The 50 Most Innovative Companies of 2015

Tesla jumped from 41rst in 2013 to 3rd this year, a 38 position increase.

• Apple AAPL +2.59% and Google GOOGL -0.77% hold on to first and second rankings this year.

• 79% of senior executives ranked innovation as either the top-most priority or a top-three priority at their company.

• 50% of senior executives predict technology platforms will provide the greatest innovative impact to their industries over the next three to five years.

These and many other findings are from the latest analysis of the world’s most innovative companies of 2015 published today by Boston Consulting Group (BCG). The Boston Consulting Group ’s study, The Most Innovative Companies 2015: Four Factors That Differentiate Leaders is accessible here. You can download the PDF of the study methodology and results here (free, no opt-in, 26 pp.). BCG has been publishing this study since 2005, basing it on interviews with 1,500 senior executives globally. Please see the report for a complete description of the methodology.

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.

Key take-aways from the study include the following:

• The 50 most innovative companies now include Gilead Sciences GILD -0.96%, Biogen, Marriott, Netflix NFLX +2.34%, AXA, Allianz, Tata Motors, Fidelity, Visa, Roche, NEC, BT Group and MasterCard for the first time. Apple retains the top spot on the list for the eleventh year in a row, with Google holding the 2nd spot two years in a row. The 50 most innovative companies of 2015 are shown below:

• 79% of respondents ranked innovation as either the top-most priority or a top-three priority at their company. This is the highest percentage of respondents ranking innovation as a high priority since BCG began asking this question in 2005. The following graphic compares where innovation and product development tank among respondent company’s top strategic priorities over the last ten years.

• 50% of respondents believe technology platforms will have the most impact on their industries over the next three to five years. 33% believe Big Data will have the greatest impact on their industries in the same time period. The following graphic provides an analysis of the areas where innovation and product development will have the most impact on respondents’ industries over the next three to five years.

Comparing Boston Consulting Group and Forbes Methodologies

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. BCG interviews 1,500 senior executives representing a wide variety of industries in every region. BCG also made two changes this year to their methodology, asking respondents to rank the most innovative companies both within and outside their own industry, and applying five-year growth in TSR to track performance over a longer time horizon.

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 2015.

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