Forbes magazine has recently published a list of the most innovative companies in the world. They construct an ‘Innovation Premium’ to compile the list. It is calculated first by projecting a company’s income (cash flows, in this case) from existing businesses, plus anticipated growth from those businesses, and look at the net present value (NPV) of those cash flows.
They then compare the NPV of cash flows from existing businesses with a current market capitalization: Companies with a current market cap above the NPV of cash flows have an innovation premium built into their stock.
The top 5 companies on their list are:
1. Salesforce.com
2. Alexion Pharmaceuticals
3. Amazon
4. Red Hat
5. Baidu (China)
On this basis they rate the most innovative companies in Europe as:
1. ARM Holdings – UK
2. Pernod Ricard – France
3. Danone – France
4. Essilor – France
5. Reckitt Benckiser – UK
6. Diageo – UK
7. L’Oreal – France
8. Beiersdorf – Germany
9. Dassault Systems – France
10. Technip – France
The full list and article is here.
The methodology is too financial and mechanical for my liking and the list omits recognised European innovators such as Virgin Group, BMW, Lego. Zara and Vodafone. Who do you think should be on the list?
The accompanying article on How Innovative Leaders Maintain Their Edge is informative. It shows that innovative leaders focus on people, processes and philosophies to differentiate them from the pack. The authors list 5 behaviours of these leaders as follows; Innovators ask provocative questions that challenge the status quo. They observe the world like anthropologists to detect new ways of doing things. They network with people who don’t look or think like them to gain radically different perspectives. They experiment relentlessly to test new ideas and try out new experiences. Finally, these behaviors trigger new associations which let them to connect the unconnected, thereby producing disruptive ideas
image credit: diverse business image from bigstock
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Paul Sloane writes, speaks and leads workshops on creativity, innovation and leadership. He is the author of The Innovative Leader and editor of A Guide to Open Innovation and Crowdsourcing, both published by Kogan-Page.
Joe Egan has made tens of millions of Euro with an invention that turns slurry (cow urine and manure) into fertilizer. If his company is not #1 on the list, the list is invalid, IMO.