An idea is only innovative if adopted. Chicago University Professor Michael Csikszentmihalyi says there are two types of creativity. "Little c" creativity is coming up with something new and different. But "big c" creativity changes things because it is adopted and changes the world.
As Steve Jobs put it, "Innovation is creativity that ships."
Which is why we should consider the innumerable lists of most innovative or admired companies with some skepticism. Too often they're "cool" and different and fascinating, but are they really going to change the world? It will be the market, not us, who judges.
So six months ago I launched an effort to really measure what the most innovative tech companies are, not based on what I like, but as measured by the impact they are having on their market.
My colleagues and I assembled a database of 6,300 companies, tracking 5 to 10 years of data on 105 factors including sales growth and profit margins. We ranked these companies according to three factors:
- Growth: They are growing faster than their peers, which means they are expanding their market share
- Profit: They are significantly more profitable, which means their offering is so attractive they can charge higher prices and/or they have sustained lower costs
- Value creation: They have generated value (enterprise value) considerably higher than the competition
For each company, we calculated a "competitiveness score" and then dug in deeper to see how analysts and investors explained the company's performance. Finally we calculated an "Outthinker" score, our measure of the level of competitive advantage a company has, which can help us predict whether the company's performance is likely to continue.