Three-quarters of businesses are making innovation a top three priority for 2021 in response to the economic shockwaves of 2020. But in its latest report on corporate innovation, Boston Consulting Group (BCG) is warning that priorities are not enough – and a readiness to innovate quickly is key.
The report, Most Innovative Companies 2021: Overcoming the Innovation Readiness Gap, found that 75% of companies making innovation a top three priority in 2021 has risen by 10 percentage points. It’s the largest year-on-year increase since 2005. For many businesses forced by the pandemic to dramatically change the way they operate, innovation is now the number one priority.
The readiness gap
While businesses have been quick to place innovation at the top of their agendas, many lack the systems, processes and capabilities required to make it happen, according to BCG researchers. The chart below from the report shows a range of benchmarks against which companies must score highly to demonstrate a readiness to innovate.
The report finds that only 20% are fully ready to deliver the innovation they see as being critical to their success.
Leaders in innovation
The most innovative companies of 2021, according to the BCG research, are those that marry the desire to innovate with the systems, leadership and processes that work to make it happen. Many of these companies are household names, but some have surged up the rankings after a period of innovation brought about by the emergence of COVID-19.
Global tech giants once again dominate the top 10 in the rankings, with Apple taking first place ahead of Google’s parent company, Alphabet. Amazon, Microsoft and Tesla make up the top five.
The pharmaceutical company Pfizer is ranked as the 10th most innovative company in the world. In 2020, in partnership with the German company BioNTech, it revolutionized vaccine development and production when faced with the challenge of helping to control the worst pandemic in living memory.
The BCG report credits Pfizer-BioNTech with “the innovation story of the year” adding, “commitment and readiness helped Pfizer, in partnership with BioNTech, not only to cut the innovation time for a COVID-19 vaccine from a decade or more to less than a year but also to ramp up production capacity to deliver much-needed vaccines”. Moderna, another COVID-19 vaccine developer (number 42), gets similar praise.
Pfizer is now committing more resources to vaccine development and is investing more than $120 million in innovation partnerships to develop treatments for cancer, genetic disorders and immunology.
COVID-19 a key driver
In the tech sector, Amazon (number 3) adapted quickly to meet surging demand for safe shopping and quick delivery as lockdowns closed huge swathes of the retail sector.
The early stages of the pandemic were characterized by panic buying. Shoppers stripped supermarket shelves bare in some countries, fearing the collapse of food supply chains. Retail giants Target (number 18) and Walmart (number 23) made large investments in e-commerce to meet a big spike in demand for food and other essentials.
A significant benefit of a readiness to innovate, according to the BCG report, was the ability to recover more quickly from the downturn caused by the pandemic. The chart above illustrates how last year’s most innovative companies outperformed other businesses in the MSCI World index.
Inspiring innovators
Among the top 50 innovators are a host of World Economic Forum partners, leading the way in setting clear ambitions, prioritizing performance management, pushing project management and developing talent and culture.
The Forum is also working to inspire the next generation of truly innovative companies. The Global Lighthouse Network is a group of organizations leading innovation in advanced manufacturing and production.
As the BCG report demonstrates, embracing innovation is no longer a corporate luxury. The businesses that will thrive once we enter the post-pandemic era are those with a readiness to adapt to meet the challenges of a rapidly evolving world.
