Tesla Motors is #1
Here are the Forbes “Top 10”
- Tesla Motors, 84.8% (Innovation Premium – see below)
2. Salesforce.com, 77.8%
3. Alexion Pharmaceuticals, 72.5%
4. Regeneron Pharmaceuticals, 72.1%
5. ARM Holdings, 69.8%
6. Unilever Indonesia, 67.9%
7. Incyte, 67.9%
8. Amazon.com, 67.6%
9. Under Armour, 66.6%
10. Biomarin Pharmaceutical, 65.2%
It’s Surprising:
Not to see Apple, Google and facebook in the “Top 100”
It’s Refreshing :
To see the stalwarts like 3M, GE, IBM and P&G not in the “Top 100”
What is the Innovation Premium?:
In 2011, Jeff Dyer and Hal Gregerson wrote “The Innovation Premium: Our Methodology” in Forbes. Here is the complete text from that article
“Many “Most Innovative” rankings of companies begin by asking executives to vote on which firms they think are most innovative. These end up becoming popularity contests based on past performance. Our method relies on investors, who vote with their wallets, to identify the companies they expect to be innovative today and in the future. To learn more about our work, visit learn.innovatorsdna.com.
We use something called the Innovation Premium to compile our lists of the World’s Most Innovative Companies. It is calculated first by projecting a company’s income (cash flows, in this case) from existing businesses, plus anticipated growth from those businesses, and look at the net present value (NPV) of those cash flows. We compare the NPV of cash flows from existing businesses with a current market capitalization: Companies with a current market cap above the NPV of cash flows have an innovation premium built into their stock. You can read a more detailed explanation of our work around innovative companies and leaders in our new book The Innovators DNA (Harvard Business Press, 2011), written with Harvard Business School professor Clayton Christensen.
The data for this analysis are taken from HOLT ValueSearch, a corporate performance and valuation advisory service of Credit Suisse. The computations and analysis are the work of Michael J. McConnell, Ph.D., formerly director of research for Credit Suisse HOLT but now retired.
Big caveat: This method does not correlate with subsequent investor returns. The Innovation Premium, embedding as it does investor expectations, is not a statement about past growth but about growth expected in the future. It is also not a statement about expected excess returns — in fact, to the extent that today’s price embeds high growth expectations, one might even anticipate returns to investors to be low, as these expectations may be difficult to meet. We went back back through the data for the past 20 years and find that there is a high correlation between the top-ranked firms by IP and their growth over the following five years.
There is, by contrast, no correlation of IP with subsequent return to investors.”
To see the Dyer and Gregerson article, go to…
To see the Complete list of the 100 Companies
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