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“Apple’s ability to innovate is legendary. But the other companies that make the grade in our 26th annual ranking have hatched plenty of their own brilliant ideas. The payoff? It keeps them strong in good times and bad.”

“The 19 other companies on our Top 20 list are no slouches at creating new markets and disrupting old ones either. Of course, many of the innovators that the Most Admired bring to market are incremental -small, steady improvements that take a product that is already good and make it better.”

“One common error is to mistake invention for innovation; they are not the same thing. Invention is the creation of something new. Innovation is the creation of something new that makes money; it finds a pathway to the consumer.”

Read Anne Fisher’s article in this month’s issue of Fortune magazine.

Yesterday I posted FastCompany’s list of the most innovative companies. Today, I’m writing about Fortune’s ranking. This other survey draws from the Fortune 1000 list, those being the largest corporations (domestic and foreign) operating in the U.S. based on gross revenue. Hay Group was the consulting firm administrating the survey among 3,721 executives, directors and security analysts.

So, in case you wondered, this seems to be a peer and expert review. Obviously, the focus on publicly traded companies misses all of those private enterprises and start-ups fostering innovative products and business models. However, by focusing on large public corporations and whether they make the innovation list or not, one can draw insights on what it takes to be a serial innovator. For instance, look at the differences and similarities between Apple and P&G:

“Apple scoffs at the notion of target market. It doesn’t even conduct focus groups. ‘You can’t ask people what they want if it’s around the corner,’ says Steve Jobs, Apple’s CEO and co-founder. At Apple, new-product development starts in the gut and gets hatched in rolling conversations that go something like this: What do we hate? (Our cellphones).”

Read Betsy Morris’s article on Fortune magazine.

“We live with our consumers and try to see the world and the opportunities for new products through their eyes. At P&G the CEO is not the boss- the consumer is (…) we get everyone we can involved: P&Gers past and present, customers, suppliers, even competitors. The more connections, the more ideas; the more ideas, the more solutions.”

Read A.G. Lafley and Ram Charan’s article on Fortune magazine.

So, Apple does not conduct focus groups and P&G is moving away from them. Apple relies heavily on design research and P&G has increased spending on immersive research techniques. There is a growing appreciation for human factors research comprehending usability testing and ethnography which lead to a better understanding of the user experience and what actually makes a difference.  Additionally, the rationalization of “emotional design” has become a mainstream practice.

Lafely and Charan’s article talks about the need for understanding what consumers need and desire, which doesn’t translate into just doing what they might say in often descontextualized surveys and focus groups. Solely relying on statistics might not do the job as good analytics is not just about processing data. If Henry Ford had listened to the marketplace, he would have built a faster, cheaper horse instead of cars.

By the way, you might have noticed that Google is listed as number one in FastCompany’s ranking, while the company did not make the top 10 in Fortune’s ranking. Just last month, there was a lot of talking about a decline in Google ads (ad coverage) as well as fewer clicks (paid click rate). In any case, later this year I will be blogging about other innovation rankings, which I presume likely to feature Google at the top. We’ll see.

J. de Francisco
Chicago, 15 March 08

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