What Makes a Company the 'World's Most Innovative?'

From Scott D. Anthony

The current issue of Fast Company was sure to get my attention. "The World's 50 Most Innovative Companies!" the cover blared. I start flipping through. The first eye roll came when the #1 ranking went to "Team Obama," which last time I checked was not a company. Then Google. Seemingly fair enough. Then Hulu, the online video joint venture between News Corp and NBC Universal. Huh?

I am a big fan of Hulu. Chapter 9 of The Silver Lining names it as one of 10 innovations that are well positioned to thrive in today's tough times. My colleague Renee Callahan has done an excellent analysis of Hulu's success to date. But the third most innovative company in the world?

My pet peeve with these kinds of compendiums is they often don't define what exactly an innovative company is. Often they will list companies that are doing cool things, or companies that have done a masterful job exploiting their core business. I couldn't even find a description of how Fast Company put its list together in the magazine.

I'm even more skeptical of surveys that ask executives to name innovative companies. Those surveys suffer from endless Halo Effects, and really shouldn't be trusted.

I empathize with editors trying to put these lists together, because it's awfully hard. After all, what does an innovative company look like?

In my mind, an innovative company does more than exploit a single idea. It develops the systematic ability to extend into new markets, and create entirely new business models. And importantly, it doesn't just invent new things; it makes money with its new efforts...