The World's Most Innovative Companies 2013

In the latest INSEAD study, Hal Gregersen, Senior Affiliate Professor of Leadership and Innovation at INSEAD, and Jeff Dyer, Professor of Strategy at Brigham Young University, co-authors of the bestseller “The Innovator’s DNA”, examine how companies handle and foster innovation. He looks at the ‘Innovation Capital’ which assesses the companies investors will pay a premium for.

When you run the world’s leading customer-relationship software firm, you need to think ahead to stay ahead. Salesforce.com Inc.’s Founder and CEO Marc Benioff is proof of this philosophy: it’s this thinking that’s allowed his company to reign number one on our list of the World’s Most Innovative Companies for three consecutive years, with no signs of slowing down.

Enlightened corporate leaders like Benioff know the importance of building a company’s creative capabilities beyond themselves. They look far into the future by looking very deeply into the present. They think about real needs, real issues and the problems facing real people. And, as Benioff emphatically put it during a conversation with us, “we’ll take innovation any way you can give it to us.”

This “innovation capital” has been realised in the form of acquisitions, of both innovators and products. Since 2011, Benioff has spent close to $4 billion buying smaller software firms and recently shelled out $2.5 billion to acquire cloud marketing platform ExactTarget –Salesforce.com’s biggest acquisition to date.

“I don’t care if it’s my idea, an employee’s idea, a competitor’s idea, a partner’s idea or some other associate’s idea,” he says. “My job is to build a culture of innovation. That’s something that we try to enforce. We encourage it. We value it. We notice it. We compensate for it. We require it.”

Pushing share prices to a premium

Investors notice organisations willing to take an innovative leap, and they’re ready to compensate them by pushing their share prices to a premium. Our list of the World’s Most Innovative Companies measures investors’ willingness to bet with their wallets that the most outstanding innovators will continue to innovate not just now, but well into the future.

Three years into this exercise, we see some interesting patterns emerging.

Some companies, like Amazon.com Inc. and Intuitive Surgical Inc., a California -based manufacturer of robotic surgical systems, are regular fixtures, varying in exact placement. Amazon ranked seventh on our list this year, after taking third place last year and second place in 2011. Intuitive Surgical came in eighth, after clocking in sixth in 2012 and third in 2011.

Others have emerged and stayed consistent over the past year. Number two on our list both this year and last year is Alexion Pharmaceuticals. The developer and distributor of a drug called Soliris, Alexion Pharmaceuticals wasn’t featured at all prior to 2012.

Contrast that with other contenders, who’ve emerged and then disappeared from the list. That was the case for North Carolina-based software firm Red Hat Inc., which was absent from the 2011 list, shot into fourth place in 2012, and was then absent again from this year’s list.

Such movements may reflect price adjustments on the stock market, which can be caused by a range of internal and external factors. Our list illustrates investors’ appreciation of these companies’ potential as innovators for the long term.


Innovative companies

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This article is republished courtesy of INSEAD Knowledge. Copyright INSEAD 2013.

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