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The State of Business Innovation and Those Companies Leading the Way

Which industries and companies rank as leading innovators? BCG’s annual innovation survey asks thousands of senior-level executives for their opinions about this important key to operations success, as well as how they view their own organizations. Some of the results may surprise you.

Of the 1,500 executives surveyed in 2014, 75% reported that innovation is among the top three priorities for their companies; 61% indicated that they spent more on innovation in 2014 than in 2013.

While these numbers are largely consistent with those for 2013, some important differences have emerged. Notably, we saw sharp shifts in the innovation stance of specific industries, a big change in industry mix, and a heightened focus on innovation in rapidly developing economies (RDEs).

Top 20 Innovators for 2014

Since 2005, BCG’s annual survey has revealed the 50 companies that executives ranked as the most innovative. In 2013, the list contained an unprecedented 14 automakers, including nine in the top 20. But in 2014, only nine auto companies reached the top 50, and only four ranked in the top 20.

Among those that made the top 50, only two—both new to the list in 2013—increased in ranking: Tesla Motors jumped 34 places to number seven, and Fiat jumped 11 places to number 32. Overall, the 2014 listing showed more variation in industries, with consumer products, auto, media, and big-data companies all making the cut.

Here’s a look at the top 20 most innovative companies:

Room for Improvement

Despite the high priority and increased spending on innovation, the study showed that results can be elusive. The vast majority of executives (70%) said that their companies’ innovation capabilities are only average—and 13% saw them as weak. It’s clear that executives have the aspiration to raise their innovation game, but how can they get the results they want?

Innovation requires commitment, discipline, strong processes, and a willingness to take risks and fail. Those attributes, especially the last one, are not easily embraced by most corporate cultures. Just 7.6% of the companies in the study had both disruptive ambitions and the innovation capabilities to match.

The report found five interconnected and reciprocally reinforcing characteristics that differentiate strong innovators from the rest of the pack. They:

  1. Commit to innovation as a source of competitive advantage.
  2. Leverage intellectual property to exclude rivals and build markets.
  3. Pursue a portfolio approach for risk taking, where all sources of knowledge are leveraged, corporate governance is strong, and budgets are dedicated for venturing and testing concepts.
  4. Concentrate on products that consumers will embrace rather than the novelty of new technologies.
  5. Build processes for speed and adapt to failure, leading to strong performance.
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