BCG+2023年最具创新性的公司-Most Innovative Companies 2023 Reaching New Heights in Uncertain Times

MostInnovativeCompanies2023

ReachingNewHeightsinUncertainTimes

May2023

Contents

01TheFormulaforInnovationfrom

LeadingCompanies

•WhatWinnersAreDoing

•Bosch:ACultureofInnovation

•The50MostInnovativeCompaniesof2023

•InnovationandPerformance

•Samsung:Leadingthe

CommercializationofConsumerTech

07ADownturnUpstheStakesin

Innovation

•ANewOutlook?

•InvestingwithFocus

•McDonald’s:DrivingGrowthwithDigitalInnovation

•GoodAdvice(Updated)StandstheTestofTime

14

19

24

2

5

HowEarlyWinnersAre

UnlockingAI’sPotential

•FromImplementationtoImpact

•H&M:LeveragingAIandHumanInputforAmplifiedIntelligence

•FourImpactSuccessFactors

•Moderna:PioneeringAI-Driven

InnovationintheFightAgainstCancer

Methodology

AbouttheAuthors

Acknowledgments

TheFormulaforInnovationfrom

LeadingCompanies

ByJustinManly,MichaelRingel,AmyMacDougall,WillCornock,JohannHarnoss,KonstantinosApostolatos,RamónBaeza,RyojiKimura,MichaelWard,BethViner,andJean-ManuelIzaret

F

orthethirdstraightyear,theevidenceismounting:companiesthatbothprioritizeinnovationandmakesurethattheyarereadytoactarewideningthegapoverlesscapablecompetitors.Theleadersatthesefirmsareconsistentlydeliveringnewproducts,enteringnew

markets,andestablishingnewrevenuestreams.The

laggardsstruggletomakeheadwaybeyondincrementalimprovements.

Thisyear,thefindingsfromourglobalinnovationsurvey

dovetailwithothernewBCGresearchshowingthatcompa-niesbuiltforthefutureshareacommonsetofattributes

thatenablethemtoexhibitsuperiorperformance,bemoreresilienttoshocksanddisruptions,andexploitinnovationfasterforvalue-creatinggrowth.Inadditiontopeopleandtechnologycapabilities(including,importantly,AI),oneoftheseattributesisaninnovation-drivenculture.

Inthisyear’sMostInnovativeCompaniesreport,we

examinewhatinnovation-readyleaders(thosethatarereadytodevelopproduct,process,andbusinessmodelinnovationsthatcandeliversustainableimpact)aredoingtopullahead

andhowinnovationisbuildingtheirresiliencetoeconomic

uncertaintyandfuelingtheirpursuitofloweremissions.In

“ADownturnUpstheStakesinInnovation,”weexplorehowapotentialdownturnin2023isevokingamuchdifferent

responsethandidthe2009financialcrisis,especiallyamongleadingfirms.In“HowEarlyWinnersAreUnlockingAI’s

Potential,”wedigintothecriticalroleofartificialintelligence(AI)ininnovationasinmanyotherareasofbusinesstoday.

BOSTONCONSULTINGGROUP1

Decrease

Increase

Exhibit2-Nearly90%ofReadyCompaniesPlantoIncreaseInnovationSpending

Howwillyourcompany'sinnovation,R&D,andproductdevelopmentspendingchangethisyearinresponsetomacroeconomicfactors?(%)

16

6

32

10

30

23

11

26

7

22

3

15

Increase

by>30%

Increaseby

21%to30%

Increaseby

11%to20%

Increaseslightly

(5%to10%)

Nochange

(<5%change)

Decrease

NoChange

Ready

Unready

Sources:BCGGlobalInnovationSurvey2023;BCGanalysis.

Note:n=1,023forglobalrespondents.Totalsmaynotsumduetorounding.“Ready”companiesarethosethatarereadytodevelopproduct,process,andbusinessmodelinnovationsthatcandeliversustainableimpact.

Forsimilarreasons,theyalsoaremorelikelytoorchestrateorparticipateinecosystems,engagingwithexternalpartners,

evencompetitors,oninnovations.Theydeterminewhattheyneed,whetherit’stechnology,data,orsomethingelse,and

thenworkoutthemosteffectivewaytoaccessit.

Theydrivedigitalinnovationwithaclearbiastowardsnew

digitalproducts,agileteaming,andimprovingcustomerandmarketinginsights.Theyregularlyreviewtheperformanceofinnovationunitsorvehicles(suchasventurecapitalfunds,

accelerators,incubators,andR&D)andshiftresourcestowardcentersofsuccess.Andtheyunderstandthateffectiveportfoliogovernanceandmanagement,especiallywithrespecttodatatransparency,arekeytodrivingimpact.

Bosch:ACultureofInnovation

TheBoschGroup(number37onthe2023MostInnovativeCompanieslist)statesinitsannualreportthat“thebasisforthecompany’sfuturegrowthisitsinnovativestrength.”WhileBoschhasaspecialownershipstructurethat

facilitateslong-termplanningandup-frontinvestments,itisastrongcultureofinnovationthatunderpins.

BoschhasaglobalR&Dorganizationofabout84,800

employees,44,000ofwhomaresoftwaredevelopers,in130locations.From2018through2021,thecompanyhas

maintainedsteadyR&Dspendingasshareofsalesat

between7.6%and8.2%.AcorepillarofBosch’sinnovation

strategyisitscentralizedBoschResearchunit.With1,800

highlyspecializedemployees,thisunitgeneratesabouta

quarterofallBoschpatents.BoschResearchfocuseson

enablingtechnologiesthatcanbeappliedacrossTheBoschGroup,suchasAIoT,whichcombinesAIandtheInternetofThings,tomovefromfundamentalresearchtoactual

productinnovationandlarge-scalecommercialization.

Boschbuildsonabroadecosystemofinternalbusinessunitsandexternalpartnerstogenerateinnovationideas.

Whilethree-quartersofR&Dspendinghasbeendevotedtothecompany’sMobilitySolutionsbusinessandtopicssuchaselectrification,driverassistancesystems,semiconductors,andsensors,BoschsupplementsinternalR&Dinvestmentswithtargetedacquisitionstosupporthigh-priorityareas,suchasitsautomateddrivingproductportfolio.

In2022alone,thecompanymadethreeinvestmentsto

acquireIPforthenextgenerationofmobility,consistent

withitsgoalofmakingBoschaone-stopshopfor“allthenecessarybuildingblocksofautomateddriving—from

actuatorsandsensorstosoftwareandmaps,”accordingtoMathiasPillin,presidentoftheCross-DomainComputingSolutionsdivision.

Forexample,Bosch’sSemiconductorIdeastotheMarketteamspecializesinhigh-frequency-processing“System-on-Chips”usedincontrolunitsfortheautomotiveindustry.ItsFiveAIunitprovidesamodularcloudplatformdesignedforbuildingsoftwarecomponentsanddevelopmentplatforms

BOSTONCONSULTINGGROUP3

forsafeautomateddrivingsystems,particularlysupportingsolutionsusedincomplexurbanenvironments.“WewantFivetogiveanextraboosttoourworkinsoftwaredevelop-mentforsafeautomateddriving,”saidMarkusHeyn,

memberoftheBoschboardofmanagementandchair-

manoftheMobilitySolutionsbusiness.Bosch’sAtlatec

team,meanwhile,createshigh-resolutiondigitalmapsthatarecriticaltoautomateddrivingfunctionality.

The50MostInnovativeCompaniesof2023

The50mostinnovativecompaniesfor2023area

geographicallydiversegroup,roughlyevenlysplitbetweenNorthAmericaandtherestoftheworld.EuropeandAsiaarewellrepresented,andtheMiddleEastjoinsthelistforthefirsttimewithSaudiAramcoatnumber41

.(SeeExhibit3.)

Autocompaniesheldmultiplepositionsinthe2022list;

internationalenergycompaniesholdfivespotsthisyear.

Thismaybeasignofrespondents’concernsoverclimate

changeandthefactthattheyarelookingtotheenergyindus-trytobealargeandcreativepartofthesolution.Inspiteofthemarketheadwindsthattheyexperiencedin2022,techcompa-niescontinuetodominatethetop50,includingthetopten.

Thebigstory,though—thisyearandformostofthepastdecade—istheabilityofinnovationtodriveperformance.Since2005,ourportfolioofthe50mostinnovative

companieshasoutpacedthebroadermarketinsharehold-erreturnsbyasignificantmargin—anaverageof3.3

percentagepointsperyear.(SeeExhibit4.)

InnovationandPerformance

TheconsistentoutperformanceofBCG’smostinnovativecompaniescomparedwiththebroadermarketisone

indicationofthecorrelationbetweensuperiorinnovationcapabilitiesandperformance.Thereareothers.

NewBCGresearchintotheshiftingdriversof

performance

andsustainablecompetitiveadvantage

showthatthe

abilitytoinnovateconsistentlyovertimeisfastrisingin

importance.Traditionalmarketshaveplateaued,and

growth,whichaccountsfor60%to70%ofshareholder

returnsinthemediumterm,isfoundprimarilyinnew

markets,includingthosecreatedbytechnologydisruption,suchase-commerce,streamingmedia,cloud-basedinter-actions,mobilitysolutions,andsmartenergysolutions.Asmallnumberofcompaniesthathaveembeddedthe

capabilitiesthatenablethemtoexploitinnovationfor

value-creatinggrowtharewideningtheperformancegapwiththeircompetitorsandgeneratingshareholderreturnsalmostthreetimesgreaterthanthoseoftheS&P1200.

Thesenewbasesofadvantagearerootedinsuperiorcapa-bilities,especiallythoserelatedtodigital,AI,andinnovation.Thesecapabilitiesaremoredifficulttoestablishbutmuch

moreenduringfortworeasons.First,technologyisevolvingrapidly,andproficiencyinatechnologytoday,suchas

AI,meansthatasthetechnologygrowsmorepowerful,acompanycanbefasteratdeployingit.Second,compa-niesthathavethesecapabilitiesbenefitfromaflywheeleffect:theycaninvent,deploy,adapt,andreinventmorequicklyandwithgreaterimpactthantheircompetitorscan.Theyalsogetbetteratco-creatingwithcustomersandecosystempartnersandatdemocratizingtheuseofdatathroughouttheirorganization.

Samsung:LeadingtheCommercializationofConsumerTech

ConsumerelectronicsgiantSamsungisanexampleofa

companythatusesallthetoolsavailabletodriveperfor-

mancebyinnovatingatmultiplestagesofthevaluechain.

Samsungregularlybringsnewtechnologytothemass

marketthroughafocusoncomponent-leveltechnology

innovationsandadvancesinscaledmanufacturing.Overtheyears,asitscoreproductsandmarkets(suchassmart-

phonesandTVs)havematured,Samsung,knownforits

dizzyingarrayofproducts,hasprovedadeptatpushingintoadjacentmarketsanddevelopingnewbusinessmodels.

Samsunginnovatesalongtwodimensions:component-

leveladvances(improvingexistingtechnologieswithinno-vations,suchasfoldablephones),andadoption(increasingaccessibilitytoproductsthroughmassproduction,lower

costs,andtechnologicaladvancements).ThecompanyisaglobalinnovationleaderacrossR&D,patents,andinnova-tionvehiclessuchaslabsandincubators.ItinvestsheavilyinR&D,spendingmorethan$17billion(9%ofsales)in

2021alone,makingitthelargestnon-USR&Dspender.

Boastingabout10,000researchersanddevelopersdedicat-edtothedevelopmentoffuturetech,thecompanyhas

developedarobustpatentportfolio:itwasgranted6,300patentsin2022,themostintheUS.

AsSamsunghasdevelopednewproductsandsoughtoutnewmarkets,ithasmovedfromdisplaysandelectronic

componentsintorobotics,smarthomeproducts,connectedcars,medicalequipment,virtualassistants,and5G

connectivity.Thecompanyhascapturedsignificantsharesoftheglobalmarketforsmartphones,QLEDTVs,and

IoTproducts.

andadvantageisbecomingstrongerthanever.Winnersunderstandthisandinvestintheirinnovationengines

T

heconnectionbetweeninnovationandbothgrowth

accordingly.Theywillcontinuetowidentheirleadoverothersuntilthelaggardsresettheirownprioritiesandinvestmentsforthefuture.

4MOSTINNOVATIVECOMPANIES2023

11–20

Pfizer(+7)

J&J(+15)

SpaceX

Nvidia(+1)

ExxonMobil

Meta(-5)

Nike(-5)

IBM(-8)

3M(+18)

TataGroup

21–30

Roche

Oracle(-3)

BioNTech

Shell

SchneiderElectric

P&G(+8)

Nestlé(+22)

General

Electric(+1)

Xiaomi(+2)

Honeywell

31–40

Sony(-22)

Sinopec

Hitachi(+6)

McDonald's

Merck

ByteDance

Bosch(-11)

Dell(-24)

Glencore

Stripe

41–50

SaudiAramco

Coca-Cola

(-6)

Mercedes-BenzGroup1

Alibaba

(-22)

Walmart

(-32)

PetroChina

NTT

Lenovo(-24)

BMW

Unilever

xxx-Returneexxx-Newentrant

Sources:BCGGlobalInnovationSurvey2023;BCGanalysis.

Note:+/-indicateschangefrom2022MICranking.

1Mercedes-BenzGroupwaspreviouslyidentifiedasDaimler.

Ranking

1–10

1Apple2Tesla(+3)3Amazon

4Alphabet

5Microsoft

(-3)

6Moderna

(+1)

7Samsung

(-1)

8Huawei

9BYD

Company

10Siemens

(+10)

Exhibit3

The50MostInnovativeCompaniesof2023

BOSTONCONSULTINGGROUP5

—BCGMIC50MSCIWorldIndex

2004200720102013201620192022

Sources:BCGInnovationJourneyAnalyticsDatabase;CapitalIQ.

Note:Totalshareholderreturn(TSR)performanceofpubliclylistedMICtop50companies.Chartcomparestheirone-yearTSRperformanceforthatyearagainstglobalperformanceindex(MSCIWorld).WereweighttheMIC50basketannuallytoreflectchangestothelist.BCGMIC50hasoutperformedtheindexin12of17years.

287

+3.3%

AnnualTSR

Totalshareholderreturn

2005=index100

100

482

Exhibit4

InnovatorsCreateValue

6MOSTINNOVATIVECOMPANIES2023

ADownturnUpstheStakesin

Innovation

ByJustinManly,MichaelRingel,AmyMacDougall,WillCornock,JohannHarnoss,KonstantinosApostolatos,RamónBaeza,RyojiKimura,MichaelWard,BethViner,andJean-ManuelIzaret

occurs)lookstobeverydifferentfromothers.Duringthelastrecession,in2009,companiesreinedin

F

romaninnovationperspective,thisdownturn(ifit

spending.Theinnovationplanswereportedon

inthat

year’sMostInnovativeCompaniesreport

reflectedthat

belttightening.Lessthantwo-thirdsofcompaniesrankedinnovationasatop-threeprioritythatyear,andonly58%plannedtoincreasespending.Nearly15%expectedtocutinnovationinvestment.Thisyear,bycontrast,79%ofcom-paniesseeinnovationasatop-threepriority—15points

morethanin2009—and66%plantoincreasespending,42%bymorethan10%.

(SeeExhibit5.)

ANewOutlook?

What’sgoingonin2023?Foronething,asgrowthhas

slowedincoremarkets,theimportanceofbeingableto

innovatenewproductsandservicesthatcarrycompaniesintonewmarketswithnewbusinessmodelshasincreased.

Wereportedin2021

thatmostcompaniesareatleast

graduallyorpartiallyalteringtheircorebusinessmodels,withdigitalopportunitiesandthesustainabilityimperative

astwokeyforcesdrivingthechange.Thisdynamiccontinuestoday.

Morecompaniesarebuildingadjacentandnew-

frontierbusinessmodelstoserveasgrowthengines.ManyfirmsarealsoplanningtoincreasetheirspendingonsuchtoolsasM&A,innovationlabs,andopeninnovationecosys-tems,despitethepossibledownturn.(SeeExhibit6.)

BOSTONCONSULTINGGROUP7

Exhibit5-InnovationPriorityandSpendingPlansAreMuchStrongerin2023ThanTheyWerein2009

Wheredoesinnovation,R&D,andproductdevelopmentrankamongyourcompany’spriorities?(%)

100

80

60

40

20

0

+15pp

+8pp

10

26

39

25

3

18

46

33

20092023

ToppriorityTop3Top10Notonthelist

Howwillyourcompany'sinnovation,R&D,andproductdevelopmentspendingchangethisyearinresponsetomacroeconomicfactors?(%)

100

80

60

40

20

0

6

5

9

+16pp

7

20

28

24

32

42

26

2023

2009

Increasesignificantly(>10%)

Decreaseslightly(-1%to-10%)

Increaseslightly(1%to10%)

Decreasesignificantly(>-10%)

Stayroughlythesame

Sources:BCGGlobalInnovationSurvey2023;BCGanalysis.

Note:n=1,023forglobalrespondents.pp=percentagepoints.

Companiesareraisingtheircommitmenttoinnovation,

althoughmanyarenotimprovingtheircapabilitiesasfastastheywouldlike.Lastyear,forexample,nearly80%(39)of

BCG’s50mostinnovativecompaniesrankedamongthetopclimateandsustainability(C&S)innovators,accordingto

globalpeervotes.Fully60%ofhigh-emittingcompaniesweretargetingdeep-techinnovation,anddeeptechwasthe

numberoneornumbertwoinnovationfocusforthosefirms.Inaddition,manymorecommittedC&Sinnovatorsare

leveragingexternalinnovationvehiclesthataretypicallyusedforlongertermormoretechnologicallyadvancedsolutions.

SeparateBCGresearchhasshownthatagroupofcompaniesrepresentingabout25%oftheS&P1200haveputinplace

thecapabilitiesthatenablethemtopivotfromshoringupthedigitalbasicsoftheirvaluechainsto

focusingongrowthfrom

innovation

.Someareontheleadingedgeofdisruptionin

theirsectorsanddemonstratingconsiderableresilienceinthefaceofuncertainty.Thesecompaniesaredeliveringimpres-

siveresults,faroutpacingtheirpeersonsuchkeymetricsasshareholderreturnsandrevenueandearningsgrowth.

Inaddition,theoldadageaboutdownturnsseparating

winnersandlosersmaybegainingrealtractionthistime

around.Topperformersrealizethat

playingagameofwait

andseecaneasilybackfire

inunstabletimes,asitgives

forward-lookingcompetitorsmoretimetopositionthem-selvestowin.Forexample,leadersknowthatbuilding

medium-tolong-termresiliencerequiresongoingfocusonC&S:89%ofinnovationleadersciteitasatop-threepriori-ty,and49%ofallcompanieshaveconfidenceintheirC&Sinvestmentdecisions(upfromjust23%lastyear).AmongthoseprioritizingC&S,average“C&Sreadiness”increasedto37%in2023from28%in2022,basedonBCG’sinnova-tiontoimpact(i2i)parameters.

8MOSTINNOVATIVECOMPANIES2023

14

15

13

18

19

22

53

52

46

60

35

33

33

32

23

22

58

55

Howdoyouanticipatetheuseofinnovationvehiclestochangeinresponsetomacroeconomicfactorssuchasapotentialdownturn,inflation,oruncertainty?(%)

15

55

26

M&A

Digitalandinnovationlab

Openinnovationecosystem

R&Dlabs

Accelerator

CVCfund

Incubator

Sources:BCGGlobalInnovationSurvey2023;BCGanalysis.

Note:n=1,023forglobalrespondents.

IncreasespendingMaintainspendingDecreasespending

Exhibit6

CompaniesExpecttoIncreaseSpendingOnKey

InnovationEnablers,EvenintheFaceofaDownturn

BOSTONCONSULTINGGROUP9

-20

-14

26

22

+7

17

10

8

6

Acquireleaders

andemployeeswith

demonstratedability

toinnovate

M&Adoesnot

playasignificantrole

markets

Accesstonew

InvestingwithFocus

Thisyear’ssurveyfoundasignificantpercentageofcompaniesthatarenotonlyprioritizinginnovationbutinvestinginit.Theyarealsofocusingtheirinvestmentsforgreaterimpactand

managingtheirportfoliosforimprovedresults,perhapsdirectlyinresponsetoeconomicuncertaintyortheprospectofturmoil.Theyunderstandthatinnovationleadstoadvantage,orasEricSchmidt,formerchairmanandCEOofGoogle,recently

observedinForeignAffairs,“Themainreasoninnovationnow

lendssuchamassiveadvantageisthatitbegetsmoreinnovation

Innovatingthroughuncertaintyrequirestoughprioritization

aroundportfoliomanagement,rigorousgovernance,investmentinM&Aopportunities,andthecontinuousbuildingoftalentandinternalcapabilities.Inpractice,thismeanscompaniesshouldfocusonfivethings.

M&A.Leaderslooktoacquiremissingtechnologies,capabilities,andtalent.Ourresearchfoundthatinnovation-readycompanies(thosethatarereadytodevelopproduct,process,andbusinessmodelinnovationsthatcandeliversustainableimpact)usea

widearrayofstrategictoolstostrengthentheirplatformsand

practices.TheyaremuchmoreaggressiveintheiruseofM&Atofurtherobjectivesbyaccessingnewtechnologiesandprocessesoracquiringleadersandemployeeswithademonstratedabilitytoinnovate.

(SeeExhibit7.)

Theyarealsomorelikelytoinvolveinnovationexpertsintargetanalysisandselection.

Microsoft(whichhasrankedamongthetopfiveinnovative

companiessincethefirsteditionofthisreportin2005)isfamousforusingM&Aaswellaspartnershipsandalliancestofillstrate-gicneedsthatfurtheritsinnovationagenda.Themostrecentexampleisthecompany’sinvestmentsinOpenAIandthe

integrationofChatGPTintomultipleMicrosoftproductofferings.

AnotherexampleisSiemens(number10thisyearandinthetop50for13oftheprevious16years),whichusesM&Ainvarious

ways.In2018,itspunoff25%ofitsSiemensHealthineersmedi-caldevicebusinesstospurentrepreneurialindependence.

SiemensHealthineershastakenadvantageoftheflexibilityto

pursuebigbetsinhealthcare,continuingthroughthepandemic.InAugust2020,itannouncedtheacquisitionoflongtimepartnerVarianMedicalSystemsfor$16.4billion.TheVarianacquisitionpositionedSiemensHealthineersastheplayerwiththemost

comprehensiveintegratedcancercareportfolio,acrossscreening,diagnostics,andtreatment.Ithasallowedthecompanyto

realizeinnovationsynergies,combiningSiemens’imagingtech-nologywithVarian’stherapeutictechnologyandAItoenhanceexistingproductsandcreatenewones.Forexample,SiemensHealthineers’newradiotherapyproductcombinesimaging

capabilitywithAItodorapidassessmentsandreal-timeoptimi-zationoftreatmentwhilepatientsarereceivingtherapy.

Exhibit7-CompaniesUseM&AtoAccessInnovativeTechnologiesandProcesses,andTheyInvolveInnovationExpertsinTargetSelection

WhatroledoM&Asplayinyourcompany'sinnovationstrategyduringtimesofdownturn,

inflation,oruncertainty(selectone)?(%)

+3

36

33

Acquireinnovative

technologiesor

processes

9

+23

32

Includeinnovation

expertsinourtarget

screeninganddue

diligenceprocess

AllcompaniesReadycompanies

Sources:BCGGlobalInnovationSurvey2023;BCGanalysis.

Note:n=1,023forglobalrespondents.”Ready”companiesarethosethatarereadytodevelopproduct,process,andbusinessmodelinnovationsthatcandeliversustainableimpact.

10MOSTINNOVATIVECOMPANIES2023

33

32

35

33

31

36

45

29

26

49

29

22

38

32

30

35

31

34

47

30

23

Exhibit8-ReadyCompaniesLeanAwayfromtheCoreTowardBreakthroughInnovations

Allcompanies

Readycompanies

100%

41

32

28

Pastyear(2022)

Expectedallocationin

uncertainty/downturn

Pastyear(2022)

Expectedallocationin

uncertainty/downturn

Distancefromcore:

Levelofadvantage:

Near-in/extension

Near-in/sustaining

Newtocompany(adjacencies)

Incremental

Newtoworld(breakthrough)

Distruptive

Source:BCGGlobalInnovationSurvey2023;BCGanalysis.

Note:n=1,023forglobalrespondents.Totalsmaynotsumduetorounding.“Ready”companiesarethosethatarereadytodevelopproduct,process,andbusinessmodelinnovationsthatcandeliversustainableimpact.

PortfolioPrioritization.Innovation-readycompanies

emphasizebreakthroughordisruptiveinnovations,whileless-sophisticatedinnovatorsallocateresourcesmoreheavilyto

“near-in”orsustaininginnovation.Significantpercentagesofallthecompaniesinour2023surveyareincreasingtheir

focusondigitalproductinnovation(34%),adjacentnew

businessmodels(30%),loweringcosts(23%),andnewwaysofworking(30%).Innovation-readycompaniesareshiftingtheirallocationofresourcesawayfromincrementalinnovations

thatsustaincurrentpositionsoradvantagestowardbreak-

throughordisruptiveinnovationsthatcreatenewmarketsorrevenuestreams.

(SeeExhibit8.)

Intheeventofadownturn,readycompaniesexpecttoallocate50%moreinvestment

towardbreakthroughinnovations(34%versus22%forothercompanies)andalmostthatmuchmoretowarddisruptive

innovations(36%versus26%).Readycompaniesareplanningtoincreasedownturnspendinginbothareaswhileothers

treadwaterorretrench.

PortfolioManagement.Embeddingeffectiveportfolio

managementandgovernancehelpsensureROI.Theavailabil