Wednesday, December 06, 2006

The Innovation Index

Introducing The Innovation Index

The Innovation Index is a compilation of the Top 20 Innovators in North America. Most of these Innovators are prestigious companies including GE, 3M, HP, IBM, and Proctor & Gamble who have created numerous innovations and shaped our lives over the past fifty plus years; some leaders are better known by their innovative product brands - Blackberry by Research In Motion, iPod and iMac by Apple, online shopping by Amazon.com, Windows and Office by Microsoft, Microprocessor powered by Intel; the list also includes leaders whose creativity and brands have become synonymous to markets: networks by Cisco, computers by Dell, marketplace of traders by eBay, hot coffee and cappuccino by Starbucks, fashionable clothing by Target, lowest price shopping by Wal-Mart, low airline fares by Southwest Airlines, and search nirvana by Google.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

The alphabetical list of the Top 20 Innovators of The Innovation Index (for 2007) along with their stock ticker symbols are presented below:

3M Company - MMM
Amazon.com, Inc. - AMZN
America Movil - AMX (added end of December 2006)
Apple Computer, Inc. - AAPL
Cisco Systems, Inc. - CSCO
Dell Inc. - DELL
eBay Inc. - EBAY
General Electric Co. - GE
Google Inc. - GOOG
Hewlett-Packard Co. - HPQ
Intel Corporation - INTC
International Business Machines Corp. - IBM
Microsoft Corporation - MSFT
Research In Motion Limited - RIMM
Southwest Airlines Co. - LUV
Starbucks Corporation - SBUX
Target Corp. - TGT
The Proctor & Gamble Company - PG
Wal-Mart Stores, Inc. - WMT
Yahoo! Inc. - YHOO (added end of December 2006)

For 2008, six Top Innovators were changed. The alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols are presented below:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

For 2009 through 2011, there were no changes (key reason was I was heavily involved in Startup activities and still am).

For 2012, the new Innovation Index comprises of the following American Innovators:

Amazon.com, Inc. - (NASDAQ: AMZN)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
Facebook - (NYSE: FB)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Intuit Inc. - (NASDAQ: INTU)
Johnson & Johnson - (NYSE: JNJ)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Proctor & Gamble Company - (NYSE: PG)
Priceline.com - (NASDAQ: PCLN)
Starbucks - (NASDAQ: SBUX)
Verizon Communications - (NYSE: VZ)
Whole Foods Market - (NASDAQ: WFM)

The Innovation Index Report will incorporate the following objectives and will be released quarterly:

1. Report, analyze and project the stock performance of the Top 20 Innovators in North America every week, and compare their performance to S&P, NASDAQ and Dow Jones.

2. Compare and contrast best practices, initiatives, new products, successes, strategies, stories, leadership and insights on Creativity and Innovation at the Top 20 Innovators.

3. Showcase Disruptors challenging these Top Innovators, their disruptive innovation strategy, and their current and potential impact on the Innovators' customer base and market share.

A potential "The Disruption Index" could also arise once the market of Disruptors grows, and they become identified and accounted for. For example, The Disruption Index could include Juniper Networks and highlights about how it is disrupting Cisco Systems, Advanced Micro Devices' and its challenge versus Intel, and Yahoo!, the once crowned Internet Innovation King now in a Disruptor's role vis-à-vis Google.

How are the Top Innovators performing (2006)?

In one word: Surprising. (click on the image to obtain a larger view of The Innovation Index) The number one Innovator by stock performance this year is not Google, nor Apple - the top two innovators in the world. Rather it is an Innovator that knows a thing or two about causing disruption in the business segment of mobile devices by its ubiquitous wireless email service: Research In Motion - RIMM. The Blackberry, called "crackberry" by its cult-like business users who are so hooked on the e-mail that they can't even go to sleep without it being on, has fundamentally changed how the business world communicates via wireless email with total ease and security. What is also surprising is eBay (EBAY), the darling of the Internet boom, is showing the highest negative return so far this year out of the top 18 Innovators. eBay is sure to answer back next year with a host of new planned innovations. Cisco Systems (CSCO) is on the rebound this year notching gains over 50% for the year; bell-weather, Hewlett Packard, is also showing impressive gains of about 40% for the year. Are they innovating and executing better this year? Dell (DELL), Intel (INTC) and Amazon.com (AMZN) are all showing double-digit negative returns for the year. Are Disruptors challenging their leadership positions? Would they be around as Innovators next year in the index?

Overall, The Innovation Index shows a solid return of 14% for the year, beating the S & P 500 and NASDAQ, and in a virtual tie with the Dow Jones Industrial Index average. The Innovation Index is currently at 75.61 points, up 9.03 points for the year. Only 5 out of 18 companies in The Innovation Index are showing negative returns. Seven Innovators are showing double-digit returns; while the venerable companies including GE, Wal-Mart and 3M are showing less than 5% return – I will be exploring under the hood as to why this is the case. I believe though that in the longer term, in as much as the index continues to include the most innovative companies in the world founded on creativity and ingenuity driving business innovation, The Innovation Index will outperform the respective market indices. On the other hand, The Disruption Index could be even more spectacular in annual returns owing to smaller yet high growth companies carving out significant market share.

2006 Innovation Index performance:

The Innovation Index closed 2006 with 18.01% return, beating the major U.S. indices.

2007 Innovation Index performance:

The Innovation Index had a banner year, and gained 66% in 2007. The Innovation Index easily crushes the major U.S. indices including the S & P 500, NASDAQ and Dow Jones. S & P 500 was up 4% for the year, NASDAQ was up 10% for the year and the Dow Jones Index was up 6% for the year.


For now, watch this blog for updates on The Innovation Index, the Top 20 Innovators in action, and their Disruptors in hot pursuit. Check Innovation Index reports below for detailed analysis, highlights, correlations, stock performance, and more.

2007 Top Innovators Update

America Movile, S.A. de C.V. (America Movil) (NYSE: AMX) and Yahoo! Inc. (NASDAQ: YHOO) were added to The Innovation Index (for 2007). With this addition, The Innovation Index now represents the Top 20 Innovators in North America. The Innovation Index will begin 2007 at 69.38 points with the addition of AMX and YHOO.

2008 Top Innovators Update

Six new Innovators have been added to The Innovation Index for 2008 and 2009:
AT&T Inc. - (NYSE: T) (52 week change: UP 18.71%)
Best Buy Co., Inc. - (NYSE: BBY) (52 week change: UP 6.30%)
Costco Wholesale Corporation - (NASDAQ: COST) (52 week change: UP 32.82%)
Merck & Co., Inc. - (NYSE: MRK) (52 week change: UP 34.66%)
McDonald's Corporation (NYSE: MCD) (52 week change: UP 34.22%)
NIKE, Inc. - (NYSE: NKE) (52 week change: UP 29.88%)
2008 Innovation Index Performance
Top 20 InnovatorsTicker31-Dec-0731-Dec-08% Change
3M Company MMM84.3257.54-31.76%
Amazon.comAMZN92.6451.28-44.65%
America Movil AMX61.3930.99-49.52%
AppleAAPL198.0885.35-56.91%
AT&TT41.1628.50-30.76%
Best BuyBBY52.5128.11-46.47%
Cisco SystemsCSCO27.0716.30-39.79%
Costco WholesaleCOST69.6052.50-24.57%
eBayEBAY33.1913.96-57.94%
General ElectricGE36.7416.20-55.91%
GoogleGOOG691.48307.65-55.51%
Hewlett-PackardHPQ50.4836.29-28.11%
IntelINTC26.5014.66-44.68%
IBMIBM107.6984.16-21.85%
MerckMRK57.6130.40-47.23%
McDonald'sMCD58.5162.196.29%
MicrosoftMSFT35.4619.44-45.18%
NIKENKE64.0051.00-20.31%
Research In MotionRIMM113.4040.58-64.22%
Proctor & GamblePG73.0561.82-15.37%



The Innovation Index
108.2766.35-38.72%
S&P 500^GSPC1,468.36903.25-38.49%
Dow Jones^DJI13,264.828,776.39-33.84%
NASDAQ^IXIC2,652.281,577.03-40.54%

2009 Innovation Index Performance

Innovation Index 2009 Annual Performance

Innovation Index Reports

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Download Apple's Innovation Strategy and Learn how Steve Jobs made Apple the #1 Innovative company in the world.

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References:

BusinessWeek: The World’s Top 25 Most Innovative Companies

BusinessWeek along with the Boston Consulting Group surveyed and ranked the top 25 Innovative companies in the world for 2006 and 2005. I have compiled the list of the Top Innovators in North America for the past three years. This list only includes the North American companies that are publicly traded.

Updated: February 19, 2008

Creativity Innovation Archives