Most Innovative Companies 2021 Overcoming the Innovation ...

Most Innovative Companies 2021

Overcoming the Innovation Readiness Gap

April 2021

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Contents

02The Readiness Gap

? Ready to Commit? ? Mind the Readiness Gap ? The Year's 50 Most Innovative

Companies ? Ready in Five

09The CEO Innovation Agenda

? Driving Business Model Innovation ? Elevating Customer Insight ? Getting the Innovation Flywheel

Spinning ? Digitally Transforming the Core ? Creating Impact from Corporate

Venturing

15How Leaders Bring Product and Sales Teams Together

? Incremental by Default ? Four Types of Solutions

21About the Authors

Innovation creates value...

Total Shareholder Return

2005 = index 100

A portfolio invested in BCG's Most Innovative Companies 50 beats the MSCI World by more than 3 percentage points per year. Outperformance in 2020: ~17%

100

2005

2010

BCG's MIC 50

2015

MSCI World

407 285

+3.3

percentage points

TSR per year overall

2020

...but too few companies are ready to drive real value from their innovation investments

Sources: BCG Innovation Journey Analytics Database; CapitalIQ.

Note: This chart compares the TSR performance of publicly listed MIC 50 companies and their subsequent one-year TSR performance against the

TSR performance of a global performance index (MSCI World). We reweight the MIC 50 basket annually. TSR data endpoint is December 31, 2020.

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MOST INNOVATIVE COMPANIES 2021

The Readiness Gap

Crises focus the mind, and COVID-19 concentrated corporate management's attention on a number of critical issues. First and foremost may have been costs, but forward-looking leaders soon looked to broader needs affecting their companies' futures, such as resilience, digital transformation, and customer relevance. Little surprise that 2020 saw innovation rapidly ascend the list of top management priorities.

CEOs are ramping up their companies' efforts and investment, recognizing that innovation's power to boost resilience and drive advantage is more important than ever. We see a risk, however, that their hopes will not be realized because their companies are not ready. They have yet to build the systemic ability--the underlying processes and capabilities that drive innovation--to transform ambitious aspirations into real results.

BOSTON CONSULTING GROUP

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