automakers—Ford and BMW. The auto industry makes an exceedingly strong showing overall—3 companies in the top 10 and 9 in the top 20. Four car makers are new to the list, and Volkswagen and General Motors are two of the biggest gainers, moving up 31 and 16 places, respectively. For the first time since we began this survey, there are more auto companies than consumer companies in the top 50 and more automakers than technology companies in the top 20. (For the full rankings from 2005 to 2013, see “The Most Innovative Companies: An Interactive Guide.”)

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    Companies in the automotive and technology sectors lead those in other industries in how important they perceive innovation and investment to be. Almost 85 percent of respondents in both sectors rated innovation as a top priority. (See Exhibit 5.) One-quarter of respondents at auto companies rated their companies as strong innovators, compared with an average of one-fifth overall. Approximately 70 percent of respondents from auto and tech companies said they plan to increase investment in innovation in the coming year.

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    The increasing acknowledgment of innovation in the auto industry continues a prominent trend from last year. Several factors are behind the current wave of automotive advancement. Manufacturers are racing to meet higher fuel-efficiency standards, which mandate an average fuel economy of 54.5 miles per gallon (mpg) in the U.S. for the 2025 model year. (The EU is targeting 64.8 mpg and China 50.1 mpg by 2020.) Automakers have stepped up both the development of electric and hybrid vehicles and their efforts to improve the mileage of mass-market models through such advancements as more efficient power trains and lighter car bodies. At the same time, vehicle safety standards continue to rise, and automakers are pursuing advanced safety innovations such as self-braking systems and vehicle-to-vehicle communications. The pervasive popularity of mobile devices has led consumers to expect advanced electronic and entertainment systems in cars that integrate seamlessly with their devices. 

    Respondents at media and entertainment companies had the highest opinion of themselves regarding innovation. In that group, 37 percent rated their companies as strong innovators (12 percentage points more than respondents from the second-place automotive industry), although only a below-average 73 percent said they view innovation as a top priority. A survey-trailing 69 percent of respondents from health care companies said they see innovation as a top priority, but only 10 percent of health care respondents view their companies as weak innovators (one-half the average).

    The judgment of senior management is the method cited by the most respondents (two-thirds overall) for determining which ideas move into product development. Similarly high percentages of respondents said that strategic and financial criteria play a key role as well. The role of senior management is particularly pronounced at strong innovators, where 83 percent said it is often or very often a driving force, compared with only 55 percent of companies in the bottom quintile.

    Strong innovators listen to customers. The views of key customers play a significant role in the innovation and new-product programs of 73 percent of strong innovators, compared with only 42 percent of weaker companies and 56 percent overall. 

    Managing IP and using it as a competitive advantage are growing in importance. Almost 70 percent of respondents said that IP is increasingly important in their industry, and a similar percentage said that owning IP is crucial to achieving a return on innovation. More than half (53 percent) said that their companies use IP to exclude others. Strong innovators are particularly aggressive in their protection and use of IP.

    We added a new category to our survey this year: up-and-coming companies. These are companies that are still relatively young or have yet to reach the scale of the top 50 global giants but are nonetheless making themselves known for innovation. (See Exhibit 6.) Their innovations are related, not surprisingly, to the latest technologies—social media, mobile applications, and cloud-based services—and almost all are making use of mobile platforms. (See “Innovation Systems: Aligning the Incentives.”)

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