The Innovation Index Strikes Back in 2009

The Innovation Index had a remarkable showing in 2009, gaining 48.65%, and beating S&P 500, Dow Jones and NASDAQ. 17 of the top 20 innovators were in the green. 3 of the top 20 innovators, including Amazon.com (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) had over 100% gains. 16 of the top 20 innovators had double-digit gains. eBay (NASDAQ: EBAY) and Research In Motion (NASDAQ: RIMM) gained over 65% each. America Movil (NYSE: AMX), IBM (NYSE: IBM) and Microsoft (NASDAQ: MSFT) gained over 50% each. Only 3 innovators were in the red.

2009 proved that the most innovative companies in USA are not only resilient, but bounce back bigger and faster compared to the general market. The Top 20 innovators performed extremely well, delivering explosive growth in business, profits, innovations, and stock performance.

How will the Innovation Index perform in 2010? Check back in April, 2010 for the quarterly report of the Innovation Index.

Learn about Apple's innovation strategy... How does Apple innovate, and what makes Apple the #1 innovative company in the world? Learn more...

Selected references:
Leading Business Innovation eBook & Resource Kit
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

The World's Most Respected Companies - Apple is #1

Show a Little Respect, Please...

"In our (Barron's) sixth annual survey, money managers indicated the degree to which they respect—or don’t—the world’s 100 largest companies (by total market value as of Dec. 31, 2009). The most-respected companies tend to retain that distinction, though some of the least-respected names might surprise you."

Top 10 Most Respected companies in the world, according to Barron's, include:
Apple (NASDAQ: AAPL), Johnson & Johnson (NYSE: JNJ), Procter & Gamble (NYSE: PG), IBM (NYSE: IBM), Berkshire Hathaway, Toyota Motor (Japan), McDonald’s (NYSE: MCD), Google (NASDAQ: GOOG), Cisco Systems (NASDAQ: CSCO) and Amazon.com (NASDAQ: AMZN).

There were more than 50 global companies that are highly respected (outside the U.S.A.). These include:
Toyota Motor, Honda Motor, Nestlé, Novartis, Bayer, GlaxoSmithKline, InBev, Roche Holding, BHP Billiton, Siemens, BASF, SAP, Samsung Electronics, Unilever, BP, Daimler, Sanofi-Aventis, LVMH Moet Hennessy LV, Royal Dutch Shell, L’Oréal, Banco Santander, Suncor Energy, Statoil, Petroleo Brasileiro, Commonwealth Bank of Australia, AstraZeneca, Telefonica, Westpac Banking, Vodafone Group, Credit Suisse, HSBC Holdings, Total, Rio Tinto, Deutsche Telekom, Vale S.A., Allianz, China Mobile, E.ON, NTT DoCoMo, BG Group, BNP Paribas, Anglo American, Electricite de France, ENI, Mitsubishi UFJ Financial, Banco Bilbao Vizcaya, GDF Suez, Reliance Industries, ArcelorMittal, France Telecom, Industrial & Commerce Bank of China, UniCredit, British American Tobacco, CNOOC, China Construction Bank, UBS, Sberbank Rossia, Rosneft and Gazprom.

The Complete List of Top 100 Most Respected Companies:

’10 ’09 Company Mean-Score HighlyRespect Respect SomewhatRespect Don’tRespect
1 4 Apple 4.22 67% 26% 4% 1%
2 1 Johnson & Johnson 4.07 59% 34% 6% 0%
3 3 Procter & Gamble 3.82 46% 47% 3% 1%
4 14 IBM 3.7 49% 37% 11% 1%
5 2 Berkshire Hathaway 3.69 54% 30% 11% 4%
6 8 Toyota Motor (Japan) 3.67 47% 33% 13% 1%
7 7 McDonald’s 3.67 41% 43% 10% 0%
8 23 Google 3.66 50% 34% 14% 1%
9 10 Cisco Systems 3.65 43% 39% 10% 1%
10 NR Amazon.com 3.55 40% 43% 9% 3%
11 NR Honda Motor (Japan) 3.52 36% 39% 13% 0%
12 5 Wal-Mart Stores 3.49 41% 41% 17% 0%
13 9 Coca-Cola 3.48 31% 54% 9% 0%
14 16 Intel 3.48 31% 56% 9% 0%
15 13 3M 3.48 33% 54% 7% 1%
16 19 Nestlé (Switzerland) 3.44 29% 53% 9% 0%
17 12 PepsiCo 3.43 31% 50% 11% 0%
18 6 Exxon Mobil 3.43 37% 50% 10% 3%
19 11 United Parcel Service 3.39 31% 50% 13% 0%
20 20 Walt Disney 3.29 29% 56% 11% 1%
21 26 JPMorgan Chase 3.26 39% 36% 20% 3%
22 22 Microsoft 3.26 36% 44% 14% 4%
23 24 United Technologies 3.25 29% 46% 17% 0%
24 15 Abbott Laboratories 3.25 27% 50% 16% 0%
25 17 Hewlett-Packard 3.18 29% 46% 17% 1%
26 27 Schlumberger 3.09 29% 43% 21% 1%
27 30 Novartis (Switzerland) 2.9 20% 46% 19% 3%
28 53 Qualcomm 2.81 17% 46% 26% 0%
29 25 Amgen 2.78 20% 44% 24% 3%
30 NR Goldman Sachs 2.76 39% 24% 19% 16%
31 45 Bayer (Germany) 2.69 14% 44% 24% 1%
32 42 Visa 2.69 19% 44% 27% 3%
33 32 Merck 2.64 16% 50% 27% 3%
34 NR Royal Bank of Canada 2.58 14% 43% 30% 1%
35 31 Chevron 2.55 14% 49% 27% 4%
36 38 GlaxoSmithKline (U.K.) 2.53 6% 56% 23% 1%
37 NR Anheuser-Busch InBev (Belgium) 2.48 17% 29% 36% 1%
38 41 Roche Holding (Switzerland) 2.47 11% 43% 29% 3%
39 39 Oracle 2.39 11% 49% 29% 6%
40 51 BHP Billiton (Australia) 2.39 10% 37% 31% 1%
41 64 Siemens (Germany) 2.38 6% 50% 23% 4%
42 NR BASF (Germany) 2.36 6% 49% 27% 3%
43 54 SAP (Germany) 2.34 13% 34% 31% 4%
44 48 Samsung Electronics (S. Korea) 2.33 9% 44% 29% 4%
45 35 Unilever (Netherlands) 2.33 10% 37% 31% 3%
46 28 ConocoPhillips 2.32 10% 40% 37% 1%
47 62 BP (U.K.) 2.28 7% 46% 37% 1%
48 NR Daimler (Germany) 2.28 16% 26% 37% 4%
49 21 Wells Fargo 2.24 11% 43% 37% 6%
50 67 Sanofi-Aventis (France) 2.13 4% 44% 33% 4%
51 47 Verizon Communications 2.1 10% 43% 33% 10%
52 NR LVMH Moet Hennessy LV (France) 2.05 3% 41% 33% 4%
53 61 Royal Dutch Shell (U.K.) 2 6% 34% 43% 3%
54 55 Pfizer 1.99 9% 40% 37% 10%
55 75 L’Oréal (France) 1.98 7% 33% 39% 6%
56 77 Banco Santander (Spain) 1.97 9% 33% 40% 7%
57 NR Suncor Energy (Canada) 1.97 9% 26% 46% 3%
58 66 Statoil (Norway) 1.95 3% 36% 36% 4%
59 57 Petroleo Brasileiro (Brazil) 1.93 6% 34% 40% 6%
60 NR Commonwealth Bank of Aus. (Australia) 1.93 1% 39% 36% 4%
61 52 AstraZeneca (U.K.) 1.9 3% 37% 37% 6%
62 60 Occidental Petroleum 1.89 9% 29% 43% 7%
63 59 Telefonica (Spain) 1.85 3% 31% 49% 1%
64 NR Westpac Banking (Australia) 1.82 3% 31% 41% 4%
65 70 Vodafone Group (U.K.) 1.8 1% 36% 44% 4%
66 NR Credit Suisse (Switzerland) 1.77 7% 27% 47% 7%
67 63 HSBC Holdings (U.K.) 1.75 9% 24% 51% 7%
68 65 Total (France) 1.73 4% 30% 44% 7%
69 56 Philip Morris Intl. 1.72 11% 26% 33% 17%
70 NR Rio Tinto (U.K.) 1.71 3% 30% 46% 6%
71 78 Deutsche Telekom (Germany) 1.7 3% 30% 41% 7%
72 NR Vale S.A. (Brazil) 1.68 3% 24% 50% 3%
73 83 Allianz (Germany) 1.67 3% 27% 46% 6%
74 43 General Electric 1.64 11% 29% 39% 20%
75 68 China Mobile (China) 1.58 4% 27% 41% 11%
76 73 E.ON (Germany) 1.56 1% 23% 49% 4%
77 80 NTT DoCoMo (Japan) 1.55 1% 24% 47% 6%
78 NR BG Group (U.K.)* 1.54 3% 20% 46% 6%
79 NR BNP Paribas (France) 1.52 3% 24% 40% 10%
80 NR Anglo American (U.K.) 1.48 0% 21% 53% 3%
81 91 Electricite de France (France) 1.43 0% 20% 57% 3%
82 87 ENI (Italy) 1.41 0% 21% 50% 6%
83 82 Mitsubishi UFJ Financial (Japan) 1.39 0% 24% 49% 9%
84 58 AT&T 1.38 4% 26% 51% 16%
85 88 Banco Bilbao Vizcaya (Spain) 1.36 1% 19% 51% 7%
86 94 GDF Suez (France) 1.33 1% 21% 43% 11%
87 92 Reliance Inds. (India) 1.29 0% 20% 51% 9%
88 NR ArcelorMittal (France) 1.21 0% 20% 49% 11%
89 90 France Telecom (France) 1.18 1% 14% 56% 10%
90 96 Indust. & Commer. Bank of China (China) 1.11 0% 21% 37% 17%
91 NR UniCredit (Italy) 1.11 0% 11% 59% 7%
92 89 British Amer. Tobacco (U.K.) 1.11 3% 17% 41% 19%
93 98 Bank of America 1.06 6% 19% 44% 27%
94 93 CNOOC (China) 1.04 3% 14% 44% 19%
95 97 China Construction Bank (China) 1 0% 19% 44% 19%
96 99 UBS (Switzerland) 0.93 4% 16% 39% 27%
97 NR Sberbank Rossia (Russia) 0.4 0% 6% 41% 29%
98 NR Rosneft (Russia) 0.32 0% 7% 36% 33%
99 100 Gazprom (Russia) 0.07 0% 4% 36% 43%
100 NR Citigroup -0.21 0% 4% 30% 63%

NR=Not Ranked.
Source: Barron's

"John Cregan, veteran money manager at Hotchkiss Associates, a unit of United Capital Financial Advisers, says he admires Apple because the company "is at the top of the list of seeing around corners. They aren't out there trying to find out what their customers want, but saying rather, 'Look at this advancement in technology. It enables us to do this. You might not want it yet or know what to do with it, but you will want it and we are going to build it."

Learn about Apple's innovation strategy... How does Apple innovate, and what makes it the #1 innovative company in the world? Learn more...

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

References:
Barron's: http://online.barrons.com/article/SB126601896024845345.html

10 Initiatives using the crowd to generate new ideas

The crowd has been used for idea generation for a very long time with idea boxes, surveys and various competitions and awards. Early examples were the reward offered by the British government in 1714 for a simple and practical method for the precise determination of a ship's longitude, with over £100000 given in the form of different encouragements and awards, or the Orteig Prize of $25000 won by Charles Lindbergh offered by hotel owner Raymond Orteig in 1919 to the first allied aviator to fly non-stop from New York City to Paris or vice-versa.

Recently there have been a growing number of initiatives combining awards, the "American Idol" concept with social networking platforms for idea generation, marketing and recruitment purposes. Below are 10 examples of traditional and non-traditional corporate initiatives:

Cisco I-Prize was an idea competition where the winning team got the opportunity to be hired by Cisco to found a new business unit and share a $250000 signing bonus. Cisco also committed it may invest approximately $10 million over three years to staff, develop and go to market with a new business based on the winning idea. Ideas were posted and commented by others and refined by the community, forming new teams of all-stars sharing similar ideas. More than 2500 idea providers from 104 countries presented 1200 ideas. Winners of the different phases were given access to Cisco's collaboration tools and experts and in the end 12 finalist teams presented for a judging panel. The winning team, based in Germany and Russia presented Cisco with a business plan that improves energy efficiency by using the network as a platform for visibility, manageability and control of energy-consuming systems.

Dell IdeaStorm is an initiative and an online community for anyone to share ideas with Dell and vote for the ones they like. Dell's objective is to connect with its users and get ideas for new products, services and "the way we do business". So far, more than 10000 ideas have been submitted and nearly 400 ideas have been implemented. In addition to the open discussion Dell posts specific questions and areas for customers to submit ideas. There are no material rewards associated with IdeaStorm.

Electrolux Design Lab is an annual global design competition open to undergraduate and graduate industrial design students who are invited to present innovative ideas for household appliances of the future. There are different themes every year and visitors of their online webpage can vote for statements to indicate desire for future themes. Finalists are invited to participate and present their ideas to a jury of high-level designers and experts. Electrolux awards three prizes: 1st place is 5000€ and a 6 month paid internship with accommodations at one of Electrolux global design centers. The 2nd place winner receives 3000€ and 3rd place 2000€. The competition is very much promoted as a way to get jobs and business opportunities and several finalists are currently employed by the company.

Goldcorp issued a now famous challenge to the world's geologists when they provided all their data on the Red Lake mine online if the contestants showed them where they would be likely to find the next 6 million ounces of gold. The prize was a total of $575000 with a top award of $105000. More than 1400 scientists, engineers, and geologists from 50 countries downloaded the company's data and started their virtual exploration. The winners, who had never even seen the mine, were a collaboration by two groups in Australia which together developed a 3D graphical depiction of the mine, used geological-modeling software and database mining tools to find the gold. According to Fast Company Goldcorp has drilled four of the winners' top five targets and have hit on all four.

IBM Innovation Jam has become a famous example where the company's researchers, employees and outside experts are invited to join in a virtual brainstorm session, posting their ideas, commenting and voting for their favorites. The jam consists of interlinked bulletin boards and related web pages on IBM's intranet, supported by systems for centrally managing activity and extracting useful answers to important questions. In the 2006 edition, the largest IBM online brainstorming session ever held, there were 150 000 participants from 104 countries and 67 companies. As a result 10 new IBM businesses were launched with seed investment totaling $100 million.

My Starbucks Idea is an initiative and an online community to gather product ideas, experience ideas and involvement ideas from the crowd. Visitors can share their ideas, view other's ideas, comment and vote to make ideas popular. There is also a blog on ideas in action for users to see how Starbucks is putting top ideas into action. Ideas are chosen based on algorithm (number of votes, comments and recency of post) and by "Idea Partners" inside Starbucks. Providers of ideas that get implemented may be given credits on the site but won't be compensated in any other way.

Netflix Prize is an open competition to improve a collaborative filtering algorithm helping Netflix customers find new movies they would like. In the first challenge the company provided a data set of 100 million of the ratings customers previously supplied and made it available to any programmer together with a baseline of prediction accuracy to beat. To win the competition, the programmers needed to share their methods with Netflix, describe the algorithm for the world and provide a non-exclusive license to Netflix. Every suggested algorithm (more than 44000 valid submissions) was broadcasted on a leaderboard to fuel competition. The grand prize, $1000000, was reserved for the entry which could improve Netflix's algorithm for predicting ratings by 10%. As long as no team won the grand prize, a progress prize of $50000 was awarded every year for the best result thus far. The competition took place between October 2006 and July 2009. In August 2009 Netflix announced it would run a second competition with shorter time spans and the challenge based on demographic data rather than previous ratings.

Nokia Mobile Games Innovation Challenge invites developers to submit mobile gaming concepts to any Nokia N-Gage, Java or Symbian-based Series 40 or S60 device. The three most innovative game concepts are offered Nokia Publishing pre-production contracts, targeting publication or winning concepts and the first winner is awarded with 40000€, the second 20000€ and the third 10000€ for further development of game concepts. The winning participant must agree that Nokia has the right to acquire, subject to a mutually acceptable agreement, the intellectual property or exclusive license to the game concept.

P&G Open Innovation Challenge are events that so far have taken place in the UK where design professionals and entrepreneurs are invited to submit propositions for products which fit P&G's criteria and have the potential to build businesses worth over $100m. To protect the idea providers' intellectual property, ideas are not seen by P&G but are reviewed by its partners National Endowment for Science, Technology and the Arts (NESTA), British Design Innovation and Oakland Innovation. Up to ten of the most promising ideas are given access to feedback, advice and up to £25000 in financing to develop the ideas into a stage at which they can demonstrate commercial viability. Up to five of the strongest applicants are then given the chance to present their finalized ideas to P&G which may decide to invest in the idea and sign contracts. If P&G doesn't invest the creator is free to take the proposition to other brands and or investors.

Virgin Earth Challenge is a science and technology prize to find a viable technology which will result in the net removal of anthropogenic, atmospheric greenhouse gases each year for at least ten years without countervailing harmful effects. The individual or group that is able to demonstrate a commercial viable design will be awarded $25 million, making the award the largest science and technology prize in history to be offered. The challenge will initially be open for five years with the judges including Richard Branson and Al Gore, meeting annually to determine whether a design has been submitted during the previous year that should win the prize.

Related posts:

Using the crowd as a part of the business model

Etsy - Mass customization of arts and crafts

Lego - Turning users into product developers
Threadless - Dressing the long tail in user design
Value network analysis and positioning

Strategic Innovation at Deloitte - The "Apple" of Services Innovation

Accounting and Innovation - Isn't that an Oxymoron?

Rick Rayson, Managing Partner, Orange County, Deloitte and Touche LLP, doesn't believe so. As a matter of fact, Rick tries to convince you otherwise - even goes as far as making you believe that accounting innovation can be "sexy". Well, sort of!

I had the first-hand opportunity to meet and hear Rick speak eloquently at last week's University of California, Irvine, Paul Merage School of Business hosted Dean's Leadership Circle event. Rick was the keynote speaker, introduced by the charismatic Dean of the UCI Business School, Andy Policano. I also spent some time with Rick after the event and was able to gain some real world insights.

Rick spoke about "Strategic Innovation at Deloitte". And he brought home many key points on what drives innovation at Deloitte, and how innovation drives business. Deloitte is a worldwide organization consisting of some 147,000 employees (talent), with offices in more than 140 countries, aggregate revenues of $23.1 billion in fiscal year 2007, and serving more than 80% of the 2007 Fortune Global 500.

Deloitte's marketplace competitors include Accenture, PriceWaterhouseCoopers, KPMG, Ernst & Young, Mercer, Towers Perrin, and IBM (NYSE: IBM). IBM is one of the Top 20 Innovators of The Innovation Index.

Why is Strategic Innovation imperative at Deloitte?

It has to do with achieving Deloitte's vision:

To be the First Choice of:

* The world’s most coveted talent

* The most sought-after clients

In his speech, Rick addressed how most product companies innovate by filtering the exceptional opportunities from the utterly raw and mundane (unblocking creativity and innovation), by managing various levels of uncertainty and investment requirements towards creating new innovations while mitigating risks (process innovation), and by looking at the "horizon perspective" as created by Karl Ulrich, CIBC Professor, Wharton School of the University of Pennsylvania (six ways to find innovation).

Professional Services Innovation

According to Rick, "Professional service firms like Deloitte have enjoyed recent macro economic changes brought on by extraordinary technological and regulatory developments such as the ERP, reengineering and Y2K craze of the mid to late 90’s and the requirements of Sarbanes Oxley legislation and regulations since 2002. The question really is “What’s Next”. A key part of Deloitte's strategy is to develop new services, new ways to serve our clients and new ways to attract, develop and retain the talent we must have for this growth." This is Deloitte's Innovation and Creativity strategy to match its bold vision.

"To develop new services, new ways to serve our clients and new ways to attract, develop and retain the talent we must have for this growth"

Three Investments are paramount to Deloitte's success: New Services, New Ways to serve, New Ways to growing talent

Rick articulates and simplifies this key Deloitte strategy further and ties it back to Deloitte's vision:

Deloitte has an urgent need to innovate on two fronts:
* In our services to clients (for their often unusual or difficult problems), and
* In our internal talent management and execution (while facing a shrinking talent pool and competition to recruit and harness the best talent).

Two forces drive the need for innovation at Deloitte:
* The need to provide outstanding client service, and
* The need to maintain a pool of top talent to provide that service.

"Edge" Drives Innovation

According to Rick, Innovation at Deloitte is driven by the thousands of talented people working at the “edge” on client service engagements. Deloitte innovates by harnessing innovation that happens at the edge, bringing it back to the core, and then pushing it back out to the edge. Compare this to product companies where innovation is driven at times by the core.

Deloitte consultants continually think of new ways to help solve their clients’ business problems by leveraging thousands of experiments in the field. Innovation for Deloitte is about accelerating the process of finding and refining good ideas at the core, and then pushing them back out to the edge – speeding up the process of turning personal innovation that happens in the field into institutionalized innovation that can be systematically delivered to our clients.

Deloitte recognizes challenges to this "Edge" model. Specifically, on how to find ways to efficiently and effectively commercialize the ideas happening at the “edge.” Deloitte has created Talent Innovation centers, and Strategy, Research and Innovation Groups, Innovation Quests, and Centers of Excellence as part of the Client Innovation Services to create game changing innovations.

One of the interesting creations is the Enterprise Value Map: a tool that gives a comprehensive view of all the drivers of value in an organization. It has now morphed into a comprehensive Value Map that all Deloitte clients benefit from.

Talent Innovation

Deloitte has tried hard to create a "youthful" yet "energetic" image of a company on the move towards hiring new talent, by developing innovative approaches to the attraction, retention and development of key talent. From a different approach to career management, to dealing with generational differences, to women and diversity needs, and fostering a culture of learning and coaching - Deloitte does all of the above to harness world class talent. Deloitte consistently ranks in the 100 best places to work, and 50 best places to launch a career.

Internal Innovations driven by India Team

Deloitte started to move services in India in 2000, making it one of the first professional services firms to create an offshore India center.
The key Deloitte difference:
Not just offshoring of back-office but also client-facing functions, all delivered with high standards of quality that Deloitte is known for.
The lower cost of employing talent in India has a significant impact on ROI; at the same time, the high quality work delivered by the offshore group has a significant impact on Deloitte's growth.

The Innovation Highway

So where exactly is Deloitte on the Innovation Highway? Deloitte admits that in the past, the innovations at Deloitte were "Distributed Reactive" a condition it tactfully describes as: Innovation that happened at the edge, was chronically under-invested and usually following another’s lead. Whereas today, Deloitte Innovation is "Programmed Proactive" - where Deloitte is proactively focused on connecting the edge to the core (e.g. Innovation Quest), by challenging some norms, and realizing that it is not just a means to an end. However, Deloitte wants Creativity and Innovation to be "Culturally Ingrained" tomorrow - innovation as part of Deloitte's core DNA (processes, people, and technology), innovation as efficient and effective, and as an externally recognized differentiator. A big portion of this is removing obstacles, and finding a way to say “yes", by failing fast and forward, however learning from the experience.

I asked Rick one key question: "What innovations drive new business at Deloitte?"
Rick Rayson: "Innovation at Deloitte occurs every day with the hundreds of client service teams and thousands of professionals who create solutions for our clients. The key is to assimilate these innovations occurring at the "edge" to the entire organization to drive new services to our clients on a broad basis."

Strategic Innovations at Deloitte - From the "Edge" to the "Core" back to the "Edge" Fast - You get the picture!

Download my Creativity and Innovation eBook. 212-page collection of over 55 best practices, case studies, and insights on the current state of Creativity and Innovation in Business at Top Innovators including Apple, Google, Netflix, 3M, Frito Lay, Johnson & Johnson, Proctor & Gamble, Toyota, GE, BMW, Deloitte, Southwest, Nike, IBM, Dell and more. "Your report from the eBook and definitive guide was the primary reference that we used." Used by over 500 leading organizations including HP, Pepsi, EDS, J&J, Nokia...Learn more
Download Now

About Rick Rayson

Managing Partner Rick Rayson (Deloitte & Touch LLP) is the leader of Orange County Practice, overseeing the Deloitte U.S. Firms' subsidiaries providing audit, tax, consulting, and financial advisory services. Rick has been with Deloitte for more than 27 years. Rick is advisory partner on many of the practice's major clients, and is actively involved in the Orange County business community. He is a member of the University of California, Irvine Chief Executive Roundtable, and is on the Dean's Advisory Board for UCI's Paul Merage School of Business.

Related Stories:
Creativity And Innovation Best Practices
Made in India - Innovations in Software Operations at the Top Innovators
Introducing The Innovation Index
Top 50 Innovative Companies in the world

Originally published in 2008. Republished in 2009.

IBM - Top 20 Innovator of the Innovation Index for 2009

"To be honest, I didn't believe they could show something like this -- I think the results they posted were stellar," said Peter Misek, an analyst with Canaccord Adams. "They just executed really well -- really, really, really well."

IBM (NYSE: IBM) predicted at least $9.20 per share in profit in 2009, a full 45 cents per share better than the average estimate of analysts polled by Thomson Reuters. Is IBM for real?

IBM's net income for the 4th quarter was $4.4 billion, or $3.28 per share - beating the analyst estimates of $3.03 per share by a full 25 cents! WOW! Net income showed 12 percent profit increase from $3.95 billion, or $2.80 per share, in the same period a year earlier.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

IBM's key revenue generator: $17.2 billion in new services contracts. IBM is executing quite efficiently in this trying economy, and has a workforce of 400,000 employees worldwide. IBM did not post a sales gain though. The sales were down sequentially by 1%, adjusted for currency fluctuations, from the previous year's quarter.

"A strong fourth quarter capped an outstanding year. In 2008 IBM performed well in an extremely difficult economic environment. Clearly our strategic transformation --- migrating to the more profitable segments of the industry, investing in growth regions of the world, and driving productivity through global integration --- is continuing to pay dividends," said Samuel J. Palmisano, IBM chairman, president and chief executive officer.

IBM gets the nod as a Top 20 Innovator of the Innovation Index for 2009. Bravo, IBM!!

The Innovation Index Reports
Introducing The Innovation Index
The Innovation Index 2008 Performance
The Iron Men of Stocks
Annual Report 2007 - The Innovation Index gains 66%
Measuring Business Innovation Success
Top 50 Innovative Companies in the world
Annual Report - Chapter One - Total Innovation Activity
Annual Report - Chapter Two - The Top Innovator
Annual Report - Chapter Three - The Innovation Insights
Innovation and Stock Performance Correlation
Future earnings guidance, A leading indicator
Smart Investing In Tough Economic Times
To Sell Or Not To Sell - You Decide
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies

About the Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

References:
IBM Press Release
AP Story

The Innovation Index 2008 Performance

The Innovation Index 2008 Performance
Top 20 Innovators	Ticker	31-Dec-07	31-Dec-08	% Change
3M Company	MMM	84.32	57.54	-31.76%
Amazon.com	AMZN	92.64	51.28	-44.65%
America Movil	AMX	61.39	30.99	-49.52%
Apple	AAPL	198.08	85.35	-56.91%
AT&T	T	41.16	28.50	-30.76%
Best Buy	BBY	52.51	28.11	-46.47%
Cisco Systems	CSCO	27.07	16.30	-39.79%
Costco Wholesale	COST	69.60	52.50	-24.57%
eBay	EBAY	33.19	13.96	-57.94%
General Electric	GE	36.74	16.20	-55.91%
Google	GOOG	691.48	307.65	-55.51%
Hewlett-Packard	HPQ	50.48	36.29	-28.11%
Intel	INTC	26.50	14.66	-44.68%
IBM	IBM	107.69	84.16	-21.85%
Merck	MRK	57.61	30.40	-47.23%
McDonald's	MCD	58.51	62.19	6.29%
Microsoft	MSFT	35.46	19.44	-45.18%
NIKE	NKE	64.00	51.00	-20.31%
Research In Motion	RIMM	113.40	40.58	-64.22%
Proctor & Gamble	PG	73.05	61.82	-15.37%
The Innovation Index		108.27	66.35	-38.72%
S&P 500	^GSPC	1,468.36	903.25	-38.49%
Dow Jones	^DJI	13,264.82	8,776.39	-33.84%
NASDAQ	^IXIC	2,652.28	1,577.03	-40.54%
McDonald's Corporation is the only innovator out of the top 20 innovators that had a positive stock performance in an otherwise tough 2008. McDonald's has achieved an amazing feat that will be cherished for a long time. 8 out of the Top 20 Innovators finished averaging better performance than the S&P 500. Assumptions and Disclosures: *Assumes equal investment in each Innovator of the Innovation Index
*Innovation Index Fund is closed and ended much lower than the Innovation Index
*2009 Innovation Index will be announced the week of Jan 12, 2009
*Innovation Index Group will relaunch in 2009, without management of any fund, as an investment research and analysis company.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Innovator Google is still growing strong

Google delivered big this week!! And so did IBM earlier in the week. Apple is next and P&G to follow... our innovators are growing strong in tough economy. When the going gets tough, the tough get going! Google shares were up after earnings release!!

In a separate story, Warren Buffett came out telling everyone to BUY for the long-term:

Buffett's optimism is based primarily on the following:

• "Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors."
• Cash is trash. "Today people who hold cash equivalents feel comfortable," he writes. "They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value."

Here is an analysis on Google and IBM:

Google Inc., owner of the most popular Internet search engine, advanced in Nasdaq trading after reporting profit that topped analysts' estimates, saying customers are still buying Web ads even as the economy slows. (Bloomberg reference)

While advertisers of home and auto loans cut back, makers of apparel and appliances kept spending, Chief Financial Officer Patrick Pichette said. Consumers continue to shop online, he said, with clicks on ads climbing 18 percent, near the previous quarter's 19 percent growth.

Google results, combined with better-than-anticipated reports from International Business Machines Corp. cheered investors after a decline in technology shares this month. Google showed resilience in a weakening economy, said Mark May, an analyst at Needham & Co. in New York.

``This really shows we need to give them the benefit of the doubt,'' said May, who recommends buying the shares (of Google). ``They should be able to weather the storm fairly well.''

Google's third-quarter net income rose 26 percent to $1.35 billion, or $4.24 a share, from $1.07 billion, or $3.38, a year earlier. Leaving out costs such as stock-based compensation, profit was $4.92 a share, beating the $4.75 average estimate of analysts in a Bloomberg survey.

Google, based in Mountain View, California, rose $18.03, or 5.1 percent, to $371.05 on the Nasdaq Stock Market at 9:50 a.m. New York time, after earlier reaching $378.97. The shares had dropped 49 percent this year before today.

Advertising Shift

Advertisers are cutting back on TV and print media spending in favor of ads that run alongside search listings. The Internet will account for 8.7 percent of the $284 billion in U.S. ad spending this year, up from 7.2 percent in 2007, according to Barclays Capital.

Excluding revenue passed on to partner sites, Google's sales expanded to $4.04 billion last quarter. Total revenue climbed 31 percent to $5.54 billion.

At least eight analysts had reduced their estimates for Google's third quarter this month after the global credit crisis erupted. That made it easier for the company to beat the average profit estimates yesterday.

``This was exactly the kind of shot in the arm that investors need,'' said Jeff Lindsay, an analyst with Sanford C. Bernstein & Co. in New York. ``People lost a lot of faith in the Internet, but this is exactly what the doctor ordered.''

New Contracts

IBM, based in Armonk, New York, said yesterday it signed $12.7 billion in contracts last quarter, topping the estimate of as much as $11 billion from Cowen & Co. analyst Louis Miscioscia. Winning contracts with the Royal Dutch Navy and Bristol-Myers Squibb Co. boosted the total.

``Tech is going to continue to be challenged for a period of time,'' Miscioscia, who has a neutral rating on IBM shares, said in an interview. ``To put this in perspective, IBM is up $2 after market, not $10, after falling about $20 since Oct. 1.''

Google handled 63 percent of U.S. online searches in August, double the market share of Yahoo! Inc. and Microsoft Corp. combined. That dominance has helped the company command higher prices for ads, according to Yahoo, which is awaiting government approval of an agreement to let Google sell some ads on its sites.

Cutting Back

Still, Google has reduced expenses by slowing its hiring rate and spending less on travel and events, said co-founder Sergey Brin.

``We don't know exactly what the future holds. We've taken a conservative approach,'' Brin said in an interview. ``We view this as an opportunity to refine our company and sharpen it.''

Capital expenditures fell to $452 million, down 18 percent from a year earlier, as Google made more efficient use of its computing centers, Brin said. He said he couldn't forecast whether the costs would continue to fall.

The credit crisis may cost the Internet ad market $6.7 billion in lost sales through 2010, according to Collins Stewart Plc. Big and small businesses, from General Motors Corp. to Simplexity LLC, are reducing ad spending plans, while some financial companies, such as Wachovia Corp., have disappeared.

Slower Growth?

The reductions will push down growth in U.S. Internet ad spending to less than 20 percent next year for the first time since 2002, said Sandeep Aggarwal, a Collins Stewart analyst in San Francisco. Advertisers will scale back spending on newspapers and broadcast TV networks, his firm said this month.

``Advertisers stay with the Internet because it's the way to reach the key younger demographic and that's what advertisers are really after,'' Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC, said in an interview from Bedford Hills, New York.

Google, which gets almost all its revenue from Internet searches, is developing ways to advertise with images and video. The company struck a deal this month to show full-length programs from CBS Corp. on its YouTube site, splitting ad revenue with the network.

``The economic situation is so fluid that we're all sort of in uncharted territory,'' Chief Executive Officer Eric Schmidt said yesterday on a conference call. ``We've always been in this for the long term, and we believe that's even more important today than ever.''

Bottomline:
Google perhaps has the best business model - best of both worlds - when times are tough, and the economy is recessionary, advertisers market on Google and other search engines because they offer better value, better tracking and tighter budget controls. On the other hand, when the economy does improve, more advertisers will market more on Google because they simply have more money to spend. The only question is the rate of growth. But if Google can maintain 20% or better earnings and revenue growth in these trying times, this is simply remarkable. Innovation Index Group is long on Google, and is setting a revised target of $500 in 12 months.

Innovation Index Reports

• Introducing The Innovation Index
• Annual Report 2007 - The Innovation Index gains 66%
• Measuring Business Innovation Success
• Innovation Index Group BUY Recommendations
• Q1 2008 Report - Innovation Index ahead of S&P 500
• Q2 2008 Report - Top Innovators Deliver
• The Innovation Index Fund FAQ
• Top 50 Innovative Companies in the world
• Annual Report - Chapter One - Total Innovation Activity
• Annual Report - Chapter Two - The Top Innovator
• Annual Report - Chapter Three - The Innovation Insights
• Innovation and Stock Performance Correlation
• Future earnings guidance, A leading indicator
• Smart Investing In Tough Economic Times
• To Sell Or Not To Sell - You Decide
• Creativity and Innovation Best Practices
• Creativity and Innovation Case Studies

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index returned 66% in 2007 based on performance model, and would have returned 174% over the previous five years (2002-2006) based on historical model*. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S & P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.*

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NASDAQ: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.
*Past Performance Does Not Guarantee Future Results

References:

Bloomberg story reported by: Crayton Harrison in Dallas at tharrison5@bloomberg.net; Lauren Berry in New York at lberry4@bloomberg.net

Top Innovators Weathering the Financial Storm

HEWLETT-PACKARD

only FOR WOMEN: Fashion designer Vivienne Tam flanked by President (PSG), Hewlett-Packard India, Ravi Swaminathan (left), and Senior Vice-President Global Marketing, Hewlett Packard, Satjiv S. Chahil

Hewlett-Packard unveiled four new laptops, including a special edition stylish notebook PC designed by U.S.-based renowned fashion designer Vivienne Tam. HP has about 33 percent market share in India's laptop segment.

Addressing a press conference here, HP's Senior Vice-President (Global Marketing) of Personal Systems Group (PSG) Satjiv S. Chahil said: "We continuously work to ensure that our HP Pavilion line appeals to new markets and segments. Vivienne's fresh and authentic design speaks to an intrinsic part of a digital lifestyle-personal expression." According to HP India's President (PSG) Ravi Swaminathan, the company plans to strengthen its market leadership position with an aggressive 'go-to-market' strategy by increasing its retail footprint across 650 cities and expanding retail partner network to over 10,000 by this year-end.

HP Vice President in an interview today on CNBC indicated that HP PC business remains robust, and touted Gartner report that shows growth of at least 15%.

HP shares are down 23.5% year to date. Innovation Index Group has a BUY recommendation on HP with a 12 month price target of $50 to $60.

PROCTOR & GAMBLE

Mr. A.G. Lafley, CEO of P&G, said: "The reason P&G has grown so consistently for so long is that we're a company that sticks to the fundamentals. We build brands that improve consumers' lives. We deliver superior value day in and day out. We manage cash and costs with unrelenting discipline. And we invest in innovation as the primary driver of profitable organic sales growth.

"While the economic environment remains volatile and uncertain, I am confident that P&G can and will continue to prosper over the long term. We are committed to ensuring P&G will continue to be a company you can count on."

P&G's net sales for the fiscal year ended June 30, 2008 increased nine percent to $83.5 billion, with organic sales up five percent - in the middle of the Company's four to six percent target range. Diluted earnings per share were $3.64, up 20 percent - or double the Company's ten percent target. P&G's free cash flow was $13.0 billion for the fiscal year, or 106 percent of net earnings - well above the Company's 90 percent goal.

P&G sales have nearly doubled for each of the past three decades - from $10 billion in 1980 to more than $80 billion today with earnings growth increasing from $640 million to $12 billion over the same period. Over the past five years, P&G has delivered 11 percent compound annual total return to shareholders, nine percent over the past ten years, and 16 percent over the past 20 years. The Company's dividends have also increased every year - more than nine percent a year, on average - over the past fifty-two years, and have been paid without interruption since the Company was incorporated 118 years ago. P&G recently announced a 40 cents dividend.

P&G shares are down 15.8% year to date. Innovation Index Group has a BUY recommendation on P&G with a 12 month price target of $75 to $85

APPLE

JP Morgan is upgrading Apple to Overweight from Neutral. Apple's model is far more diverse than previous vintages, and they think the staying power has been underappreciated. With its market share momentum likely intact, Apple in firm's view offers strong relative downside protection to the looming earnings reset that they expect to impact IT Hardware companies in coming weeks and again early next year.

- Diverse model provides staying power. There has been considerable investor concern lately over the Apple model losing steam, particularly if the consumer vertical rolls over. JPM estimates that the company's total model exposure is about 70-75% consumer, but they think that Apple's brand and market share momentum offer meaningful buffers to potential macro-driven pressures on the consumer.

- Retail expansion could sustain share gains and international momentum. JPM thinks a major force behind Apple's growth story will be its diversifying revenue streams. They expect Apple's penetration of the international markets to be measured in years and supported by the increasing build-out of the retail stores overseas.

- iPhone could lead to the enterprise or other content-rich devices. Firm thinks the iPhone could be a stepping stone to penetrating the enterprise. Also, they could envision the iPhone pushing Apple deeper into the set-top box market as the convergence of voice, web, data, and content continues.

- Expect numbers to come down across the sector, but Apple likely has a backstop beyond the first round. For Apple, they are revising their below-consensus revenue and EPS estimates. Looking to fiscal 2009, revenue and EPS estimates are $36.98 billion and $5.27, versus the Street consensus of $40.26 billion and $6.02.

- Apple trades at 18.8x JPM's calendar 2009 EPS estimate, versus the peer group average of 11.1x. With macro pressures showing no signs of dissipating, they believe it is time to play defense, and they think Apple can avoid having a major problem with the "E" in the price-to-earnings multiple moving through the coming year. Firm expects the company's model to limit a series of major earnings cuts from unfolding in coming quarters, and they think this should support a valuation gap in Apple's favor.

Apple announced new aluminum shell, more powerful laptops on October 14, and reduced the price on updated laptops to under $1,000. Apple is poised to see a robust growth in its sale of notebooks during the holiday season owing to competitive pricing and better features.

Apple shares are down 48.6% year to date. Innovation Index Group has a BUY rating on Apple, and is now updating the 12 month price target in the range of $160 to $190.

IBM

JPMorgan upgrades IBM as a stock that is a 'sturdy ship' in rough economic waters

A JPMorgan analyst upgraded International Business Machines Corp. saying the company's diverse and steady revenue streams make the stock a "sturdy ship" in the worsening economic environment, the firm said Wednesday.

Mark Moskowitz raised his rating to "Overweight" from "Neutral" because IBM has diverse revenue sources that offer relative stability. He also said at least half of the company's revenue comes from annual payments on long-term services and software contracts.

IBM represents a "flight to quality" for investors" due to its broad services, hardware and software reach," the analyst wrote. IBM 3Q profits jumped 20% from last year in large part due to services contracts.

IBM shares are down 15.3% year to date. Innovation Index Group has a BUY recommendation on IBM with a 12 month price target of $125 to $150.

These four innovators present attractive buying opportunity at the current price points.

Innovation Index Reports

• Introducing The Innovation Index
• Annual Report 2007 - The Innovation Index gains 66%
• Measuring Business Innovation Success
• Innovation Index Group BUY Recommendations
• Q1 2008 Report - Innovation Index ahead of S&P 500
• Q2 2008 Report - Top Innovators Deliver
• The Innovation Index Fund FAQ
• Top 50 Innovative Companies in the world
• Annual Report - Chapter One - Total Innovation Activity
• Annual Report - Chapter Two - The Top Innovator
• Annual Report - Chapter Three - The Innovation Insights
• Innovation and Stock Performance Correlation
• Future earnings guidance, A leading indicator
• Smart Investing In Tough Economic Times
• To Sell Or Not To Sell - You Decide
• Creativity and Innovation Best Practices
• Creativity and Innovation Case Studies

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index returned 66% in 2007 based on performance model, and would have returned 174% over the previous five years (2002-2006) based on historical model*. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S & P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.*

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NASDAQ: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.
*Past Performance Does Not Guarantee Future Results

The Top 50 Innovative Companies in the World - Apple is #1 4th year in a row

Rank	Company	HQ Country	HQ Continent	Revenue Growth 2004-07* (in %)	Margin Growth 2004-07* (in %)	Stock Returns 2004-07** (in %)			Most Known for its Innovative... (% who think so)
1	APPLE	USA	North America	47	69	83			Products (52%)
2	GOOGLE	USA	North America	73	5	53			Customer Experience (26%)
3	TOYOTA MOTOR	Japan	Asia	12	1	15			Processes (36%)
4	GENERAL ELECTRIC	USA	North America	9	1	3			Processes (43%)
5	MICROSOFT	USA	North America	16	8	12			Products (26%)
6	TATA GROUP	India	Asia	Private	Private	Private			Products (58%)
7	NINTENDO	Japan	Asia	37	4	77			Products (63%)
8	PROCTER & GAMBLE	USA	North America	16	4	12			Processes (30%)
9	SONY	Japan	Asia	8	13	17			Products (56%)
10	NOKIA	Finland	Europe	20	2	35			Products (36%)
11	AMAZON.COM	USA	North America	29	-11	28			Customer Experience (33%)
12	IBM	USA	North America	1	11	4			Processes (31%)
13	RESEARCH IN MOTION	Canada	North America	56	-1	51			Products (37%)
14	BMW	Germany	Europe	6	-5	11			Customer Experience (40%)
15	HEWLETT-PACKARD	USA	North America	10	17	35			Processes, Business Models, and Customer Experience (27% each)
16	HONDA MOTOR	Japan	Asia	12	6	14			Products (40%)
17	WALT DISNEY	USA	North America	6	14	7			Customer Experience (63%)
18	GENERAL MOTORS	USA	North America	-2	NA***	-11			Products (55%)
19	RELIANCE INDUSTRIES	India	Asia	31	-7	94			Business Models (31%)
20	BOEING	USA	North America	9	32	21			Products (63%)
21	GOLDMAN SACHS GROUP	USA	North America	30	6	28			Processes and Business Models (33% each)
22	3M	USA	North America	7	5	3			Products (45%)
23	WAL-MART STORES	USA	North America	10	-2	-2			Processes (48%)
24	TARGET	USA	North America	11	3	0			Customer Experience (67%)
25	FACEBOOK	USA	North America	Private	Private	Private			Customer Experience (51%)
26	SAMSUNG ELECTRONICS	South Korea	Asia	2	-14	8			Products (42%)
27	AT&T	USA	North America	43	6	23			Customer Experience (33%)
28	VIRGIN GROUP	Britain	Europe	Private	Private	Private			Customer Experience (47%)
29	AUDI	Germany	Europe	11	11	41			Products (50%)
30	MCDONALD'S	USA	North America	7	-7	25			Customer Experience (42%)
31	DAIMLER	Germany	Europe	-11	37	28			Products (35%)
32	STARBUCKS	USA	North America	23	-2	-13			Customer Experience (60%)
33	EBAY	USA	North America	33	-37	-17			Business Models (28%)
34	VERIZON COMMUNICATIONS	USA	North America	12	0	9			Services (41%)
35	CISCO SYSTEMS	USA	North America	20	-5	12			Products (35%)
36	ING GROEP	Netherlands	Europe	7	4	11			Services (41%)
37	SINGAPORE AIRLINES	Singapore	Asia	9	5	20			Customer Experience (55%)
38	SIEMENS	Germany	Europe	1	21	22			Products (41%)
39	COSTCO WHOLESALE	USA	North America	11	-5	14			Customer Experience (46%)
40	HSBC	Britain	Europe	12	-1	4			Services (39%)
41	BANK OF AMERICA	USA	North America	12	0	0			Customer Experience and Services (23% each)
42	EXXON MOBIL	USA	North America	11	7	25			Processes (50%)
43	NEWS CORP.	USA	North America	4	4	4			Business Models (47%)
44	BP	Britain	Europe	14	-5	11			Processes (42%)
45	NIKE	USA	North America	8	-1	14			Customer Experience (43%)
46	DELL	USA	North America	7	-12	-17			Business Models (37%)
47	VODAFONE GROUP	Britain	Europe	7	-21	15			Business Models (33%)
48	INTEL	USA	North America	4	-10	6			Products (53%)
49	SOUTHWEST AIRLINES	USA	North America	15	9	-9			Customer Experience (50%)
50	AMERICAN EXPRESS	USA	North America	3	1	3			Customer Experience (35%)

2008 Report

BusinessWeek/Boston Consulting Group (BCG) recently announced the world's top 50 innovative companies for 2008.

17 of the Top 20 Innovators of The Innovation Index are included in the top 50 innovative companies of the world by BusinessWeek/BCG. This is a testament to the Innovation Index methodology and the process.

There are many new entrants in 2008. The top five innovators from last year have strengthened their positions further, and remain in the top five slots this year also. Apple is #1 for the fourth time in a row owing to another innovation milestone: Apple iPhone (check our sister blog: http://appleinnovation.blogspot.com ) Google is #2 again owing to the growth of the AdWords and AdSense businesses, and the phenomenal growth of YouTube videos post acquisition (although Google is still trying to find the appropriate business model towards making money from the millions of videos served daily). Toyota Motor remains at #3 in large part due to the dominance of hybrid cars - Toyota has expanded its position further by introducing hybrid cars in all the major car lines besides Prius, General Electric remains at #4 due to the emerging alternative energy innovations, and Microsoft rounds at #5, due to the growth of the XBox and new consumer innovations - can Microsoft retain its number 5 position in 2009?.

Tata Group - India vaults into the Top Ten innovative company list for the first time at #6. Tata was not in the top 50 innovative company list last year. Tata recently boldly acquired Jaguar and Land Rover from Ford. Although the big reason Tata is in the top ten is owing to the introduction of Tata Nano, a $2,500 new car that will revolutionize the car industry. Nintendo, at #7, is the top innovator out of Japan, thanks to the runaway success of Wii. Proctor & Gamble fell one notch to #8, but stayed in the Top Ten innovators list. P&G is a perennial innovator, and figures to be in Top Ten for the foreseeable future owing to hits such as Febreze and Mr. Clean. Another Top Ten innovator went up a notch to #9 - Sony. Sony's Blu-Ray and new product mix is causing a turnaround. Rounding out the Top Ten is Nokia out of Finland. Nokia went up 3 places and surged back in the Top Ten list. Nokia is the heavyweight in wireless, and the new Nokia models are doing rather well.

General Motors is on a comeback with exciting new electric concept cars, and remarkable new vehicles in the Buick, Hummer, Cadillac and Saturn lines. GM is on a rebound, and could have a solid 2008-2009 if it embraces the alternative energy engine technologies for the new cars. BMW, Honda Motor, Audi and Daimler are also in the top 50 innovator list on the strengths of new innovative cars that are customer friendly and in tune with the present environment. Reliance Industries, another Indian innovator, vaults into the Top Twenty list of innovators. Reliance is a household name in India - from wireless to telecommunications, technology to infrastructure - Reliance can be found in virtually every industry in India. There are key companies shining in this year's list out of England including Vodafone, BP, HSBC, and Virgin Group. Overall, 2008 list of innovators is very well-represented globally.

#25 on the list is Facebook - a new innovator who has the sixth highest trafficked website on social networking - who can one day challenge Google and MySpace.com. Although Facebook still has a long way to go.

According to BusinessWeek, "2008 list of the World's Most Innovative Companies adds three financial measures to the mix to determine the rankings. For this year's list, votes cast in the proprietary BusinessWeek-BCG survey received 80% of the overall weighting, stock returns were weighted 10%, while three-year revenue and margin growth each got 5%. While these changes -- only votes from our survey counted in the past -- marked the biggest shift yet in our rankings of the World's Most Innovative Companies, there are some similarities to previous years."

2007 Report

BusinessWeek announced (external link) the top 50 innovative companies of the world, an annual ranking compiled along with Boston Consulting Group. Click here to view the Top 50 rankings. Listed below is the 2007 Top 50 Innovative companies in the world, along with their 2006 ranking comparison.

Apple Inc. (NASDAQ: AAPL) is #1 again, 3rd year in a row. Google Inc. (NASDAQ: GOOG) is #2 again. And climbing up one notch is Toyota at #3. General Electric (NYSE: GE) is #4, up 2 places; Microsoft (NASDAQ: MSFT) held steady at #5, Proctor & Gamble (NYSE: PG) went up 1 spot to #6, 3M (NYSE: MMM) went down 4 notches to #7, Walt Disney Co (NYSE: DIS) zoomed up a whopping 35 places to #8, IBM (NYSE: IBM) went up 1 place to #9, and Sony climbed 3 places to #10.

There are many new innovators in the BusinessWeek top 50. AT&T (NYSE: T), Citigroup (NYSE: C), Verizon (NYSE: VZ), Nintendo (Japan), Volkswagen (Germany), Best Buy (NYSE: BBY), Merck (NYSE: MRK) and News Corporation (NYSE: NWS) are your new companies. Besides, Royal Philips Electronics (Netherlands), Costco Wholesale (NASDAQ: COST), Pfizer (NYSE: PFE), Johnson & Johnson (NYSE: JNJ), Amgen (NASDAQ: AMGN), McDonald's Corporation (NYSE: MCD), and LG Electronics (South Korea) have vaulted into the top 50 rankings (in 2006, these companies were ranked in the top 100, outside the top 50). This means, a few innovators dropped out of the top 50.



Last year (December 2006), I started The Innovation Index of the top 20 innovators based on 2006 BusinessWeek rankings of North American companies and my own research. I had only included the top 25 publicly traded North American companies in The Innovation Index based on the BusinessWeek rankings so as to evaluate their innovation activity and stock performance on a weekly basis. I am now planning to revise The Innovation Index for 2008 based on this new ranking from BusinessWeek, and am considering including the global publicly traded Innovators - the likes of Toyota, Sony, Nokia, BMW, Samsung, Philips, Infosys (although Infosys was not included in the Top 50 this year), top innovator from China, and more - besides the North American Innovators. This would create the first global Innovation Index for 2008.

How did BusinessWeek come up with the Top 50 Innovative Companies ranking?

According to the BusinessWeek article:
"The BusinessWeek-Boston Consulting Group 2007 list of the World’s Most Innovative Companies is based on a senior management survey about innovation and was distributed electronically to executives worldwide in late 2006. In October, surveys were sent to the 1,500 largest global corporations, determined by market capitalization in U.S. dollars, with instructions to send the survey to their top 10 executives in charge of innovation. The survey was also distributed to senior management members of the BusinessWeek Market Advisory Board, an online panel consisting of BusinessWeek readers, and via the Knowledge@Wharton e-mail newsletter. Survey participation was voluntary and anonymous, and the survey closed in March, 2007. The survey consisted of 20 general questions on innovation and an optional 12 questions focused on innovation metrics.

A total of 2,468 executives answered the survey. Of those indicating their location, 77% were from North America, 12% were from Europe, and 9% were from Asia or the Pacific region. A larger share of North American voters this year may explain some movement in the rankings of some companies on our list."

Compare this to 2006 BusinessWeek rankings, wherein only 1,070 executives answered the survey, although the mix was globally representative - 46% were from North America, 30% from Eurpoe, and 16% from Asia and Pacific.

In 2007, out of the top 50 innovative companies, only 14 were outside North America; in 2006, 20 companies were outside North America. Perhaps this has to do with the executives answering the survey, and their representative global mix.

Regardless, the top 50 innovators in the world are world-class companies creating new innovations through unmatched creativity and driving profitable growth.

Creativity And Innovation in Business Definitive Guide is a 212-page collection of my handpicked 56 Creativity and Innovation best practices, case studies, articles, interviews, and insights on the current state of innovation in business. The Innovation eBook provides real-world examples on how the Top 50 Innovators including Apple, Google, GE, Proctor and Gamble, Yahoo, Toyota, Netflix, BMW, Deloitte, Timex, Frito Lays, Johnson & Johnson, Starbucks, Southwest Airlines, Microsoft, Intel and more innovate and grow their business successfully time and again, especially during trying times. Use this eBook as a guide and relevant resource to find and create game-changing innovations, unblock creativity, and make innovation successful at your business...Learn more

The Innovation Index Reports:
Introducing The Innovation Index Fund - The Innovation Index Fund introduction announcement
Top 50 Innovative Companies in the world - 2007 & 2008 Report on Top 50 Companies and Innovators
The Innovation Index closes 2007 with 66% gain, crushes major U.S. indices - 2007 Annual Report
Annual Report - Chapter One - Total Innovation Activity - 2006 Annual Report One
Annual Report - Chapter Two - The Top Innovator - 2006 Annual Report Two
Annual Report - Chapter Three - The Innovation Insights - 2006 Annual Report Insights
Innovation and Stock Performance Correlation - The Innovation Index and Stock Performance

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index returned 66% in 2007, and would have returned 174% over the previous five years (2002-2006). This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S & P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.

Additional Labels:
top 5 innovative companies
innovative companies
top innovative companies
top companies on innovation and creativity
innovation and creativity top 50
creativity and innovation in business
top 10 creative and innovative companies
top 10 innovator
top 100 innovative business
top 10 innovative companies
top 50 innovative companies

Originally published: May 11, 2007
Updated: April 22, 2008, May 21, 2009
*Past performance does not guarantee future returns