What's Innovative? Who is Innovative?
I think there are probably several reasons why this list fails to satisfy. One reason is that it is often difficult for people to arrive a a standard, common definition of innovation, since it means different things to different people. I doubt there was a good definition of innovation used, and used consistently, as people recommended firms for the list. Some of these firms are just very good at customer service or other aspects of business, but that does not make them innovative.
Another point is that some firms on this list are there because of what they MAY do in the future, not based on innovative skills they've demonstrated in the past. Likewise, some firms on this list are resting on old laurels and haven't been innovative in quite a while.
GM is a good example of a firm that is on this list because of what it says it will do - will create hybrid cars, will change the way designers and engineers work together. Is GM an innovative company? I don't think the American car buying public thinks so. Could GM become an innovative company? That's possible, but I don't think they've demonstrated that yet. Likewise, 3M is on the BusinessWeek list, but anyone who has followed 3M closely knows that innovation at 3M took a real hit when the board brought in a Six Sigma aficionado who clamped down on research freedom. Only lately has that been reversed, so 3M is on this list based on its innovation reputation from five to ten years ago.
Thanks to the interactive scoreboard that BusinessWeek provides with more details on the top 50 companies in their estimation, we can dig a little deeper. Certainly, being an innovative firm will enable your company to drive margin growth? Well, of the firms on the list, only 10 have had margin growth of double digits over the last 3 years, and 20 firms on the list have no margin growth or negative margin growth over that same period. If these firms are innovative, why can't they command a margin premium?
The problem with a survey approach like the one used by BusinessWeek is that it has a lot of bias built in for companies that are "known" innovators, or that are simply well known. Some of the firms on this list are innovative - Apple, Google, etc - and some aren't (Wal-Mart???) Some of these firms had a focus on innovation, but have recently shifted direction. BP is probably the best example - John Browne, the former CEO was very enthusiastic about innovation, but the new CEO is not.
When we deign to make a list of innovative firms, let's be sure to use more specific definitions, and identify firms that are actively innovating and able to demonstrate what innovation has meant in terms of new products, services, business models and the returns that the innovation has delivered.