World Monitor Mag, Industrial Overview WM_November_2018_WEB_Version - Page 94

additional content years, in 2007 the industry with the largest presence on the list was computing and electronics, in 2012 it was computing and electronics and healthcare (tied), and in 2017 it was healthcare. High-leverage innovators had operating and gross margins similar to those of other Global Innovation 1000 companies for the five years ending in 2017, but significantly outperformed them on five other financial metrics, including gross profit growth (which for high-leverage innovators was 2.1 times as high as that of other companies) and market capitalization growth (2.9 times as high) (see “High-Leverage Innovator Performance Index”). During the three five-year periods ending in 2007, 2012, and 2017, high-leverage innovators’ relative outperformance decreased on two key measures — gross profit growth and operating income growth — although relative total shareholder returns increased slightly. This likely reflects a general improvement in the overall performance of the Global Innovation 1000 companies over time. But the data also reveals a startling fact: The high-leverage innovators vastly outperformed other companies in the 2007–12 period, which spans the last major business downturn and the first years of the current expansion. This suggests that during the 92 world monitor Great Recession, high-leverage innovators recovered more quickly and robustly. In fact, they blew the doors off the competition in gross profit growth (which was 6.6 times as high as that of other companies), operating income growth (7.0 times as high), and total shareholder returns, which were 13.4 times those of the rest of the companies in the Global Innovation 1000 (see “High-Leverage Innovator Performance, 2007–17”). Character is tics of Success ful Innovators In analyzing our survey respondents’ answers to questions about innovation practices and strategies, we found sharp differences between companies reporting fast revenue growth (43 percent of respondents) and those reporting similar or less success than their peers (48 percent said they were growing at the same rate as their peers and 9 percent said they were growing more slowly). Moreover, survey respondents who reported that their companies were outperforming their competitors have many of the same approaches and attitudes toward innovation that the high-leverage innovators exemplify. Strategic alignment. Respondents who reported that their companies were outperforming their industry groups were far