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The World's 50 Most Innovative Companies

Special Report

Not so long ago, no conversation about innovation would be complete without the story of 3M inventor Art Fry’s eureka moment that led to the Post-it Note. Today, that tale, which verges on cliche, has been almost universally replaced by the story of the iPod, Apple’s omnipresent icon of design.

It should come as little surprise, then, that Apple tops the BusinessWeek-Boston Consulting Group’s list of the World’s Most Innovative Companies for the third year in a row. That sort of staying power speaks volumes about the sort of innovation that matters today. Unlike the Post-it Note, which proves the value of lone inventors, the iPod epitomizes today’s innovation sensibilities. These include the ascendance of design, the focus on the user’s experience, and the power of ecosystems: The iPod is a hit because it works so seamlessly with the iTunes software. The company’s much-anticipated iPhone, which launches in June, will likely keep Apple high on our list next year too.

There are some surprises this year, including four new companies in the top 25—Disney, Boeing, Genentech, and Cisco Systems. In other cases, the resilience of corporate reputation was surprising. Wal-Mart Stores suffers from slow growth, but still commands respect for its supply-chain innovations. Dell wears the brand halo of an innovator for its efficient direct-to-consumer model, though it suffered through a management shakeup and fell from No. 14 to No. 22. And what of 3M? It fell too, from No. 3 in 2006 to No. 7 this year.

Click column heading once to reorder from highest to lowest. Click twice to reorder from lowest to highest.
2007 Rank
2006 Rank
Company Name
HQ CITY
HQ COUNTRY
HQ CONTINENT
STOCK RETURNS
2001-2006*
REVENUE GROWTH
2001-2006*
MARGIN GROWTH
2001-2006*
PATENT CITATION
INDEX**
41 NR VOLKSWAGEN  WolfsburgGermanyEurope14.66 3.44 -18.88 4
5558DUPONT  Wilmington, DEUSANorth America6.20 2.46 5.57 null
46 NR MERCK  Whitehouse Station, NJUSANorth America-1.20 -13.86 6.16 7
78 NR STARWOOD HOTELS & RESORTS  White Plains, NYUSANorth America23.20 8.55 -2.62 null
3424RESEARCH IN MOTION  WaterlooCanadaNorth America   34
7469NESTLÉ  VeveySwitzerlandEurope6.40 3.06 4.30 null
34TOYOTA MOTOR  ToyotaJapanAsia20.50 8.30 5.21 361
1013SONY  TokyoJapanAsia-2.62 0.60 1.14 418
1223HONDA MOTOR  TokyoJapanAsia13.61 7.40 0.38 377
6457NISSAN MOTOR  TokyoJapanAsia17.71 8.76 0.91 null
79 NR CANON  TokyoJapanAsia18.70 7.40 11.89 null
4587AMGEN  Thousand Oaks, CAUSANorth America3.89 28.86 -4.33 1
6954ROYAL DUTCH SHELL  The HagueThe NetherlandsEurope13.70 10.99 -1.19 null
6161YAHOO!  Sunnyvale, CAUSANorth America23.55 55.03  null
92 NR AMD  Sunnyvale, CAUSANorth America5.11 7.74 48.70 null
5226PORSCHE  StuttgartGermanyEurope20.00 9.91 15.86 null
3031DAIMLERCHRYSLER  StuttgartGermanyEurope4.22 -0.16 19.00 181
733M  St. Paul, MNUSANorth America7.77 7.35 5.49 57
93 NR ANHEUSER-BUSCH  St. Louis, MOUSANorth America3.67 4.01 -3.75 null
2327GENENTECH  South San Francisco, CAUSANorth America24.50 34.85 32.40 4
1712SAMSUNG ELECTRONICS  SeoulSouth KoreaAsia36.24 4.60 8.07 1000
4985LG ELECTRONICS  SeoulSouth KoreaAsia   394
67 NR HYUNDAI  SeoulSouth KoreaAsia22.18 12.60 -7.77 null
149STARBUCKS  Seattle, WAUSANorth America30.04 24.07 1.51 2
2021AMAZON.COM  Seattle, WAUSANorth America29.53 27.96  0
84 NR NORDSTROM  Seattle, WAUSANorth America38.92 8.80 21.65 null
2630MOTOROLA  Schaumburg, ILUSANorth America10.10 7.40  466
1917INTEL  Santa Clara, CAUSANorth America-7.57 5.92 12.55 216
99 NR CHEVRON  San Ramon, CAUSANorth America14.00 16.39 8.23 null
2418EBAY  San Jose, CAUSANorth America12.45 51.47 4.91 1
2528CISCO SYSTEMS  San Jose, CAUSANorth America8.58 5.02 205.04 20
88 NR LINDEN LAB  San FranciscoUSANorth America   null
88 NR TESLA  San Carlos, CAUSANorth America   null
35 NR AT&T  San Antonio, TXUSANorth America3.00 6.55 -7.27 16
2214DELL  Round Rock, TXUSANorth America-1.59 12.87 -5.24 16
43 NR BEST BUY  Richfield, MNUSANorth America8.86 10.71 3.20 0
55MICROSOFT  Redmond, WAUSANorth America0.83 11.85 -3.04 174
7341PEPSICO  Purchase, NYUSANorth America6.81 5.46 2.50 null
8739DANONE  ParisFranceEurope13.27 -0.55 3.67 null
94 NR ALCATEL-LUCENT  ParisFranceEurope-10.20 -13.50  null
3142HEWLETT-PACKARD  Palo Alto, CAUSANorth America16.70 15.17 10.47 258
2815IDEO  Palo Alto, CAUSANorth America   1
48100MCDONALD'S  Oak Brook, ILUSANorth America12.87 7.74 1.61 0
37 NR VERIZON  New York, NY,USANorth America0.20 5.58 -6.80 5
4255PFIZER  New York, NYUSANorth America-5.89 8.56 -4.36 15
47 NR NEWS CORPORATION  New York, NYUSANorth America11.00 14.19 4.18 0
51 NR AMERICAN EXPRESS  New York, NYUSANorth America15.20 2.82 6.91 null
36 NR CITIGROUP  New York, NYUSANorth America6.70 5.57 3.81 1
95 NR BHARTI AIRTEL  New DelhiIndiaAsia78.92 61.80  null
4453JOHNSON & JOHNSON  New Brunswick, NJUSANorth America4.14 10.02 1.33 31
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Methodology
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. We also distributed the survey 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.

Analysis and data provided in collaboration with the innovation practice of The Boston Consulting Group, BCG-ValueScience, along with Standard & Poor's Compustat data and company reports, and the Delphion patent database. We broke ties by comparing one-year total shareholder returns between 12/30/05 and 12/29/06. In ties between a public and a private company, we assumed the private company's shareholder return to be equal to the average return of the public companies on the list, or 19.6%. Ties remain only where two or more private companies receive the same number of votes.

*Stock returns are annualized,12/31/01 to 12/29/06, and account for price appreciation and dividends. Compound growth rates for revenues and operating margins are based on 2001-2006 fiscal year data as it was originally stated. Operating margin is earnings before interest and taxes as a percentage of revenue. Where possible, quarterly and semi-annual data are being used to bring performance for pre-June year ends closer to December 2006. Financial figures are calculated in local currency.

**The patent citation index reflects how often the company's patents filed over the past five years have been cited as a basis for other innovation. The number is calculated by adding, for all patents filed between 2001 and 2005, the number of times each patent or application has been cited or mentioned by other patents up until December 31, 2006. We then adjusted the citation counts for patent age, since older patents have a greater likelihood of being cited than more recent ones. The age-adjusted counts were then indexed to a linear scale

***Calculating five-year compound annual growth rate for operating margins was not possible when either figure was negative.

^Insufficient data.