It’s April again, and that means it’s time for the annual Boston Consulting Group’s innovation survey. The report has a lot of valuable information, but I’ll start with their ranking of the most innovative global companies:
- LG Electronics
- BYD Company
- General Electric
Respondents’ votes counted for 80% of the weighted rankings, shareholder returns 10%, revenue and margin growth 5% each.
Apple and Google have held the top two spots for four years now. BYD Company is the surprise newcomer on the list, a Chinese company that makes automobiles and rechargeable batteries. LG moved from 27th in 2009 up to 7th. Ford moved from 31st to 13th.
Now for the more provocative part of the report, which is subtitled “a new world order” because BCG believes that RDEs (rapidly developing economies) “are in the ascendancy and appear poised to put a major dent in the major economies’ self image and position” (p. 18). The projected growth in China, India, and Brazil, as well as other countries, is far greater than that projected for the mature economies. How are they building innovation competitiveness?
- investing in public education, particularly in STEM areas
- large, permanent R&D tax credits
- immigration policy that favors entrepreneurs and preferred expertise (and is starting to attract returning expatriates from Europe and the U.S.)
Business leadership in these countries is also committed to innovation. Eighty two percent of respondents in Brazil, India, and China (BIC) said innovation was in the top three priorities (92 percent in China!) versus 68 percent of respondents from mature economies. Eighty five percent of BIC respondents plan to increase innovation spending in 2010, versus 53 percent from mature economies.
The take-home message? “Becoming better at innovation is probably the single most important thing you can do this year.” (p. 20)
The top ten innovation friendly companies, according to a recent Boston Consulting Group report:
This according to a recent study by Boston Consulting Group and the National Association of Manufacturers. The study ranked 110 countries on a variety of factors including tax policies, education systems, infrastructure, and number of patents issued.
Of course, the devil is in the details. One of the variables is “R&D tax credit” (which I agree with); another is “Taxation level” (which I’m more skeptical about…do lower taxes result in more innovation? The answer depends on your political leanings). And some of the factors are not defined, like “Trade policy” (which trade policies do they count as “innovation favorable”?) “IP policy” (ditto) and “Immigration policy” (ditto). But they have captured a broad range of factors, from “Workforce quality” to “Infrastructure quality.”
Based on interviews with 1,000 executives, they came up with a list of the top strategies for generating innovation. Two of them are collaborative initiatives that I advocate in my book GROUP GENIUS: (1) Use outside sources of ideas, and (2) partner with suppliers for new ideas. These executives said that the single most critical factor was finding a skilled, educated work force. Many of the executives were critical of today’s schools. The number one recommendation of the report was “Strengthen the work force” by improving education. Regardless of the details, we can all agree on that.
I’ve been cleaning out my file cabinets to get ready for an upcoming move to a new building. Buried in a long-forgotten file folder, I found a 1999 “Innovation Survey” by Price Waterhouse Coopers. Many readers of my blog already know that just about every consulting firm now publishes an annual innovation survey; the best known are Boston Consulting Group (published in connection with Business Week magazine) and Booz Allen Hamilton (published in their own magazine, Strategy+Business). The amazing thing about the 1999 PWC report is that it is right on the money. Remember my blog posting from last week, about Gary Hamel’s “Inventing the Future of Innovation” conference? Just about every recommendation that we came up with was already in this 1999 report. Here’s a sampling:
* The critical role of knowledge management in gathering, discussing, and disseminating new ideas from both inside and outside the firm
* Innovation can’t be limited to a separate group, like an R&D lab; it has to be everyone’s responsibility and be built into everyday ways of working
* Diverse teams generate better ideas
* The most critical element of an innovative culture is trust between people that will enable them to share ideas freely
* Survey respondents fall into two management styles: managed (planned, systemic) and open (radical, discontinous initiatives that have no obvious connection with past successes; balancing the consensual and the anarchic). Of the top 20% of performers in their survey, 75% displayed the open style; of the top 5%, all displayed the open style.
If you’ve read my book GROUP GENIUS, you know that I wasn’t surprised by any of this. But what is surprising is that this knowledge has been around for so long, for at least ten years, and the majority of companies still aren’t paying attention. If we all get together in ten more years for another “future of management” conference, it would be pretty depressing if nothing in the corporate world has changed.
Expert consultants to the report included: Mark Brown and Dominic Swords of Henley Management College; Scott Isaksen, Brian Dorval, and Ken Lauer of the Creative Problem Solving Group at Buffalo; Gerard Puccio of the Center for Studies in Creativity; and Chris Dewberry of Birkbeck College. The report originated in the U.K. and has a distinctly U.K. flavor (or “flavour”?) but the findings are valid in every region.