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South Korean women view thin-film transistor liquid crystal displays (TFT-LCD) on display at the headquarters of Samsung group in Seoul
Image: South Korean women view thin-film transistor liquid crystal displays (TFT-LCD) on display at the headquarters of Samsung group in Seoul. REUTERS/Lee Jae Won

Most Innovative Companies and Countries Reveal 2018 Shakeup

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Image: South Korean women view thin-film transistor liquid crystal displays (TFT-LCD) on display at the headquarters of Samsung group in Seoul. REUTERS/Lee Jae Won

The 2018 Bloomberg Innovation Index and the Boston Consulting Group’s The Most Innovative Companies 2018 show there are new leaders on the rise while old powers slide.

United States Loses Top 10 Spot

The 2018 Bloomberg Innovation Index has ranked the top countries in terms of innovation. It scored countries based on seven different criteria in order to create its rank. These include spending on research and development as well as the concentration of high tech public companies.

That said, while South Korea and Sweden were able to hold onto their positions in the first and second spots on the index, the United States, on the other hand, fell by two places, leaving the top 10 list for the first time in the six years in which the index has been compiled.

The American slide is primarily the result of an eight position droop in the post-secondary (tertiary) education efficiency category. That category suggests that the country’s share of new science and engineering graduates moving into the labor force is shrinking. Another factor contributing to the United States’s fall from the coveted top ten spots also had to do with a slump in value-added manufacturing. While there were improvements in the country’s productivity, it wasn’t enough to compensate for the other areas that experienced declines.

Global Innovation Strength Shifts

“I see no evidence to suggest that this trend will not continue,” said Information Technology & Innovation Foundation president Robert D. Atkinson. “Other nations have responded with smart, well-funded innovation policies like better R&D tax incentives, more government funding for research, more funding for technology commercialization initiatives.”

Moon welcomes Trump at the Blue House in Seoul South Korea
Even before Moon Jae-in election, South Korea invested over 4% of it’s gross domestic product
into R&D. REUTERS/Jonathan Ernst

While some countries lost ground they’d held for many years, others saw an important rise in their ranks. For example, Singapore was able to take hold of the third position, ahead of powerful European markets known for their tech leadership, such as Germany, Switzerland and Finland. Singapore increased its position on the index by three places when compared to last year.

“Singapore has always placed strong focus on educating her populace, especially in STEM disciplines,” said Singapore University of Technology and Design professor and associate provost, Yeo Kiat Seng. The city-state also boasts a “steadfast commitment to funding R&D and innovation,” said Yeo, the owner of 38 patents.

The Top 10 Innovative Countries

The top spot was held by South Korea, with Sweden holding onto the second position as well. On the other hand, Singapore had to rise by three places to grab hold of the third spot on the index. In fourth was Germany, which fell by one slot, as did Switzerland, which is now in the fifth spot. Japan rose by one place to the sixth position, while Finland fell by two places to arrive in seventh place. Denmark held its position in eighth place when compared to last year. France jumped two places to arrive in the ninth spot. Israel stayed in the tenth spot, the same place it was in 2017.

Interestingly, Israel – the country in tenth place –was the only country on the entire list that was able to beat South Korea – in the first place – within the research and development category.

The 2018 Bloomberg Innovation Index ranking was based on an examination of more than 200 economies. Every economy was meticulously scored based on a scale of 0 to 100. To do this, seven categories – each of which were equally weighed – were taken into consideration. The list was thinned down to 80 economies when the nations that reported on fewer than six categories were eliminated from the ranks. Bloomberg’s official report was a ranking of the top 50 economies around the world.

The Innovative Companies Behind the Countries

The Boston Consulting Group’s report called “The Most Innovative Companies 2018” ranked the businesses around the globe that are leading the way in research and development as well as new product development and digital achievements.

That report placed Apple and Google in the first and second spots on the BCG’s index. That report ranked the top 50 companies for innovation in the world. While those two firms are in the same place as last year, there was a bit of shifting throughout the rest of the upper end of the list.

For instance, in 2017, Tesla had been in the third place on the BCG’s index, but this year it dropped down to sixth place. Microsoft, on the other hand, managed to increase its place to third, after having been in the fourth spot last year. Amazon was able to climb up to the fourth place from having been in fifth last year, while Netflix plummeted out of the top ten from tenth place to thirteenth.

Changes in Innovation Leadership

While the majority of the companies in the top ten list merely shifted around, there were two that made it in for the first time. Those companies were Uber and Alibaba. Uber, the ride sharing app, grabbed hold of the ninth place for 2018, while Alibaba, the Chinese e-commerce giant took its spot in tenth.

North America was home to the majority of the world’s most innovative companies. Among the top fifty, 27 were from North America. Europe was home to 16 of the companies on BCG’s list, which was a notable increase over last year when there were ten European countries on the list.

Among the various sectors and industries that made their way into the list, travel and transportation enjoyed a notable presence on this year’s BCG list. Among the companies in that category were Tesla, Uber, SpaceX and Airbnb as well as Toyota, Mariott, BMW and InterContinental Hotels Group.

BCG determined that digital technologies were the driving force behind the most innovative companies in the world. Moreover, they also found that the companies on the list were also those most likely to develop new products with greater speed and at a lower cost than their rivals.

That said, the research indicated that the largest difference between the companies appearing at the top of the ranks and those at the lower end of the scale had to do with the priority they placed on incorporating digital processes into their businesses as a whole. Comparatively, the companies that gave the best performance in innovation in 2017 were those that encouraged collaborative open work environments and that drew the most ideas from outside sources such as social media.

The changes 2018 is seeing in innovation not only occur quickly among the top innovators, but also require companies and countries to keep up and adapt to an ever-changing ecosystem of advancement.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.