Companies who are strong at innovation are three times more likely to rely on big data analytics and data mining than their counterparts who are less adept at innovating (57% versus 19%). 67% of breakthrough innovators say their big data analytics and data mining efforts are paying off. These and many other findings are from the latest analysis of the world’s most innovative companies of 2014 published last month by
Forbes also has an annual list of the world's most innovative companies you can find here. For a comparison of the methodologies BCG and Forbes use in defining the most innovative companies, please see the section at the bottom of this post.
The 50 Most Innovative Companies Now Include
Key take-aways from the study include the following:
- 75% of the global executives BCG interviewed for the study said that innovation is among the top three priorities of their companies today, with 61% predicting spending in 2014 will be above 2013 levels. The following graphic from the study shows the shift in priorities and spending plans by industry with automotive having the most significant reduction in innovation investment:
- Software is the only industry in which the majority of senior executives responsible for innovation (53%) see big data as having an impact on their ability to innovate in the next three to five years. BCG found that only 41% of their companies however are targeting Big Data as part of their innovation programs. The following graphic compares respondent organizations actively targeting big data in their innovation programs by the expectation of big data delivering a significant impact in three to five years:
- BCG also found that big-data leaders generate 12% higher revenues than those who do not experiment and attempt to gain value from big data analytics. Companies adopting big data analytics are twice as likely as their peers (81% versus 41%) to credit big data for making them more innovative.
- Telecommunications is the only sector that cited mobile as an important top medium-term innovation (56%), and only 36% are targeting it. As of Q1, 2014 70% of Fortune 500 companies had a mobile app and less than 50% had a mobile website. BCG found that the B2B marketplace has been slow to adopt mobility overall as well. The following graphic compares respondent organizations actively targeting mobility in their innovation programs by the expectation of big data delivering a significant impact in three to five years:
Boston Consulting Group's methodology is based on three financial measures including three-year total shareholder return (TSR), three-year revenue growth, and three-year margin growth. Respondents' rankings of the most innovative companies account for 80% of the ranking methodology weighting with 10% allocated to the three-year TSR, and revenue and margin allocated 5% each.
The Forbes methodology is based on the Innovation Premium that is calculated by projecting a company’s income from its existing businesses compared to the net present value (NPV) of those cash flows. Using the Innovation Premium methodology, the base value of the existing business is compared with the current Enterprise Value (EV): Companies with an EV above the base value have an innovation premium built into their stock price. You can read more about the Forbes Innovation premium here. To determine the differences between market capitalization and net present value of cash flows from existing businesses, Forbes uses the HOLT algorithm from Credit Suisse. This algorithm is based on historical and future projected performance of the given firm, as it has been shown to reflect sector identification or industry position. What emerges from the Forbes methodology is a list of innovators quantified by their past performance and potential for future growth. To see the Forbes methodology in detail please visit the post, How We Rank The World’s Most Innovative Companies 2014.
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