Starbucks, Dell, Intel, Virgin--Big Losers In The World's Most Innovative Companies List.

Posted by: Bruce Nussbaum on April 21, 2008

Digging into the new list of The World’s Most Innovative Companies, the companies that have fallen significantly are as interesting to ponder as those that have risen sharply—or appeared for the first time. Bear in mind that we have evolved the list over the past three years, adding more hard metrics such as revenue growth, profit margin growth and annualized stock return to the survey results (nearly 2,000 top executives from the 2,500 largest global corporations answered this year). But given that caveat, let’s see which corporations fell sharply from 2006 to 2008.


Starbucks: 2006- #9; 2007- #14; 2008- #32

Dell: 2006- #14; 2007- #22; 2008- #46

Virgin 2006- #11; 2007- #18; 2008- #28

Intel 2006- #17; 2007- #19; 2008- #48

Cisco 2006- #28; 2007- #25; 2008- #35

Now, why? Starbucks we know about. It eroded the consumer experience by loading on too many products, forgetting the core coffee

aroma moment and playing to Wall Street. It's trying to change that now.

Dell, we know too. It's brilliantly innovative supply chain operation and model of selling inexpensive PCs to corporations was disupted by the switch to laptops and personal, not corporate, mobile computing. Dell is racing to catch up, hiring great designers from Nike and focussing on individual needs.

Virgin? Too much stretching of the "cool" brand into market spaces that didn't work.

Intel and Cisco? That confuses me. Both are executing well, innovating as they go. I could use some help here. Was it the metrics--revenue growth, margin growth and stock return--that dropped them down on the list? Or was it the opinions of thousands of top glboal managers?

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Reader Comments

DT

April 21, 2008 11:15 PM

Dell is an easy one..they shipped their customer service to India and that is the kiss of death.

Bill Kircos

April 21, 2008 11:50 PM

I work for Intel, and we’ve been sort of scratching our heads, too. It’s not often (well, 40 years exactly) that the transistor inside the brains of computers is entirely reinvented, boosting a computer’s speed, style and energy savings, and sparking a new class of web-savvy chips, the Atom. Our chips have 100s of millions of transistors inside them -- in fact, 2 million would fit inside the period at the end of this sentence. And while a three year financial look tells one story, our stock was one of the top Dow performers in 07 and margins increased soon after announcing the invention in early ’07. Perhaps this is a better definition of ‘return on innovation.'? Alas, a poll is a poll and we’ll keep at it – all of these companies are doing incredible things.

Dave

April 22, 2008 07:48 AM

How could this ranking be credible if it ranks top innovator like Intel at 48th place??? That's a big joke dude...Intel's 45nm high-K metal gate transistors was named one of the top 5 innovations of 2007 by Time Mag.

John B

April 22, 2008 03:48 PM

I work for Dell, and while I see some reasons why Dell may have fallen in this poll, I have also been part of one of Dell's more innovative efforts over the past couple of years. As part of a team that's been actively engaging the online community since April of 2006, I can say that we've been constantly innovating in that area. While we've made changes in our marketing, services, and sales strategies that may have brought us closer in line with other computer companies, we've stood out as a leader in social media. We were one of the first companies to have a "blog team", and others have been scrambling to follow suit.

I have to echo what Bill Kircos said:

"...a poll is a poll and we’ll keep at it – all of these companies are doing incredible things."

stevo

April 22, 2008 08:08 PM

I think that with Howard back at the helm and some great new guys in and the fast food guys out Starbucks should do real well. It sure looks like they are going to get back to their core competence. After all it's the fourth most well known brand in the world and a real icon.

Dave

April 22, 2008 08:27 PM

"Virgin? Too much stretching of the "cool" brand into market spaces that didn't work." - isn't this one of the core tenets of an innovative company? It's not that they make mistakes - it's that they take risks and learn from the mistakes they do make.

stevo

April 22, 2008 09:13 PM

Starbucks has added a few new very bright stars to it's line up of experts brought in to rebuild the core business.
Todd Kluger is a great chocolate and bakery young guru and should be a big influence in focusing the business in that lucrative sector. My hat's off to Howards good judgement. Starbucks is booming in it's foreign markets and should rebound in the States as well. In the 80's they did very well in a rough economic market. They had a way better class of barristas as bankers got the sack and filled the coffee.

Stewart

April 23, 2008 04:39 AM

Agree with DT - the kiss of death for Dell has been not being able to support the product, no matter how innovative. We had Dells for many years in our home. Problems - all support related - finally caused us to get rid of the Dell's and go to Apple. Both Apples work great, ad when I have had problems, the problems don't get big because I just make an appointment to fix it at the Genius Bar at the local Mall.

munidas pereira M.B.A (McGill)

April 23, 2008 11:44 AM

An answer to some questions:
1. Why is Cisco not doing so well? Huawei (a chinese company) is invading their domain at lower cost.
2. Dell -their customer service dropped. Based on personal experience I can tell of problems with dell.

Mike H

April 25, 2008 04:43 PM

Here come the bashers. Why is is that everytime a report or story comes out that portrays a company as slipping in this poll or other, doinghtis wrong, or even in many cases doing something right everyone comes out of the woodwork to complain. Have we really become a society truely this cynical? Using Dell as the example here is didn't take long for people to act like lemmings and jump right in.

For every negative report and comment like these baseless ones, there are positives. This report was published this past Tuesday. Who came out on top? And this support was very likely...oh...don't say it...India.

http://www.notebookreview.com/default.asp?newsID=4377

Ted

April 25, 2008 09:12 PM

I work for Dell (new employee) and I must say I'm encouraged by the level of investment being made to improve the customer experience.

I seems to be making good strides if this article is any indication: http://www.notebookreview.com/default.asp?newsID=4377

Amit H Shah

April 28, 2008 05:24 PM

I totally agree with Ted. I, too, work for Dell and have seen things improving at a very fast pace, be it customer experience, energy savings, services offerings, supply chain management, or product innovation.

Just go to http://www.dell.com/content/topics/global.aspx/awards/en/awards_new?c=us&l=en&s=corp and click on any product categories to see the numerous awards won by the company recently. In fact, the Dell XPS One received the "Most Important Products of 2007" award from BusinessWeek itself, apart from other "Best Product" category awards.

I would really like to see the detailed metrics BW used to assign these rankings. The term "Innovative Companies" seems to be narrowly (or loosely?)-defined.

I have to echo what Bill Kircos said:

"...a poll is a poll and we’ll keep at it – all of these companies are doing incredible things."

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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