The Most 50 Innovative Company

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THE 50 MOST INNOVATIVE COMPANIES April 15, 2010, 5:00PM EST The 50 Most Innovative Companies For the first time since Bloomberg BusinessWeek began its annual Most Innovative Companies ranking in 2005, the majority of corporations in the Top 25 are based outside the U.S. The reason: the new global leaders coming out of Asia By Michael Arndt and Bruce Einhorn In the past decade, as the U.S. was losing an estimated 2.4 million factory jobs to China, the Economic Policy Institute and other research organizations identified an alarming trend—alarming to Westerners, at least. The factories of South Korea, Taiwan, and China were making their way up the global value chain, from the sneakers, toys, and T-shirts they had produced in earlier years to personal computers, consumer electronics gear, household appliances, and even cars. For the West, the silver lining was this: Asia's high-tech products were still generally regarded as inferior knockoffs of items designed in the U.S. and other so-called knowledge economies. China may have been the biggest worry, but as author Ted C. Fishman argued in his 2005 book, China Inc., it possessed a factory culture—it could imitate but not innovate. If Asia ever did figure out how to design cutting-edge products comparable to those dreamed up in the West, however, the one-two punch of high-value research and development and low-cost manufacturing would make it almost unbeatable in the battle for global economic supremacy. The battle is on. In the 2010 Bloomberg BusinessWeek annual rankings of Most Innovative Companies, 15 of the Top 50 are Asian—up from just five in 2006. In fact, for the first time since the rankings began in 2005, the majority of corporations in the Top 25 are based outside the U.S. Asia's newfound confidence is turning up everywhere you look, from wind turbines to high-speed bullet trains, just two of the technologies China is trying to export to the U.S. "We are the most advanced in many fields," Zheng Jian, director of high-speed rail at China's railway ministry, told The New York Times in April. "And we are willing to share with the U.S." The U.S., of course, still has its innovators. Apple (AAPL) remains No. 1, followed by perennial first runner-up Google (GOOG). But just ahead of General Electric (GE) in seventh and eighth places are newcomers LG Electronics of South Korea and BYD, with Korea's Hyundai Motor claiming a spot at 22. The extended Top 50 list is dominated by companies from Europe, Asia, and, in another first, South America (Petrobrás (PBR) of Brazil at No. 41). China's rise is biggest. A year ago its only representative was PC-maker Lenovo Group (LNVGY), at 46. This year Greater China is tied with Asia's postwar powerhouse, Japan, thanks to showings by BYD, Haier Electronics (27), Lenovo (29), China Mobile (CHL) (44), and Taiwan-based HTC (47). The age of Asian innovation has begun. To make room for these newcomers to the Top 25, which also include Intel (INTC) and Ford Motor (F) from the U.S. and Virgin Group from Britain, past winners Honda Motor (HMC), Reliance Industries, McDonald's (MCD), Walt Disney (DIS), and Vodafone (VOD) all got pushed to lower slots on the Top 50, while AT&T (T) dropped off entirely. "We're starting to see the beginning of a new world order," says James P. Andrew, a senior partner at Boston Consulting Group and head of its global innovation practice. "The developed world's hammerlock on innovation leadership is starting to break a little bit." HTC is typical of Asia's ascendancy. Founded in 1997 as a contract manufacturer, the company has long been the world's top maker of mobile handsets using Microsoft's (MSFT) Windows Mobile operating system. It produced unbranded devices that bear the logos of such wireless giants as Verizon, T-Mobile, Sprint Nextel (S), and Japan's NTT DoCoMo (DCM).

As it became more sophisticated, HTC built the first phone powered by Google's Android operating system, for T-Mobile,...
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