 Commentary by Praveen Gupta Subscribe via Email or RSS |  Biography |
December 6, 2007
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Innovative Companies - Most, Best, or Managed |
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The list of Most Innovative companies in Business Week interests me a lot. I do not know what to do with the list. What can one learn from the companies listed on the list? They all look good companies, so are many more companies off the list. I recognize the criteria for ranking most innovative companies included stock performance, revenue growth, profit growth, and patents. My experience shows that patent and stock performance are not very effective measures given that only about 5% of patents are gainfully deployed. I tried to answer the question. Why should a company be innovative? How does innovation help a company? Was innovation systemically utilized or the company hit the home run? What was the return on investment in innovation, or simply return on innovation? Answering these questions I came up with variety of classification, such as Most Innovative, Best Innovation, Innovation Managed, and Return on Innovation. To me the company is most innovative that grows its revenue the most. The company that sold more has to be innovative given the primary purpose of innovation is growth. A company is best innovative when its revenue growth is profitable. The company that manages innovation means its R&D process contributes to its profitable growth. Finally, the return on innovation, where R&D is the major component of a company’s innovation, has to be the profit earned from the revenue growth per its R&D dollar. The following table consisting of the top 25 and a few more using the Business Week data for 2003-2006 period, shows top five companies for the above four categories. I hope it makes sense to you as it does to me. If not, post your thoughts. Love to read your comments:
* Companies using the Business Week’s list of Most Innovative Companies 2007 Most Innovative - Revenue Growth Volume ($) Best Innovative - % Revenue Growth * % Profit Growth Innovation Managed - % Revenue Growth * % Profit Growth/ % of Sales R&D Expense Return on Innovation - Revenue Growth * % Profit/ R&D Expense ($) It is interesting to note that return on innovation for Nokia ($ 0.84) that is twice that of Motorola ($ 0.41). |
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Comments [3] | Permalink |
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| posted by spacecadette [ http://filemp3tune.com ] | December 28, 2007 at 2:39 am |
These innovative companies are well-admired and we are awed by their success and the great return in innovation. It is a little hard to imagine, companies like Motorola and Nokia would stop on their tracks, because people fell into expecting the extraordinary ideas they produce. |
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| posted by Praveen Gupta [ http://accelper.com ] | January 21, 2008 at 7:27 am |
Hello Prashant, I am glad you liked the analysis. I can send you the link to an innovation survey. Best, Praveen |
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