Visualizing the most innovative companies in 2018

Visualizing the most innovative companies in 2018Visualizing the most innovative companies in 2018Move fast and break things. Unless you are breaking stuff, you are not moving fast enough. So said Mark Zuckerberg, back when Facebook was still growing rapidly and not engulfed in so many public problems. Zuckerberg meant that neuerung is messy, and as it turns out, expensive.PwCs 2018 Global Innovation Study analyzed the top 1,000 companies spending the most on research and development (RD). We broke out the rankings by industry for the top 50, letting you easily see the leaders in each category both in overall terms ($B) and RD intensity (% of total revenue). This approach creates a dynamic view into several different industries and companies, revealing the ones leaning hard into innovation and disruption.Click to enlargeFirst, a couple caveats. Companies had to publicly disclose their expenditures to be included in the ranking. PwC excluded any subsidiaries with financials included i n a parent company. For example, Googles expenditures roll up to its parent company, Alphabet. Taken altogether, the rankings comprise an astonishing 40% of all the worlds RD spending for 2018, which includes government RD.Top 10 Companies that Spend the Most on RDAmazon.com (United States) $22.62BAlphabet Inc. (United States) $16.23BVolkswagen (Germany) $15.78BSamsung Electronics (South Korea) $15.31BIntel (United States) $13.10BMicrosoft (United States) $12.29BApple (United States) $11.58BRoche Holding AG (Switzerland) $10.80BJohnson Johnson (United States) $10.55BMerck Co. (United States) $10.20BAmazon is by far and away the leader of the pack with over $22.6B in total expenses. To be fair, we classified Amazon as a retailer, although it should properly be understood as a conglomerate. Much of its RD budget no doubt goes to things like natural language processing (Alexa), web hosting services and logistics. Even still, Amazon easily surpasses the outlay of Alphabet, which is fa mous for its moonshot innovation projects.Our visualization also hints at underlying corporate strategies. Take technology hardware and equipment as an example. Samsung ($15.3B) and Apple ($11.6B) are both investing heavily in RD, but both companies are so successful that these huge figures only represent 5 to 10% of their overall revenue. They have enormous balance sheets. Nokia ($5.9B) is spending substantially less overall on RD but not when expressed as a percentage of its total revenue (21%). Clearly Nokia is betting the farm, so to speak, on its ability to innovate and stay in business.Yet another way to look at our visual is to compare different industries against each other. Software and services companies clearly spend substantial percentages of their revenue on RD, with only IBM allocating less than 10%. Thats similar to the pharmaceuticals industry, where every single company on our visual is well over 10%. In fact, if we ranked the top companies by their RD intensity, 4 out of the top 5 would be in pharmaceuticals. Theres an obvious and strong linkage between discovering new drugs and staying competitive.Compare these industries with auto manufactures, capital goods companies, diversified financials and consumer durables. Not a single company in our visual from these categories allocates more than 10% of its revenue. Granted, their RD budgets are still enormous by any reasonable standard, but only because most of these companies are gigantic multinationals.Are these companies safe from disruption? Or should they be spending billions more on RD? Wed only point out thatGEstock is trading below $8 a share.Searsis in a fight for its life. And big companiestend to declinewith old age.This article was originally published on HowMuch.