Apple, Google, Microsoft, Amazon, and Samsung top the list of the world’s 50 most innovative companies, said The Boston Consulting Group (BCG), a global management consulting firm, in a new report.

BCG surveyed over 1,000 senior innovation leaders from a wide variety of countries and industries for its report titled “The Most Innovative Companies 2018: Innovators Go All In on Digital”.

Eleven of the 50most innovative companies—including seven of the top ten—are digital natives—that is, they have always been digital businesses with digital offerings. Two digital natives pushed their way into the top ten this year: Alibaba Group, which joined the top 50 for the first time, and Uber.

Among the top 20, Tencent is new to the list, and Airbnb, SpaceX, Cisco Systems, Orange, and Marriott moved up significantly. Overall, 12 companies either joined the list or returned to it in 2018.Most companies on the list have built digital technologies into their innovation programs.

One standout takeaway from this year’s survey is that companies are focusing significantly more than in the past on four elements of digital innovation: big data analytics, the fast adoption of new technologies, mobile products and capabilities, and digital design. Meanwhile, other areas of innovation—such as new products and new services—have become less of a focus for innovation executives.

“Slow movers on digital innovation risk being left behind by those that invested sooner and more decisively,” said Michael Ringel, a BCG senior partner and a co-author of the report.

“Competitive advantage increasingly depends less on products and more on the digitally enabled services that surround them. From today’s predictive maintenance offerings for industrial goods to tomorrow’s Internet of Things, digital strategists need to explore and master new innovation domains. And as more advanced technologies, such as artificial intelligence, enter the mainstream, the stakes will keep getting higher.”

Strong innovators are doubling down on digital investments and capabilities

The report describes a gap, which may continue to widen, between strong innovators and weak innovators in terms of their ability to make the most of digital technology. For example, while 79 per cent of self-defined strong innovators reported that they have properly digitized innovation processes, only 29 per cent of weak innovators made the same claim.

More than one-third of survey respondents said that digitized processes aren’t really doing much for their company—a sign that they haven’t yet found a way to embrace the new possibilities. Moreover, the largest gaps between strong and weak innovators occur with regard to the embrace of digital-innovation techniques.

Strong innovators are disproportionately investing in digital technologies. For example, 43 per cent of strong innovators are actively investing in big data versus 26 per cent of weak innovators; 42 per cent of strong innovators are actively investing in mobile capabilities versus 16 per cent of weak innovators; and 39 per cent of strong innovators are actively investing in digital design versus 14 per cent of weak innovators.  

Moreover, strong innovators were much more likely to report that their organizations embrace key elements of the agile product development approaches that characterize digital leaders. Eight out of 10 strong innovators reported that they take steps to bring together, in one place, cross-functional teams that include people with a full spectrum of relevant skills. By contrast, at weak innovators, only 35 per cent of teams work in the same place, only 41 per cent have all the relevant functions represented, and only 43 per cent contain people with all the relevant skills.

“Digital technologies present a trifecta of innovation challenges: they blur boundaries and invite new competitors, they increase the speed of innovation, and they lower the cost at which new competitors can enter a market to seize share,” said Hadi Zablit, a BCG senior partner and a co-author of the report.

“Traditional companies, no matter how large, can’t afford to pursue innovation, R&D, and product development in traditional ways. To do so cedes competitive advantage to the disruptors. All companies need to determine their own digital strategies and start playing the innovation game by today’s rules.” – TradeArabia News Service