Alibaba and Tencent join the world’s 50 most innovative companies for the first time, according to a survey by The Boston Consulting Group (BCG) of more than 1,000 senior innovation leaders from a wide variety of countries and industries.
The survey findings are detailed in a report, titled The Most Innovative Companies 2018: Innovators Go All In on Digital, which was published recently.
While Alibaba has made it to the top 10, Tencent is among the top 20.
Topping the list include Apple, Google, Microsoft, Amazon, and Samsung while Uber pushes its way to the top 10 this year. Among the top 20, Airbnb, SpaceX, Cisco Systems, Orange, and Marriott moved up significantly, according to the report.
Eleven of the 50 most innovative companies—including seven of the top ten—are digital natives—that is, they have always been digital businesses with digital offerings, said BCG, adding that most companies on the list have built digital technologies into their innovation programs.
Overall, 12 companies either joined the list or returned to it in 2018, BCG noted.
One standout takeaway from this year’s survey is that companies are focusing significantly more than in the past on four elements of digital innovation: big data analytics, the fast adoption of new technologies, mobile products and capabilities, and digital design, said BCG.
Meanwhile, other areas of innovation—such as new products and new services—have become less of a focus for innovation executives, the firm added.
“Slow movers on digital innovation risk being left behind by those that invested sooner and more decisively,” said Michael Ringel, a BCG senior partner and a coauthor of the report. “Competitive advantage increasingly depends less on products and more on the digitally enabled services that surround them. From today’s predictive maintenance offerings for industrial goods to tomorrow’s Internet of Things, digital strategists need to explore and master new innovation domains. And as more advanced technologies, such as artificial intelligence, enter the mainstream, the stakes will keep getting higher.”
Strong innovators double down on digital investments, capabilities
The report describes a gap, which may continue to widen, between strong innovators and weak innovators in terms of their ability to make the most of digital technology, Ringel pointed out.
While 79% of self-defined strong innovators reported that they have properly digitized innovation processes, only 29% of weak innovators made the same claim.
More than one-third of survey respondents said that digitized processes aren’t really doing much for their company—a sign that they haven’t yet found a way to embrace the new possibilities, he said, adding that the largest gaps between strong and weak innovators occur with regard to the embrace of digital-innovation techniques.
Strong innovators are disproportionately investing in digital technologies, according to the report.
While 43% of strong innovators are actively investing in big data versus 26% of weak innovators, 42% of strong innovators are actively investing in mobile capabilities versus 16% of weak innovators.
In addition, 39% of strong innovators are actively investing in digital design versus 14% of weak innovators.
Strong innovators embrace agile product development
Strong innovators were also much more likely to report that their organizations embrace key elements of the agile product development approaches that characterize digital leaders, said BCG. Eight out of 10 strong innovators reported that they take steps to bring together, in one place, cross-functional teams that include people with a full spectrum of relevant skills.
By contrast, at weak innovators, only 35% of teams work in the same place; only 41% have all the relevant functions represented; and only 43% contain people with all the relevant skills, BCG added.