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Apple, Google, 3M world's most innovative: Booz & Co news
17 May 2011
Apple is the world's most innovative company, reveals a recent peer survey by global strategy consulting firm Booz & Company.

As part of its annual Global Innovation 1000 study, which tracks the companies that spend the most on innovation, Booz invited 450 innovation leaders in over 400 companies, which between them spend a combined $150 billion on R&D, in 10 industries to name the three companies they considered to be the most innovative in the world.

Booz & Company identified 1,000 public companies around the world that spent the most on research and development in 2009 and made their data available in the public domain; all data was based on each company's most recent fiscal year as of 30 June 2010.

For each of the top 1,000 companies, Booz & Co obtained key financial metrics for 2002 through 2009, including sales, gross profit, operating profit, net profit, R&D expenditures, and market capitalisation.

In addition, total shareholder return was gathered and adjusted for each company's corresponding local market.

The report on the survey, The Global Innovation 1000: How the top Innovators  Keep Winning, reveals Apple led the Top 10, with a 79-per cent of the vote, leading second ranked Google, which received a 49-per cent; and 3M at third place with 20 per cent.

"Apple is an exceptional example of our observation that success in innovation is determined not by how much money you spend, but rather by how you spend it," Booz said.

It added Apple has a long history of bringing innovative and stylish products to market, from the first Apple personal computer in 1976 to the iPod, the iPhone, and the iPad today. Yet it invests a mere 3.1 per cent of its revenues in R&D  - less than half the average percentage of the computing and electronics industry.

"Apple's financial performance has been stellar: a five-year total shareholder return (TSR) of 63 per cent," the survey notes.

In contrast, though second-ranked Google's five-year TSR is even more impressive at 102 per cent, its R&D intensity (spending on innovation as a percentage of revenue) at 12 per cent is nearly four times that of Apple, but 1.3 percentage points lower than the average R&D spending by the software and internet industry as a whole.

Third-ranked 3M has been seen as a highly innovative company for many years, and its five-year TSR is almost 50 per cent, which the survey says is indicative that it continues to spend its R&D money in the right places.

R&D Spending
2009 $US mil.
Sales 2009
$US mil.
Intensity (Spending as % of sales)
1 Apple
2 Google
3 3M
4 GE
5 Toyota
6 Microsoft
7 P&G
9 Samsung
10 Intel
Source: Booz & Company

"Only three of the companies on the ''10 most innovative'' list - Toyota, Microsoft, and Samsung - also appear among this year's top 10 spenders, reiterating the lack of correlation between R&D spending and innovation results," Booz said.

"We also compared the overall financial results of the most innovative group with our listing of the top R&D spenders. The results are clear: The most  innovative companies outperformed their industry peers on three different indicators of financial success.

Companies that are perceived to be highly innovative are clearly successful in creating new products and bringing them to market. Some spend more than others to accomplish this goal, but the real winners, financially speaking, are those companies, like Apple, Google, and 3M, that can innovate successfully without breaking the bank, the study noted.

See: The Global Innovation 1000: How the top Innovators  Keep Winning
See: Global recession affected world's top innovators in 2009: Booz & Company

Barry Jaruzelski*Barry Jaruzelski: Partner. Leads Booz & Company's Global Technology Practice. He specializes in corporate and product strategy and the transformation of core innovation processes for high technology and industrial clients

Kevin Dehof*Kevin Dehof:: Partner. Focus on helping large companies select and build new capabilities to enhance their competitive position in existing and new markets

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Apple, Google, 3M world's most innovative: Booz & Co