Innovative Companies: The Methodology

How we compiled our list of the World's Most Innovative Companies

To determine our 2008 list of the 50 most innovative companies, the Boston Consulting Group once again asked executives to vote for the most pioneering companies in the last year. In a climate when innovation will be scrutinized more than ever, we added three financial measures. For 2008, votes cast in the BusinessWeek-BCG survey got an 80% weighting, while three-year revenue and margin growth each got 5% and stock returns were weighted 10%.

Apple (AAPL) again leads our list. But the added metrics and more global nature of our respondents produced new names. Tata Group and Nintendo both landed in the top 10 for the first time. And dark horses like struggling General Motors (GM) received a surprising number of votes, thanks to concept cars like the electric Volt and a renewed focus on design.

BCG sent the 17-question survey electronically in November to the 2,500 largest global corporations by market value. More than 2,950 executives responded, our largest sample ever. BCG also sent it to readers in senior management, including members of the BusinessWeek Market Advisory Board. Participation was voluntary and anonymous, and self-votes were eliminated. To compare financials of private companies, we used metrics equal to industry performance.

DATA: Analysis and data provided in collaboration with Boston Consulting Group's innovation practice and BCG-ValueScience. Reuters and Compustat supplied financial data; Bloomberg, total shareholder returns.

* Revenue and operating margin growth is annualized based on 2004-2007 fiscal year earnings before interest and taxes, as a percent of revenues as they were originally stated. Where possible, quarterly and semiannual data were used to bring performance for pre-June yearends closer to December, 2007. Financial figures were calculated in local currency.

** Stock returns are annualized, 12/31/04 to 12/31/07, and account for price appreciation and dividends.

*** Calculating 3-year compound annual growth rate for operating margins was not possible when either figure was negative.

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