25 Most Innovative Companies and why?

The Boston Consulting Group-BusinessWeek 2006 list of the Top 25 Most Innovative Companies is based on a survey of more than 1,000 executives at the biggest companies around the world. The resulting ranking is both predictable -- Apple at No.1, Google at No.2 -- and surprising: Where's Motorola? Where's Siemens?

To understand the thinking behind the ranking, they asked the survey respondents to explain their votes. Here are the key reasons behind their belief that, say, Toyota is more innovative than Microsoft.

Apple

• Delivers a stream of extremely well-designed products that create and build new markets from existing technologies/platforms

• Has the ability to create demand by understanding customers' needs and anticipating new ones

• Reintroduces new products at the right time and effectively markets them

• Has built a culture that encourages innovation and accepts the risks entailed

Google

• Delivers a steady stream of innovative and useful technologies, tools, and services against tough competition

• Leverages its brand to move into new business areas

• "There are a lot of search engines -- and then there is Google"

• Is changing the way people interact with information

3M

• Innovation is engrained in the culture

• Empowers and incites employees to innovate

• Effectively balances technology with customer needs

• "Post-Its"

Toyota

• Its leading-edge hybrid technology meets market needs and its manufacturing technologies deliver a quality product

• Uses design, technology, manufacturing, and marketing for maximum market penetration and profits

• Doesn't think conservatively in a conservative industry

Microsoft

• Pushes innovation through technology

• Uses innovation to remain market leader

• Takes existing market innovations and "makes them right"

• Expands beyond core market as new opportunities emerge

GE

• Engages in continuous product and process innovation

• Established the organization to innovate, driven from the top

• Uses metrics to be successful

Procter & Gamble

• Employs "Connect & Develop" model to leverage external resources to drive innovation

• Great brand manager

• Nimble enough to push quickly to market, despite its size

• High patent rate

Nokia

• Maintains market leadership and brand recognition in competitive mobile-phone market

• Clear customer focus

• Great product-portfolio management and fast to market

• Ability to reinvent itself

Starbucks

• Ability to intelligently market a commodity product as an experience customers are willing to pay a premium for

• Creation of a "third place"

• Extension beyond coffee to create a lifestyle brand

IBM

• Draws on intellectual property to be innovative in many areas/ technologies

• Has the ability to repeatedly reinvent itself as tech paradigms shift

• IBM Fellows program

Virgin

• Has a unique approach to international flights

• Extends that thinking to other lines of business focused on customer value

• Willing to take risks

• "It just seems like they're in the business of imagination"

Samsung

• Challenges market with superior product design and understanding of customer needs

• Speedy new product introduction

• Went from low-cost, low-quality electronics company to cutting-edge consumer electronics brand in 10 years

Sony

• Emphasis on product-design innovation

• Always on leading edge of new developments

• Ability to establish new platforms in multiple segments of the consumer market

Dell

• Leader in supply-chain and sales-channel innovation

• Mass-personalization

IDEO

• Offers new approaches and processes to bring ideas to market, including user research, cross-functional teams, and rapid prototyping

• Has a track record of design excellence

BMW

• Challenges industry convention by combining excellent automotive design with cutting-edge technology development to create and market the "Ultimate Driving Experience"

• Has become a leader in automotive telematics

Intel

• Constantly pushing the envelope of computer-chip design

• Great ability to reinvent itself with new technologies

• Rewards and builds on the strengths of its employees

• "Always asking 'What's next?'"

eBay

• Online community breaks the rules to create new ways of doing business

• Constantly developing new ideas and opportunities

IKEA

• Customer-focused marketing and product offerings keep customers coming back

• Has changed the way people buy products in the traditional furniture industry

• Brought design to the masses

Wal-Mart

• Uses technology and pioneers processes to streamline its complex supply chain

• "Hardball approach to global economy"

Target

• The retail experience provides excellent product choice, attractive store layout, and great customer service

• Reinvented their brand with focus on substance, style, and value

• "Redefined the term 'discount retail'"

Honda

• Superior engineering and design capabilities deliver attractive products that meet customer needs

• Relentless focus on quality

• Robotics

Amazon

• Uses its data to derive insight into customer preferences and provide them with a meaningful online experience

• Brought simplicity to e-commerce

RIM

• Its services are changing the way the business world communicates

• Has made mobile e-mail user-friendly

Southwest

• Crafts new approaches to different markets to stay ahead of its competition

• One-make, one-model plane fleet makes for low-cost maintenance and easier training

• Has set the standard for efficiency in its industry, in part by drawing on the ideas of employees

• "Remained profitable even after 9/11"