Traditional companies getting in on the innovation push

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It's not just Apple and Google. Auto makers, industrial companies and old-fashioned conglomerates are now some of the most innovative companies in the world.

Tech and telecom firms still dominate Boston Consulting Group's annual ranking, to be released Thursday, taking seven of the top 10 spots. But turbulence in their sector means many – including Waterloo, Ont.-based Research In Motion – have tumbled out of the global top-50 list while traditional companies such as General Motors and Siemens are gaining ground.

Innovation – or successfully creating value out of new ideas – is a big buzz word these days. It pays off, as the most innovative companies tend to see sustained, above-average returns. More executives are moving innovation higher up on their priority list to drive growth, especially given that most have completed cost cuts, and that mergers or acquisitions are too expensive.

"One of the big untapped value drivers is to dramatically increase rates of organic growth – and that leads to innovation," Andrew Taylor, partner and manager director at Boston Consulting, said in an interview.

Canadian companies are notably absent from the top-50 list, after RIM tumbled out of the ranking. Innovation is a broader challenge in Canada; in its most-recent assessment, the Conference Board of Canada gave the country a "D" grade, saying Canada remains below average in its capacity to innovate.

Apple – which launched both the iPhone 5 and the iPad mini last year, becoming the world's largest company by market capitalization – tops this year's list as the world's most innovative company. It has claimed top spot every year since 2005. Google is No. 2 and has been in second place for the past six years.

But industrial and auto companies now make up 40 per cent of the list.

Consider, for example, Germany's BASF, whose roots date to 1865 when it turned coal tar into magenta dyes. The world's largest chemical maker is now working with St. Louis-based Monsanto Co. to produce the world's first drought-tolerant corn as it expands into plant biotechnology and transportation.

Or Belgium's Anheuser-Busch InBev, which traces its origins to the Den Hoorn brewery in 1366. The world's largest beer maker now makes lime-flavoured brew, cider, and beer cans with fully opening lids (developed for the Chinese market).

Inventors at IBM, meanwhile, received a record 6,180 patents in 2011, the 19th time in a row that the company has led the list of top recipients. The 101-year-old company is currently developing new systems that mimic the human brain to sift through oceans of data.

If there is one area that stands out for its lack of innovation, it is health care. This sector has failed to place more than one pure-play company on the list since 2007, the report noted.

The rankings are based on a survey of more than 1,500 global senior executives who were asked about their own plans and the track record of other companies. Boston Consulting has been conducting these surveys since 2004.

Innovation is a growing priority and the outlook for spending on innovation is at its highest level in more than five years, the survey shows. The top-ranked companies for innovation are ones that tend to have CEOs who actively promote it, and those that focus most closely on the needs of their customers, Mr. Taylor said.