Successful Innovators Walk the Talk


The Most Innovative Companies 2020

In innovation—as in life—drive, size, and skill are a powerful combination. Drive to set an ambitious agenda and fund promising opportunities. Size to transform these opportunities into real sources of new revenue. And the skill, as embodied in a well-tuned innovation system, to be able to do it over and over again.

And the world’s most innovative companies have been getting bigger. The revenue of a typical “small” company on BCG’s 2020 list of the 50 most innovative companies is $30 billion—up more than 170% from $11 billion (in constant dollars) in our first survey in 2005.

But drive and size mean little if your innovation system can’t build on them for serial success. And here our research offers a more sobering assessment. Serial innovation is hard. Of the 162 companies that have been on our top 50 list over the past 14 years, nearly 30% appeared just once—and 57% appeared three times or fewer. Only 8 companies have made the list every year: Alphabet, Amazon, Apple, HP, IBM, Microsoft, Samsung, and Toyota.

When we began the research for this 14th edition of BCG’s Most Innovative Companies report, COVID-19 had not yet emerged. As we explored the data and interacted with clients, however, it became clear that this year’s core findings—about the advantages of scale and the imperative for serial innovation—may be even more relevant today as innovation leaders need to adapt to rapidly shifting patterns of supply, demand, consumer behavior, and ways of doing business.

Moreover, our research has shown that companies doubling down on innovation during downturns—using the opportunity to invest and position for the recovery—outperform over the long term. But doing that successfully requires developing a clear innovation strategy and supporting it with appropriate investment, leveraging the advantages of scale, and ensuring that your innovation system is nimble enough to spot and seize the best opportunities quickly and decisively. As we explore these themes, we draw on our global innovation performance database of more than 1,000 firms to detail the practices that make the best stand out from the rest.


Innovation is a top-three management priority for almost two-thirds of companies. This is the lowest level since the financial crisis in 2009 and 2010—perhaps reflecting the uncertain economic outlook amid geopolitical tensions even before the outbreak of COVID-19.

We can disaggregate our findings further. “Committed innovators” (45% of the total) say that innovation is a top priority, and they support that commitment with significant investment. “Skeptical innovators” (30% of the total) are the reverse, seeing innovation as neither a strategic priority nor a significant target of funding. And “confused innovators” (25% of the total) are in between, with a mismatch between the stated strategic importance of innovation and their level of funding for it. (See Exhibit 1.) We find the highest proportion of committed innovators in the financial and pharmaceutical sectors (both 56%)—and the lowest in industrial goods (37%) and wholesale and retail (32%).

Committed innovators are winning. Almost 60% of them report generating a rising proportion of sales from products and services launched in the past three years, compared with only 30% of the skeptics and 47% of the confused. The skeptics may or may not be making wise strategic decisions—it is sometimes neither strategically sound nor feasible to pursue innovation leadership—but at least they are consistent. The confused are a puzzling lot with a worrying disconnect between strategy and innovation spending.

And winners are more likely to be committed innovators, further evidence of the divide between the best and the rest that we have discussed in the past few innovation reports. In 2019, for example, we found a wide gulf between strong and weak innovators with respect to their use of artificial intelligence (AI). We also discovered that strong innovators were making increasing use of external innovation channels such as incubators and partnerships with academic institutions. Our 2018 research showed that almost 80% of strong innovators have properly digitized innovation processes compared with less than 30% of weak innovators. The relationship between commitment and results is the latest evidence of the strong getting stronger—across a spectrum of innovation-related criteria.


While many companies struggle to address multiple innovation challenges at once, committed innovators prioritize a handful and as a result address them more effectively. They focus on advanced analytics, digital design, and technology platforms. (See Exhibit 2.) Companies may embrace these enablers for different reasons. Advanced analytics, for example, are a top priority for industrial goods companies that are seeking to develop new analytics-driven value propositions, such as agricultural equipment manufacturers moving into precision farming enabled by the Internet of Things (IoT).

Even among committed innovators, only 60% report success in solving the challenges they prioritize. All companies have plenty of room to improve but doing so may be hampered by the “AI paradox” we pointed to last year—the ease of achieving powerful results with AI pilots and the difficulty of replicating those results at scale. Another issue is the challenge of making success repeatable, establishing a successful serial innovation machine. (See the related article in the 2020 report, “When It Comes to Innovation, Once Is Not Enough.”)

Consider the example of Target. The company is making a major push to innovate in its core store-based retail business and achieve synergies between offline and online commerce. Target doubled capital expenditures from 2016 to 2018. The intent is to attract foot traffic by making stores more interactive—for example, customers can better imagine how products fit their homes by using augmented-reality point-of-sale displays. The company also wants to create omnichannel customer journeys so that shoppers can seamlessly move among channels, ordering at home and picking up in stores, for instance. Target’s online sales growth outpaced its competitors in 2019, and in a sector that has been under sustained disruptive attack, it generated 25% annualized TSR for the past three years.


Since 2015, we have asked executives to name not only the three companies they regard as the top innovators across all industries but also the three most innovative companies in their own industry. This year, we noted a new and surprising pattern: compared with 2015, significantly more respondents named companies traditionally associated with a different industry as a leading innovator in their own industry. Think Amazon in health care or Alibaba in financial services.

In a world where every industry is becoming a technology industry to some degree, this kind of boundary-busting innovation is an increasingly important innovation capability. We have therefore added a new scoring dimension to our most innovative companies ranking methodology that captures each company’s variety and intensity of boundary breaking. Granted, some companies have always been boundary busting. For example, 3M has innovated in multiple industries over the years, including consumer goods, chemicals, manufacturing, and medtech. Yet today, we already see significantly more such activity compared with 2016—an increase of 20%. New players that are active across industry borders and exemplify this trend include firms such as Sony, Nike, Xiaomi, and

Looking at the data on the industry level, software and services companies are the ones most frequently cited as entering other sectors—further confirmation (if any is needed) of venture capitalist Marc Andreessen’s 2011 observation that “software is eating the world”—but tech is far from the only cross-industry disruptive innovation force. (See Exhibit 3.) Automakers, chemical companies, retailers, and industrial manufacturers are also playing more and more often in other companies’ sandboxes as they see opportunities for new technology-enabled business models and revenue streams outside their own core businesses.

These disruptors are often orchestrating ecosystems that bring together the capabilities of multiple participants in a new platform or service offering. The auto industry’s shift toward autonomous driving and a mobility model is one prominent example, as demonstrated by Sony, Alphabet, and Apple, as well as automotive companies such as Tesla, Volkswagen, and Bosch.

The IoT and other technologies create opportunities for traditional companies, such as manufacturers, to transform themselves into data-enabled software or service businesses. These companies often play offense and defense simultaneously. Think of the ongoing transformations in the automotive, aircraft, and farm equipment industries, where companies are moving from manufacturing equipment to combining equipment, data, software, and connectivity to provide entirely new types of solutions. The data suggests that successful self-disruptors earned an annual TSR premium of 2.7 percentage points from 2016 to 2019 over companies that focused solely on defending their own turf.

A clear innovation ambition, appropriate resourcing, and the ability to break industry boundaries are not the only prerequisites for innovation success. As we examine in the companion articles that make up this year’s report, winners find a number of ways to differentiate themselves. And large companies are increasingly using size to flex their innovation muscles and may be even more advantaged now than before the crisis.

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