BCG’s Most Innovative Companies of 2020

Published on the 09/07/2020 | Written by Jonathan Cotton

BCG Most innovative companies

The results are in: so what do the winners have in common?…

BCG, the global management consulting firm, has released its new report, The Most Innovative Companies of 2020 ranking the top 50 most innovative companies worldwide.

While all the expected names top the list – as well as a few rapid climbers – more interesting is BCG’s sobering take on the difficulty of sustained innovation success over the long term.

“Drive and size mean little if your innovation system can’t build on them for serial success,” says the report’s authors. “Serial innovation is hard.”

“Serial innovation is hard.”

Researched pre the Covid-19 epidemic, company rankings are based mainly on BCG’s survey of 2,500 ‘global innovation executives’, who were polled from August through to October 2019.

So who made the list?

This year’s ranking shows the usual suspects in pole position, along with a dramatic jump by Huawei, ascending from 48th last year to 6th place.

  1. Apple
  2. Alphabet
  3. Amazon
  4. Microsoft
  5. Samsung
  6. Huawei
  7. Alibaba
  8. IBM
  9. Sony
  10. Facebook

So what makes a company innovative over the long term?

It’s not skills, luck, or even company culture that separates the best from the rest, says the report. Rather, it’s a trio of elements that makes organisations continuously innovative.

According to BCG, successful innovators ‘walk the talk’ of innovation, committing to investment and making innovation a top business priority.

“‘Committed innovators’ say that innovation is a top priority, and they support that commitment with significant investment,” reads the report.

“‘Skeptical innovators’ are the reverse, seeing innovation as neither a strategic priority nor a significant target of funding. And ‘confused innovators’ are in between, with a mismatch between the stated strategic importance of innovation and their level of funding for it.”

It’s the committed innovators who are winning.

“Almost 60 percent of [commited innovators] report generating a rising proportion of sales from products and services launched in the past three years, compared with only 30 percent of the skeptics and 47 percent of the confused.”

That spending has to be controlled of course, with investment dollars focused on core business enablers.

“While many companies struggle to address multiple innovation challenges at once, committed innovators prioritise a handful and as a result address them more effectively,” advises the authors.

Currently, those top priorities have included advanced analytics, digital design and technology platforms.

“Companies may embrace these enablers for different reasons,” says the report.

“Advanced analytics, for example, are a top priority for industrial goods companies that are seeking to develop new analytics-driven value propositions, such as agricultural equipment manufacturers moving into precision farming enabled by the Internet of Things (IoT).”

When identifying the innovation advantage, size matters. As the top 10 suggests, the idea of the small, fast-moving innovators having a competitive advantage over the less-nimble giants may be overstated.

“While smaller companies’ scale makes coordination easier – and helps ensure that they stay closer to customers – our research found that the innovation success rates of smaller companies were not higher in any statistically significant way than those of larger ones.”

More important is the presence of systems and strategies to support innovation over the long term.

“Leading large innovators pursue different priorities and more carefully design their innovation systems for impact,” says the report.

The leaders on the list also invest more than their less innovative peers, says BCG.

“Large innovators that outperform their big-company peers… put more money behind their innovation programs – 1.4 times more as a percentage of sales – and they get far greater payoffs: Four times as much as a percentage of sales.”

Simply put, innovation success is achieved by design. That means the systematising innovation, and juggling the talent, governance, management issues that come along with it.

“Serial innovators succeed not because of the qualities of any individual offering. Rather, they draw on the strength of their underlying innovation systems, which integrate strategy, ecosystems, portfolio management, governance, development, performance management, and more into one seamless and mutually supportive whole.”

Which is all well and good, but since the survey part of the report was completed, the global Covid-19 pandemic has scuttled more than a few grand designs. As businesses struggle to survive, where does that put unproven innovation projects?

Front and centre, says the report, which some caveats.

“Our research has shown that companies doubling down on innovation during downturns – using the opportunity to invest and position for the recovery – outperform over the long term.”

“But doing that successfully requires developing a clear innovation strategy and supporting it with appropriate investment, leveraging the advantages of scale, and ensuring that your innovation system is nimble enough to spot and seize the best opportunities quickly and decisively.”

Post a comment or question...

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Thank you! Your subscription has been confirmed. You'll hear from us soon.
Follow iStart to keep up to date with the latest news and views...