Apple is NOT The World's Most Innovative Company. Here is Why.

Apple regularly comes top of the polls that score the world’s most innovative companies. Here is the main reason why not being the most innovative bodes well for the Apple share price.

In the past year, Apple has topped Fast company’s -for walking the talk(?) – “Apple definitely has the keys–because where it goes, everyone follows.” It topped Fortune’s most admired for innovation.

And Boston Consulting Group/BusinessWeek had it number one in their global list. The Forbes list of the world’s most innovative is a notable exception placing Apple fifth

Apple has been innovative and disruptive. It reshaped the smartphone industry while Nokia toyed with its Symbian OS. It gave us the Ultra, with MacAir, and it finally got tablets right with the iPad. That run ended in 2010, too long ago for the kudos to continue accruing to Apple.

But leaving the time lag aside, there’s a good reason for not considering Apple to be the world’s most innovative company. And that’s simple. Companies that disrupt need what Brant Cooper and Patrick Vlaskovits,authors of the recently published Lean Entrepreneur, described earlier as a“sustaining” period.

The market needs to recognize that disruptors go into hibernation and rightly exploit what they have created before they disrupt again, if ever.

The lack of cognizance of this is affecting interpretations of Apple’s performance. But Apple has been losing innovation kudos – rightly so – for some time, if your reference point is the general public.

In the graph below you can see Apple’s reputation for innovation in decline from 2010 onwards. At the beginning of 2011 Google was regarded in social media channels as being as innovative as Apple.

But Google too had been through a trough just before, after the failures of Wave and Buzz. And that is the most important reason why Apple should not be regarded as the world’s most innovative company. Google came back with a 30% share price rise.

The reality is innovators need time in the doldrums. They need their relative failures (Maps, Siri). And they need time to reap the rewards of disruption.

They can sustain those failures if they switch off the disruption button, or at least tone it down. They become sustaining innovators, improving the basics of their product offerings (Phone 5) and services (iTunes in the Cloud).

But just as Google came back with Glass and the driverless car, and updated their innovation reputation (and share price), so too Apple will return. Cook promised as much to investors this week. At that point it will deserve the plaudits once more. In the meantime the most innovative tag is a millstone, forcing its share price down despite its enviable economic success.

We and the markets need to embrace the idea of sustaining innovation, periods of incremental change and relative failure. They are what make champions like Google and Apple tick. [Forbes]

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