BCG: Apple the Most Innovative Company in the World, No Croatian Companies on the List as They Do Not Achieve Above-Average Returns

Apple is once again the most innovative company in the world this year, with the top five of the 50 most innovative companies rounded out by Tesla, Amazon, Alphabet, and Microsoft, according to research published by Boston Consulting Group (BCG) titled “Most Innovative Companies 2023: Reaching New Heights in Uncertain Times”.

The research results are based on a survey of over 1,000 participants, primarily executives from large companies responsible for innovation, conducted at the end of last year and the beginning of this year. The study has shown for the third consecutive year that companies that prioritize innovation and are ready to respond promptly significantly outperform their less agile competitors. Leaders of such innovative companies consistently deliver new products, enter new markets, and create new sources of revenue. Those who lag behind struggle to achieve more than just incremental, minimal improvements.

Innovation for New Value

The new research from the Boston Consulting Group also revealed that companies built for the future share a common set of attributes that enable them to achieve significantly better results than their competitors, resilience to shocks and disruptions, and rapid application of innovations that create new value. Along with human and technological capabilities, including artificial intelligence, one of these attributes is an innovation-driven work culture.

Despite global economic uncertainty, innovation has become a top corporate priority in 2023, with 79 percent of companies ranking innovation among their top three goals. This marks an increase from 75 percent in 2022 and is close to the highest number of 82 percent from 2019. The most important areas where innovations are being implemented are new products and research into related business models.

Increased Investment in Innovation

Cost is a key driver for 62 percent of respondents and the main reason for the emergence of innovation. Thus, 42 percent expect a significant increase in investment in innovation this year, a jump of 16 percentage points compared to the last economic crisis in 2009. These are impressive figures, especially in the current macroeconomic and geopolitical environment. A certain group of companies is achieving much more and placing innovation at the very center of their future growth strategies.

BCG also revealed that three elements are necessary for successful innovation – that innovation is a priority, investment in people, and the ability to convert investment into tangible results. Interestingly, only one in four companies was “innovation-ready,” meeting all three criteria, particularly possessing leadership and team collaboration elements that enable effective execution of the company’s innovation ambitions. In last year’s report that examined companies’ readiness in the context of climate and sustainability, two-thirds of companies ranked these issues as a top corporate priority, but only one in five companies was ready to take effective action.

Readiness for Innovation

In 2023, two out of three companies ready for innovation rank it as their main priority, and 90 percent expect an increase in spending, even by more than 10 percent. Moreover, while all companies on average expect to allocate more money for incremental innovations, which is a understandably conservative approach in uncertain times, innovation-ready companies allocate a full third of their spending for the development of revolutionary innovations.

Expansion into Related Business Models is also a priority in 2023. And 89 percent of innovation-ready companies prioritize climate and sustainability compared to 58 percent of all companies.

Innovation-ready companies utilize a wide range of strategic tools to strengthen their innovation platforms and practices. They are willing to seek external expertise and knowledge outside their own company to enhance their business and know how to leverage it to make that investment pay off.

Creating Ecosystems

These companies are much more assertive in executing mergers and acquisitions, targeting innovative technologies and processes, and finding leaders and employees with proven innovation capabilities. They are also more likely to involve innovation experts in the acquisition process to better select targets.

For similar reasons, innovation-ready companies are more likely to participate in business ecosystems or even create them, connecting with external partners, even competitors, to work on innovations.

The most innovative companies are geographically very diverse, almost evenly split between North America and the rest of the world. Europe and Asia are well represented, and for the first time, the Middle East joined the list with Saudi Aramco at 41st place. Automotive companies held more positions on the list in 2022, while this year international energy companies occupy five spots. This data may be a sign of respondents’ concerns about climate change and the fact that the energy industry could be a creative and significant part of the solution in the fight against climate change. Despite the headwinds that hit the market in 2022, technology companies continue to dominate among the top 50, including the top ten.

And Where is Croatia?

And what characteristics should Croatian companies have to make it onto this list, described Tomislav Čorak, Croatian partner at BCG:

– For a Croatian company to be on the list, it must be globally recognized, have a recognized status in its industry, and achieve above-average returns on investment for its shareholders. Given that this is research that combines qualitative information from over 1,000 top managers who manage innovation, and quantitative information from global stock exchanges, the criteria for entering the list are not easy to meet. Therefore, it is not surprising that almost every other company on the list is American, reflecting the ambition and capabilities of American companies to be global players, concluded Čorak.