When Fast Company released its list of The World’s 50 Most Innovative Companies, a few things jumped out at us immediately like a miswired jack-in-the-box. We’ll also talk about why innovation is such an important indicator for growth, and how you can improve your chances of success when reaching out to growing companies with your offers by “trend-stacking.” (We’ll explain what we mean by that later on.)
Hotbeds of Innovation: Europe and North America Go Head-to-Head
The regional disparities apparent in the Fast Company list seemed glaringly obvious to us. Many of the companies listed as being amongst the world’s most innovative are based in North America and Western Europe. In fact, it’s hard to overstate how dominant these regions are. Along with some stiff competition from a handful of Asian countries, Western Europe and North America continue to gobble up a sizeable chunk of investment and contribute more than their share of the innovation driving the global economy.
This isn’t too surprising, given that these regions offer a wide variety of business benefits, from relatively efficient legal systems free of widespread corruption to political stability, free markets, and strong intellectual property protection.
Oh and sidenote, in case you wondering: how is innovation measured?
Innovation gets measured in all sorts of different ways. In addition to quantifiable metrics, like number of patents, dollars invested in research & development, and the rate of company creation in key industries (like quantum computing and biotech, for example), various rankings utilize qualitative factors to score regions and sectors, like:
• The stability and supportiveness of local governments
• The education levels and capabilities of local workforces
• The resilience and development of local infrastructure
• Market and business sophistication
There are two countries in particular we wanted to point out for their remarkable ability to nurture consistently high levels of innovation: The United States and Switzerland.
Born in the USA: Fast-Growing Innovation Cluster
Companies like Arctic Wolf Networks, operating out of Eden Prairie, Minnesota, continue to deliver cutting-edge services despite having a global headquarters nowhere near Silicon Valley. This cyber risk company offers security operations as a concierge service and, in doing so, has managed to earn a spot on both Fast Company’s 2022 list of the World’s Most Innovative Companies and a G-Score of 6 (the highest possible score) on our very own Gazelle platform.
And it seems that this trend of extreme innovation across the United States is only poised to continue. We’re optimistic for a whole bunch of reasons, but two of those stick out in our mind:
The federal government in the US has taken dramatic steps to boost high-tech research and development across the country. The CHIPS and Science Act is just one example of powerful legislative action designed to spur the creation and commercialization of new technologies by American companies.
Past innovation tends to spur future innovation. As this relatively recent paper from the Brookings Institute think-tank points out, innovative companies tend to cluster. Once you’ve established a hub of dynamic, fast-growing companies in an area, others tend to want to join the party.
Switzerland: Famous For More Than Just Banking and Cheese
On the other side of the Atlantic, Switzerland offers many of the same benefits as the United States, in a slightly different flavor. While its economy is not as freewheeling and fast-growing as the one found in the US, widespread availability of highly educated professionals, rock-solid domestic financial and political institutions, and the presence of innumerable well-known corporate innovators combine to make Switzerland a jewel of innovation in Europe.
Beyond established corporate titans famous for their innovative drive, Switzerland also boasts an exciting startup scene, with nimble competitors like Yokoy Group AG and Planted Foods AG aiming to catch their big rivals off-guard.
The proximity of other countries experiencing their own innovation tailwinds only serves to season the already rich menu of growth companies available to investors in Switzerland. Germany, France, and the countries of northern Europe all have strongly innovative economies in their own right, and their competitive drive further accelerates Switzerland’s movement.
This distinguishes Switzerland from its American competitor, insofar as the latter is bounded by oceans to its east and west and only borders Canada and Mexico, limiting the number of nearby potential trading partners.
Innovation and Growth Go Hand-in-Hand
We also noticed a strong correlation between the companies on Fast Company’s list and high growth scores (G-Score) in our own Gazelle platform. That’s not too surprising either, given that the number patents held by a firm are one of the growth signals in Gazelle.
In our humble opinion, the innovation activity in a company (as measured by the amount and nature of a company’s IP) is closely linked to how explosively that organization will grow and expand in the future. That’s why companies like Texas-based Solugen and the well-known SpaceX, both of which appear on the Fast Company list, also have high growth scores. These are companies that seem positioned for success and growth because of how well they create and commercialize new ideas and tech.
Trend Stacking: The best prospects
Of course, if you can stack multiple trends that all point to a high probability of growth and expansion, you’re even more likely to identify companies that need to fuel that growth.
What do we mean?
Well, we know that certain regions (cough…USA, Western Europe…cough) tend to collect most available commercial investment. But we also know (because we’ve written about this in the past) that the ESG and sustainability industries are currently magnets for innovation and investment.
That’s why we’re huge fans of looking for booming regions that serve as the headquarters for innovative companies in booming industries. Not only will you find high-value prospects enjoying regional tailwinds, but you’ll also find that they’re being supercharged by sector-specific boosts as well. So, for example, you can use Gazelle to limit your search for leads to sustainable Western European countries in the energy sector, thereby ensuring that any company you find will benefit from the booms in the energy industry, the sustainability sector, and the regional subsidies available in Western European nations.
Innovation, Growth, & Generating Leads
If there’s one thought we want to leave you with it’s definitely that innovation is a self-perpetuating flywheel. Once a region or industry has become established as an innovation powerhouse, it tends to build on itself and attract more and more investment, which makes it even more attractive to new entrants, etc…
For anyone focused on identifying growth opportunities amongst innovative firms around the world, they’d be best served by concentrating their efforts on the regions and industries we’ve identified above, as well as others that meet those same criteria. You can get the full list of the most innovative companies in the world organized by growth rate, geographical footproot, contacts, and 100s of exclusive data points!