Pandemic widens the gap between innovative companies and the rest
The covid-19 pandemic has demonstrated the importance of innovation excellence in turbulent times, according to the latest Boston Consulting Group (BCG) report. The most active in this area outperformed the market average in profitability. The survey also identified significant regional differences, with China and the United States leading the way.
The report ‘Most Innovative Companies 2021: Overcoming the Innovation Readiness Gap’, reveals that barely 20% of the world's companies have developed the high-performance innovation systems needed to transform their ambitious aspirations into real results.
This is compounded by large differences in level of readiness between sectors. Those companies that are committed to innovation (backing up their priorities with investment) and prepared (putting in place the necessary practices and platforms) are up to four times more likely to outperform their competitors in terms of revenue generated by new products, services and business models.
“Innovative companies have reaped the rewards of their investment in the context of the current crisis, both in shareholder value and in terms of social impact,”, states Ramón Baeza, managing director and senior partner at BCG and one of the authors of this report.
This year's ranking of the 50 Most Innovative Companies underscores the importance of commitment and preparation. In addition to 33 holdouts from last year, the 2021 list includes 12 companies that have returned to the top 50 after at least one year's absence, and five companies making their debut on the list.
The tech and software continue to preside over the ranking (Apple, Alphabet, Amazon, Microsoft, Tesla). However, this year, pharmaceuticals have made a stellar appearance, with nine of them making the list, which is triple the 2020 number. Abbott Labs, Moderna and AstraZeneca are ranked for the first time.
The differences regarding readiness versus innovation are also reflected in the performance, as evidenced by the shareholder returns generated by companies that have been part of BCG's ranking in the past.
The United States continues to lead the ranking with 27 companies in the top 50, two more than last year, driven by technology, software and pharmaceutical companies.
Europe, due to its relative lack of technology and software companies, only has 11 companies on the list, four fewer than last year. However, it maintained its performance in other sectors such as automotive, medical technology, pharmaceuticals, industrials and fashion.
Although China has achieved only four positions in the top 50, more and more companies from this country are approaching the doors of the top 50;s companies that are approaching the gates of the Top 50 and will enter the list in the coming years, when they begin to compete more visibly in global markets.
On the other hand, the top fifty companies in innovation tend to have greater diversity among their management teams, as shown by the examples of Microsoft, Alibaba, Cisco, Philips and Novartis.
This year, the analysis reflects aa worrying readiness gap. On the positive side, 75% of companies cite innovation as one of their top three priorities, up 10%, the largest year-on-year increase in the report's three-year history. Sixty percent intend to step up their investment in innovation, a third by more than 10%. However, 80% fall short of BCG's benchmark in terms of the multi-dimensional readiness of their innovation systems.
The report suggests that concentrating efforts in two areas can help narrow this gap: increasing the degree of senior management commitment and creating a stronger link between product and sales teams
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