World’s Most Admired Companies

Each year, the Fortune Magazine publishes the list of the most admired companies (You probably have heard already about The Fortune 500). The list for 2010 was recently published. This is a good occasion to look into the rankings for the innovation category, and to check, why leading companies are perceived as leaders, what makes them innovative. Besides this, the material used allows us to take at the key performance indicators, and it allows us to look at other factors that make a company successful, or innovative.

Fortune 500

For those, who do not know this list, you find this year’s Fortune 500 list in the article → World’s Most Admired Companies. As you will learn in the methodical section below → How we pick them, the data is collected and assembled by the consultancy firm The Hay Group. To arrive at their results, they use a mixture between statistical methods, and interviews with executives, directors, and analysts.

In their study, they focus on the overall perception of a company, and they discuss results in different categories. Among others you find there the categories Innovation, People Management, Product Quality, or Global Competitiveness. On the other hand, all companies are assigned to their industry, and ranked within these categories. It is thus possible to view the category leaders per category. Besides the most admired companies, you find there information about the least admired ones as well.

Most Innovative Companies

This year, the following companies belong to the most innovative ones: Apple, Google, Nike, Amazon.com, and Goldman Sachs Group. To learn more about the strategies, read about the reasons for these rankings:

„What makes Apple so admired? Product, product, product. This is the company that changed the way we do everything from buy music to design products to engage with the world around us. Its track record for innovation and fierce consumer loyalty translates into tremendous respect across business‘ highest ranks…

Google… continues to dominate search on the web and attract the smartest designers and engineers. Meanwhile YouTube, long disparaged by critics as a money-loser, has started showing signs of major growth potential …. But all eyes are on the Android OS for smartphones, to see how seriously it will challenge Apple’s iPhone in the hotly competitive world of mobile devices…

The athletic apparel and footwear giant (author’s remark: Nike) is a perennial on our list, admired for its brand strength, marketing prowess and innovation…

Amazon.com…. strong sales in the recession, and the early success of the Kindle won Jeff Bezos the respect of our voters…

Goldman as the poster child for the greed that sparked the financial crisis, but its reputation in the business world is stronger than ever.“

Other Categories

If you look into the People Management category, you find that most of the innovative companies are ranked high for their people management as well. For me, this is not a miracle, as innovation, personnel, and motivation go hand in hand. With respect to Product Quality the correlation with the innovation level seems not to be high – at least not all innovators are ranked in the top group for product quality. This can have two reasons:

  • The customers assume that the quality of innovative companies must be high, and they value it as something the they do not mention
  • There is indeed no linkage between quality and innovation.

Become innovative? Here is what you need to do

If you want your company to be innovative, here is what you need to do:

  1. Create products, which change the ways people do things, like Apple, or Amazon (Kindle)
  2. Constantly improve the customer experience, and excel the customer needs in terms of usability, creativity, etc
  3. Attract, train and retain good personnel.
  4. Be prepared to fight for your ideas, even if it takes more time to be profitable (YouTube).
  5. Invest into your brand and marketing power.
  6. Maintain your good reputation.
  7. Deliver better than average product quality.

Sometimes Perception is not everything

Ok, and sometimes perception is not everything, but hard work is needed, as the following remark shows (Remember, Microsoft is not even mentioned below the first 10 most innovative companies):

„Google is seen as more innovative, even though Microsoft is well ahead of Google based on the quality of patents. In the end, it comes down to products, not research, and Microsoft could do a better job there.“ → Who’s the world’s most inventive tech company? Based on patent quality, it’s Microsoft.

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