As every year, Boston Consulting Group (BCG) recently came up with their own ideas of what companies are the most brazen innovators of our time:
The first thing you’ll see that No. 1-5 literally reads like a list of the top-capitalization companies of America, and thus incidentally the top-5 companies of both S&P500 and NASDAQ-100.
For the full list, almost all these companies count as mega-corporations or conglomerates.
Let me tell you that something is rotten in the state of Denmark when a list of the top-50 “most innovative companies” features the likes of Coca Cola, Siemens, ExxonMobil, IBM, Tata Motors, Shell, Procter & Gamble, Nestle, McDonalds, Unilever or Walmart, while the most active disruptors (namely smaller businesses that are able to swiftly navigate and transform a changing marketplace) are nowhere to be seen.
The list is headlined by a couple of tech companies that might have been innovators in their prime many decades ago but that really have not innovated for a long time at all – prominently Blue-chip Mack Daddy Apple which has produced nothing new over the last decade aside from following industry peers and general hardware advances into putting more cameras, larger memory, quicker chips, etc. into its mobiles, offering a credit card which other retailers have introduced many decades before, and bringing an overpriced AR headset to market long after competitors.
I think it is easy to tell that the aim of this list was not to collate an overview of the most innovative companies, “innovation” standing for unique products/services disrupting a market niche, establishing a theme of transforming the consumer landscape via emergent value creation. What was the purpose then?
I’ll let you form your own conclusion by reading through the flawed, biased, and even politicized criteria (fat) that were used for inclusion, and some comments from my side (italic):
- “Global mindshare: the number of votes received from all global innovation executives” – essentially the good old boys networks voting for each other under the banner of “brand visibility and popularity”.
- “Industry peer view: the number of votes received from executives in a company’s own industry” – essentially more of the above.
- “Industry disruption: the Diversity Index (Herfindahl-Hirschman) of votes across industries” – essentially weighting a company by its market share, i.e. its monopolistic power and ability to absorb smaller & more nimble competitors, which will by definition put the household names on top. This is as far detached from an “industry disruption” metric as I could ever dream up one. This represents a twisted version of BCG’s own growth-share matrix approach.
- “Value creation: total shareholder return, including share buybacks, over the 3-year period from Jan. 2020 through Dec. 2022” – probably the most laughable metric, using speculative stock performance (in this case especially moronic due to the pandemic lockdowns and unprecedented equity market liquidity injections) and share buybacks of all metrics to measure “value” creation for shareholders. Share buybacks increase the perceived value of a share by reducing the floating amount of buyable shares in the secondary market. How are any of those related to innovation?
In effect, this list is a compilation of companies that have the strongest ‘pull’/’say’/connections in their own industry and across industries, and have the largest firepower to buy back their own stock and competitors. But size does not mean innovation, per se.
An exercise in futility, if there ever was one, to bring the attention to those corporations that have opened large enough consulting contracts with BCG to receive the “one hand washes the other” benefit. Some people are sitting in their big offices right now, reading this report and exploding in laughter like Henry Hill in the motion picture Goodfellas.
