Are you looking for inspiration on how to be innovative with your products and services, and how to use innovation to propel your business growth, there is a resource that you need to pay attention to: Forbes’ Fifth Annual List of the World’s Most Innovative Companies.
The list features some of the world’s best across multiple industries: Tesla Motors, Salesforce.com, Amazon.com, Under Armour, and more. There are 100 companies on the 2015 list in total, topped by the disruptive Tesla Motors.
To explore deeper into the list, we have a great Q&A opportunity with Bruce Upbin, the Managing Editor at Forbes Media, as follow.
Q (Ivan Widjaya): Hi, Bruce – please kindly introduce yourself to our readers.
A (Bruce Upbin): Hi. I’m Bruce Upbin, managing editor at Forbes Media. I oversee our technology coverage and various other projects including the list of the World’s Most Innovative Companies.
Q: I’ve read the coverage on Forbes’ Fifth Annual List of the World’s Most Innovative Companies. It’s fascinating to (finally) see my favorite post-Jobs and Apple Inc., cult-like innovator Elon Musk and his Tesla Motors top the list. Why do you think Tesla Motors Inc. deserves the top spot?
A: As our cover story explains, Tesla in a very short period of time has captured a sizable share of the high-end luxury car market with a universally well-regarded (if expensive) product. Consumer Reports named it the best car on the road two years running. No other car startup has come close to achieving what Tesla has in this short of a time, and it rewrote several of the rules in the automobile industry. Tesla continues to provoke critics and inspire its fans with big moves such as its Gigafactory taking shape in the Nevada desert and the new Powerwall stationary storage business.
Investors keep throwing money at the company (it has raised more than $5 billion in debt and equity) even as skeptics think it will never make money. We think it can make a huge amount of cash if it executes on its plan to become a multi-car, global vehicle + battery maker.
Q: How does Forbes rank the companies?
A: Forbes doesn’t rank them, our data partners do, according to a proprietary methodology that’s a little too complicated to explain in brief. It’s basically the difference between a company’s enterprise value (equity plus debt) and its intrinsic value based on a projection of cash flows from its existing products and services. In other words, it’s the premium afforded to the company by investors based on what they think the company will dream up next. The complete explanation is here: http://www.forbes.com/sites/innovatorsdna/2015/08/19/how-we-rank-the-worlds-most-innovative-companies-2015/
Q: Tesla Motors bumped Salesforce.com to the number 2 spot for the first time in five years – even though they have yet to see profits from their operations. And I understand that Salesforce.com is the big, profitable player in the cloud sector. What does it signify?
A: Not sure I understand the question. Salesforce remains a highly ranked company on our list and its “innovation premium” went up from 2014 to 2015. It would have been number one if Tesla hadn’t become eligible for the ranking this year. (Companies need 7 years of public financials. which is why you don’t see Facebook or Twitter.)
Q: It’s great to see a company from my home country, Unilever, make the list at number 6. I know that they are very innovative, but how an FMCG company wins investors’ heart, when so many competitors are out there fighting for their portion in the FMCG market?
A: There are two Unilevers on the list! Indonesia and Hindustan Unilever, which are both traded as separate entities on their local markets as I understand it. But we have quite a few consumer products companies on the list, including Colgate, Reckitt Benckiser, Unicharm from Japan, and a few beauty companies such as AmorePacific from South Korea and Estee Lauder of the U.S. These companies have to come up with new ideas constantly to eke out gains in unit volumes.
Their innovations might not be of the disruptive kind, but they’re champions of making sustaining, or more incremental, product innovations that serve to maintain high margins or uncover new growth while they look for the next huge hit like a Swiffer, SpinBrush or cleaning agent.
Q: About the future – what do you think of Uber? I’ve read that they are predicted to go public in 18-24 months. Would they make the list in Forbes’ future 2017/2018 list?
A: No. A company needs 7 years of public financials to make the list. You wouldn’t see Uber on the list until 2024. Facebook should be on in 2019.
Q: You are involved in the list, and I’m sure that you’ve discovered some “success” patterns from the companies featured. Please kindly share what you’ve learn from the innovative companies.
A: The great thing that we’ve uncovered—and all of the credit goes to Brigham Young University’s Jeff Dyer and MIT’s Hal Gregersen, who created the ranking and the methodology behind it with statisticians at HOLT— is that anyone can an innovator. You don’t have to be born Steve Jobs or Elon Musk to come up with growth ideas, but it does take discipline and changes to one’s behavior. It’s not in the brain, it’s in how you act and organize your teams and their time.
Dyer and Gregersen have identified five discovery skills that distinguish innovative entrepreneurs and executives from execution focused, results driven managers:
- Questioning: Asking questions that challenge common wisdom;
- Observing: Scrutinizing customer, supplier, and competitor behaviors to identify new ways of doing things;
- Networking: Meeting people with different ideas, backgrounds, and perspectives;
- Experimenting: Constructing interactive experiences that provoke unorthodox responses to see what insights emerge;
- Associating: Connecting the unconnected across questions, problems, or ideas from unrelated fields.
Consistently practicing these actions—questioning, observing, networking, and experimenting—triggers associational thinking to deliver new businesses, products, services, and/or processes.
Many thanks for your time, Bruce – much appreciated!
Tesla Motors win investors’ votes by developing potentially world-changing – or industry-changing, to the least – innovations, such as a huge lithium-ion battery factory, Gigafactory, and a development of Powerwall, a solar-panels-powered battery for homes. While Tesla’s innovation is on the cutting edge, being innovative is not all about being disruptive. Unilever and other FMCG companies are thriving on product innovation, launching products that offer sustainable business growth and operational margins.
Indeed, we can learn from the list that successful companies are those that are responsive to the market changes and always explore new opportunities to maintain business growth – something that businesses of any sizes can do.
What’s your take from the World’s Most Innovative Companies list?