Abstract
In this paper, the authors analyze global innovation rankings as provided by Strategy& over the last 7 years. They first explore the raw ranks and report variations in year-over-year (YOY) ranks for top ten ranking companies. The normalized innovation ranks are then used to calculate the Innovation Power (inP) to assess if these companies maintained or improved their ranks over time. An interesting classification of innovations for the top 10 emerges from this analysis. The constant top innovators were Apple and Google. The rising innovators were Tesla, 3M and Facebook. Other classifications are discussed. The authors propose a non-statistical predictive model, which is reminiscent of a kinematic model using a novel concept of Innovation Momentum (inM) and predict that for 2017, Apple and Google will hold their first and second place, followed by Amazon, Samsung and Tesla. Facebook is also expected to rise in its rank. Companies that reach out and serve end-user needs with service innovations appear rising in ranks, far more than R&D intensive patent filing innovators in these ranks. Tesla is an interesting top ranker to watch. There are implications for software focused companies gaining importance given their flexibility over hardware dominant ones. Some bottom innovators are further declining. Although the rankings are perception-based, there is a pattern that implies it is not random or merely subjective. The analysis highlights the need for leaders and consultants to put in perspective the complex management problem of measuring innovation.
Highlights
As strategically important and as commonly used as it is, the definition of innovation remains vague and muddy in most cases
We introduce for the first time the terms Innovation Power and Innovation Momentum to qualitatively describe rank trends and draw our conclusions on why variations are seen in these rankings and whether the trends have scope for predictability of future ranks
Should Google start realizing significant reveand IBM. These are all large, global and stable nues from its mobile operating system, applications, companies with headquarters in USA (9 compa- software and hardware devices, something it has nies), and South Korea (1 company). This list of so far consistently failed to achieve despite its best rankers clearly puts USA in the position of leader- attempts, e.g. Google Glass, it might be able to ship with innovation, and surprisingly there is no rise to rank 1
Summary
As strategically important and as commonly used as it is, the definition of innovation remains vague and muddy in most cases. Innovation is usually measured by R&D intensity, number of patents granted and number of knowledge workers involved It is often regarded as the exclusive realm of scientists and engineers that are dedicated to changing the world with their creativity and inventiveness. Innovation reflects a more “strategic intent” (Prahalad, 1989) and takes a more market-pull approach It is tightly linked with the outcome, as opposite to the outputs or the process, which is the successful commercialization of inventions and other intellectual property to gain a strong competitive advantage. This business model-based, market-driven definition of innovation has been further expanded by Gary Hamel (Hamel, 1998) and Henry Chesbrough (Chesbrough, 2010). All these definitions of innovation revolve around a “multi-stage process whereby organizations transform ideas into new/improved products, service or processes, to advance, compete and differentiate themselves successfully in their marketplace” (Baregheh, Rowley, & Sambrook, 2009)
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