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The world’s top five most innovative businesses: Innovation
The world’s top five most innovative businesses
By Oliver Milman
What defines innovation? Is it the creation of new ideas or the commercialisation of them?
Is it something that comes from a lone entrepreneur working tirelessly on a ground-breaking project or is it something that can be embedded within a company culture?
Some people would say all of the above counts as innovation. Measuring it, however, can be a little trickier.
US business tome Forbes has attempted to rank the world’s businesses by their innovation level, unveiling a top 100 that features just one Australian firm – Victorian biotech business CSL.
Forbes uses an investor-led method to define the innovation level. The more investable and commercially viable the innovation, the higher it ranks.
It uses an ‘innovation premium’ – a gauge of how much investors expect a business’ value to rise based on future new products, services and markets.
As Forbes states: “Innovators ask provocative questions that challenge the status quo. They observe the world like anthropologists to detect new ways of doing things.”
“They network with people who don’t look or think like them to gain radically different perspectives. They experiment relentlessly to test new ideas and try out new experiences.”
“Finally, these behaviours trigger new associations which let them to connect the unconnected, thereby producing disruptive ideas.”
So which are the most innovative businesses in the world and what can Australian start-ups learn from them?
Here are Forbes’ top five, along with the story behind the innovation of each.
Click on each tab below for each of the top five:
1. Salesforce, US
12-month sales growth: 37.7%
Innovation premium: 73%
In an increasingly crowded cloud computing market, Salesforce has, according to Forbes, stood out from the rest to become not only an industry but global innovation leader.
But how? Fundamentally, the company has strained every sinew to stay ahead of the curve, even if that means making the occasional failure.
CEO Marc Benioff was always keen to push ahead “big ideas” from within, taking on inspiration from customers, partners and the marketplace. The business recently changed tack, realising that it couldn’t do it all itself, it actively sought out other innovators to partner with.
Benioff watched a YouTube video on how social media monitoring was becoming increasingly important for businesses. This inspired him to spend big money on acquiring two start-ups – Radian6 and Buddy Media – to create a new division within Salesforce to do exactly this.
He tells Forbes: “Innovation is a continuum. You have to think about how the world is evolving and transforming. Are you part of the continuum?”
2. Alexion Pharmaceuticals, US
12-month sales growth: 46.5 %
Innovation premium: 72.3%
Alexion was created in 1992 after a casual chat in a US grocery store between friends Leonard Bell and Steve Squinto when Bell mentioned he wanted to launch his own biotech company.
After initially struggling to attract funding, Alexion was on the brink of closure when Bell realised that innovating on unusual diseases and little-known medical niches could prove profitable. Subsequently, the business got $5 million to aid pig organ transplants for humans.
Alexion’s real cash cow has been Soliris, launched in 2007, which treats a rare cause of anaemia. The drug has raised the business $1.1 billion in revenue, at a net margin of 22%.
A key part to the business’ success is pricing its innovation highly. Soliris costs a whopping $440,000 per patient per year, but because it operates in a niche and is highly effective, private health insurers around the world – including Australia – shell out for it.
“We focus on patients with absolutely devastating disorders that are also either lethal or life-threatening,” Bell tells Forbes. “They’re also very, very rare, so they get no attention from anybody.”
3. Amazon.com, US
12-month sales growth: 34.9%
Innovation premium: 58.3%
As one of the few garage tech start-ups to survive the dot com crash, some would expect Amazon to cling onto the business model that saw it through the boom and bust years.
And yet the online retailer has undergone constant periods of reinvention and renewal in order to keep itself ahead of the game.
First it offered a commission-based brokerage service to buyers and sellers of used books. Then it opened itself up to third-party sellers, to aggregate them under its burgeoning brand.
Then it did something that would potentially wreck the industry that served it – it launched the Kindle in 2007 in order to tap into the nascent eBook market.
In just a few short years, Amazon had gone from online seller to aggregator to technology manufacturer of a new product. And yet the sales keep racking up.
"If you want to continuously revitalise the service that you offer to your customers, you cannot stop at what you are good at," CEO Jeff Bezos told Bloomberg.
"You have to ask what your customers need and want, and then, no matter how hard it is, you better get good at those things."
4. Red Hat, US
12-month sales growth: 22.6%
Innovation premium: 58.1%
Red Hat is a US open sourced software company that defines itself thus: “Red Hat is more than a software company. We're the bridge between the communities that create open source software and the enterprise customers who use it.”
This collaborative ethos is demonstrated by its sponsorship of the Fedora Project, an open-source project which promotes the development by open source software, and its annual innovation awards, which it doles out to those in the open source community.
As the company states on its site: “In the early days of open source software, few imagined that Red Hat would one day shake the industry giants. But we did.”
“With a vision to expand open source software development, Red Hat sought to ‘partner with the world’ to create low-cost, high-value enterprise-class solutions.”
5. Baidu, China
12-month sales growth: 73.9
Innovation premium: 57.8%
China is seen as the next big frontier for the likes of Facebook and Google, but local player Baidu is showing that it isn’t standing still in the quest to be the first port of call for the country’s growing online population.
The search engine and portal network recently said it will spend $1.6 billion on a cloud computing centre, after unveiling its WangPan – or “web disk” – that gives users 15GB free space, far more than DropBox’s 2GB.
The firm has also beefed up its range of apps and offers a rendered, 3D mapping service that looks more like Sim City than any sort of Google Maps rip-off.
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