Apple is now a mediocre No. 79 on Forbes’ 100 firm innovative companies ranking list. Google bests Apple substantially at No. 47, but both can take some solace in that Microsoft doesn’t make the list at all.
However In 2011, which was Forbe’s Most Innovative Companies ranking inaugural year Apple nailed the No. 5 spot, dropping to No. 26 in 2012, and then the dizzying 53 position plungethis year.
In “How We Rank The World’s Most Innovative Companies 2013,” Forbes’ Jeff Dyer and Hal Gregersen explain that while most innovation rankings are popularity contests based on past performance or editorial whims they set out to create something very different with the Worlds Most Innovative Companies list, using the wisdom of the crowd. Their method relies on investors ability to identify firms they expect to be innovative now and in the future.
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Companies are ranked by their innovation premium: the difference between their market capitalization and a net present value of cash flows from existing businesses (based on a proprietary formula from HOLT/Credit Suisse). The difference between them is the bonus given by equity investors on the educated hunch that the company will continue to come up with profitable new growth.
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The Forbes’ “The World’s Most Innovative Companies” Rankings: