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Innovation: The Biggest Bang For The Buck

By Reena Jana

Innovation: The Biggest Bang For The Buck

Creating hip devices like the iPhone may not be the most profitable type of innovation. The S&P/BusinessWeek Global Innovation Index tracks 25 corporations known for their forward-thinking products, processes, consumer experience, or business models. For the 2008 BW/Boston Consulting Group Most Innovative Companies Survey, on which the index is based, we asked nearly 3,000 executives at 2,500 companies to rate each company by the type of innovation for which it is known. Here, we show how many companies in the index (named in each circle) fall under four types of innovation. We compare their average stock returns (the number on left) and average revenue growth (the number on bottom), weighted by market capitalization as of Sept. 3, 2008. Companies with innovative business models tend to have the highest average stock returns and highest average revenue growth of all the companies in the index.

Data: BCG-ValueScience, Bloomberg Financial Markets, Boston Consulting Group, Compustat, Reuters

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