The Boston Consulting Group (BCG) is an American worldwide management consulting firm with 90 offices in 50 countries. The firm advises clients in the private, public, and not-for-profit sectors around the world. It releases an annual ranking of the 50 most innovative companies. The 2016 report can be viewed here.
Its methodology is based on a survey of senior executives who represent a wide variety of industries in every region worldwide, as well as an analysis of select financial metrics. Over the years, the rating methodology has undergone several changes, starting with a single criterion before 2008 (respondents’ picks) which was soon expanded to include three more categories: Total Shareholder Return (TSR), Revenue Growth, and Margin Growth. Respondents’ votes accounted for 80% of the ranking, TSR for 10%, revenue growth as well as margin growth each determined 5%.
In 2015, further criteria were added. Respondents were asked to rank the most innovative companies both inside and outside their industry. Votes for companies within their industry accounted for 30%, votes for companies outside their industry made up 30%, and TSR determined 40%. In 2016, start-ups which had not yet had a public offering were defined as private companies founded after 2001, and a TSR was used which was common for companies that had a market capitalization of $1bn, had an initial public offering from 2010-2012 and were founded after 2001.
The impact of the technological companies is hard to overlook in the new listing. The first 10 places in the ranking are occupied by Apple (1), Google (2), Tesla Motors (3), Microsoft (4), Amazon (5), Netflix (6), Samsung Group (7), Toyota (8), Facebook (9), and IBM (10). The first four positions have not changed compared to the previous year. However, further down the list, serious shifts have taken place. Netflix has fundamentally improved its position, jumping from 21st place in 2015 to 6th. Toyota has lost two places, whereas Facebook has entered the top 10 for the first time. Also, IBM has advanced three positions to 10th place. In positions 10-20 new players have emerged. There several companies have dropped out of the rating altogether. This particularly concerns Yahoo (placed 16th in 2015), whose place has been taken by Uber, Biogen (formerly 17th place) and SoftBank (formerly 14th place).
The research shows that the main difference between the most successful innovators and their weaker peers is in the pursuit of external ideas. Successful innovators are characterized by their analytical approach. 65% claim they find new ideas through social networks and extensive data mining (compared with just 14% for weak innovators). Strong innovators show a diversified approach in relation to how they come up with innovations. For example, 66% say that they find inspiration through external partnerships often or very often (versus just 22% for weak innovators).
Taking a closer look at energy companies, one can hardly fail to notice that many prominent names have dropped out of the 2016 rankings altogether. Big companies such as BP and ExxonMobil featured in the lists from 2006 to 2008 (BP) and from 2008 to 2009 (ExxonMobil), as well as in 2013 (both). In all their years of participating in the rankings, neither of these two major players in the oil and gas industry managed to enter the top 10. With BP, the change in the four ranking parameters, Revenue, EBIT, TSR, and R&D Spending amounted to 0.9%, 23.6%, 23.2%, and 4.9% in 2013. ExxonMobil fared equally badly, with Revenue, EBIT, TSR, R&D Spending scoring -7.2%, -19.2%, 20.2%, and 0.2%. Royal Dutch Shell received bottom scores in 2009, where it entered the ranking at number 50 for the first time, dropped out of the list in 2010, and was eventually able to rejoin it at number 25 in 2012. From 2009 until 2014, the company managed to climb steadily to 27th place, with Revenue, EBIT, TSR, R&D Spending change scores amounting to -6.7%, -17.1%, -1.4%, and -7.3% in 2014. Reliance Industries featured in the ranking from 2008 to 2010, having entered it at number 19, climbing to number 15 in 2009, and plummeting to number 33 in 2010. The other companies, China Petroleum, Iberdrola and Petrobras Brasileiro, each featured in the rankings for only one year (China Petroleum in 2012, Petrobras Brasileiro in 2010, Iberdrola in 2009) occupying bottom places on the list. None of these companies is represented in the current rating.
This year's list is divided into three continents: 34 companies on the list are from the US, 10 are from Europe, and 6 from Asia. This shows that a significant shift toward North American companies has taken place, which has captured 68% of the top 50, as compared to 44% in 2013. This marks a steady increase for US companies which had 29 companies on the list the previous year.