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The World’s MOST Innovative Companies

US weekly magazine BusinessWeek teamed up with The Boston Consulting Group to produce the second annual ranking of the world’s 100 most innovative companies. More than 1,000 senior managers responded to the global survey, making it the deepest management survey to date on this critical issue.

The BusinessWeek-BCG survey also focuses on the major obstacles to innovation that executives face today. While 72% of the senior executives in the survey named innovation as one of their top three priorities, almost half said they were dissatisfied with the returns on their investments in that area.

A lack of coordination is the second-biggest barrier to innovation, according to the survey’s findings. But collaboration requires much more than paying lip service to breaking down silos. The best innovators reroute reporting lines and create physical spaces for collaboration. They team up people from across the org chart and link rewards to innovation. Innovative companies build innovation cultures. “You have to be willing to get down into the plumbing of the organization and align the nervous system of the company,” says James P. Andrew, who heads the innovation practice at BCG

Apple Computer Inc. heads the rankings. BusinessWeek reports innovation consultant Larry Keeley of Doblin Inc., as saying that Apple used no fewer than seven types of innovation. They included networking (a novel agreement among music companies to sell their songs online), business model (songs sold for a 99 cents each online), and branding (how cool are those white ear buds and wires?). Consumers love the ease and feel of the iPod, but it is the simplicity of the iTunes software platform that turned a great MP3 player into a revenue-gushing phenomenon.

THE WORLD’S MOST INNOVATIVE
COMPANIES

2006 Rank	Company	Margin Growth 1995-2005 %	Stock Returns 1995-2005 %
1	Apple	7.1	24.6
2	Google	NA**	NA**
3	3M	3.4	11.2
4	Toyota	10.7	11.8
5	Microsoft	2.0	18.5
6	General Electric	5.7	13.4
7	Procter & Gamble	4.4	12.6
8	Nokia	0.0	34.6
9	Starbucks	2.2	27.6
10	IBM	-0.7	14.4
11	Virgin	NA**	NA**
12	Samsung	-4.5***	22.7
13	Sony	-11.0	5.1
14	Dell	2.0	39.4
15	IDEO	NA**	NA**
16	BMW	9.1	14.2
17	Intel	-0.3	13.8
18	eBay	13.0***	NA**
19	IKEA	NA**	NA**
20	Wal-Mart	1.9	16.2
21	Amazon	25.0***	NA**
22	Target	7.4	25.2
23	Honda	8.0	12.9
24	Research In Motion	57.0***	NA**
25	Southwest	-0.1	13.9
26	Porsche	NA**	33.1
27	Genentech	5.7	29.3
28	Cisco	-2.2	15.2
29	Nike	0.0	10.7
30	Motorola	0.7	3.8
31	DaimlerChrysler	4.8***	-1.8
32	Infosys	3.0***	73.6
33	Ryanair	2.7	28.4
34	Pixar	24.2	13.8
35	SonyEricsson	NA**	NA**
36	Whole Foods	4.1	36.6
37	Capital One	-2.1	27.4
38	Tesco	-0.3	16.2
39	Danone	4.7	13.3
40	BP	-0.2	12.3
41	PepsiCo	4.9	10.2
42	Hewlett Packard	-6.6	7.1
43	Disney	-3.7	2.9
44	jetBlue	NA**	0.9
45	W.L. Gore & Associates NA**	NA**
46	Skype Technologies	NA**	NA**
47	FedEx	4.3	18.9
48	Bang & Olufsen	2.4	16.3
49	Renault	23.7	14.8
50	L’Oreal	2.3	14.2
51	ExxonMobil	5.8	13.6
52	Siemens	2.0***	12.6
53	Johnson & Johnson	3.6	12.6
54	Shell	2.4	11.0
55	Pfizer	1.8	9.9
56	Singapore Airlines	-5.8	7.7
57	Nissan	30.2	5.4
58	DuPont	-1.8	4.9
59	Zara	NA**	NA**
60	TiVo	NA**	-24.6
61	Yahoo!	NA**	42.9
62	Macquarie Bank	NA**	35.0
63	Audi	9.2	30.1
64	Harley Davidson	7.1	22.3
65	Progressive Insur	1.1	22.0
66	Volvo	-2.7	17.1
67	Philips Electronics	3***	16.2
68	ING Bank	3.0	15.7
69	Nestle	1.2***	13.9
70	Boeing	0.1	7.6
71	Matsushita Electric Industrial	-1.4	3.9
72	easyJet	0.0***	3.7
73	UPS	3.4	3.6
74	Coca-Cola	1.3	2.4
75	Cirque du Soleil (tied)	NA**	NA**
75	McKinsey (tied)	NA**	NA**
75	Woolworths (tied)	5.6***	NA**
78	Hutchison Telecommunications	NA**	88.1
79	Salesforce.com	NA**	58.4
80	ACS	NA**	35.1
81	ITC	NA**	25.4
82	Time Warner	8.1	22.3
83	Danaher	2.7	21.7
84	Costco Wholesale	1.7	20.7
85	LG Electronics	NA**	19.1
86	bankinter	NA**	18.3
87	Amgen	-0.3	18.2
88	Caterpillar	0.3	17.5
89	Accenture	NA**	16.3
90	SAP	1.3	15.7
91	SK Telecom	1.5	15.7
92	Home Depot	4.3	14.9
93	LVMH	-2.6***	12.3
94	Gap	-1.7	11.6
95	Unilever	5.0***	11.2
96	Goldman Sachs	-4.9***	10.9
97	John Deere & Co.	-1.1	8.9
98	Whirlpool	2.0	7.2
99	Entel	NA**	6.2
100	McDonald’s	-2.4	5.2

Source: BusinessWeek April 24, 2006 Issue

*
Insufficient data

**
Based on fewer than 10 years of data

2006 RANK: In the 2006 rankings, ties were broken by comparing 10-year annualized
total shareholder returns between 1995 and 2005. In ties between a public and a
private company, the public company was favored.
MARGIN GROWTH: Annualized based on 1995-2005 fiscal year earnings before interest and
taxes as percent of revenues.

STOCK RETURNS: Annualized, Dec. 29, 1995 to Dec. 30, 2005, price appreciation and
dividends.

DATA:
Analysis and data provided in collaboration with the innovation practice of The
Boston Consulting Group. Also, Standard & Poor’s Compustat® data
and company reports.

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The World’s MOST Innovative Companies

* Insufficient data

** Based on fewer than 10 years of data

STOCK RETURNS: Annualized, Dec. 29, 1995 to Dec. 30, 2005, price appreciation and dividends.

DATA: Analysis and data provided in collaboration with the innovation practice of The Boston Consulting Group. Also, Standard & Poor’s Compustat® data and company reports.

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*
Insufficient data

**
Based on fewer than 10 years of data

STOCK RETURNS: Annualized, Dec. 29, 1995 to Dec. 30, 2005, price appreciation and
dividends.

DATA:
Analysis and data provided in collaboration with the innovation practice of The
Boston Consulting Group. Also, Standard & Poor’s Compustat® data
and company reports.