Top Performers — This Year?

Business Week’s Top 50 Best Performing Companies from the S&P 500, as you might expect, has some pretty sobering news. Because it’s figured on a three-year average, some of the companies that made the list are now going through layoffs, reduced earnings and are trading at a fraction of last year’s share prices.

Oddly enough, however, only one was cited for its excellence in cost cutting.  The star performers in this group are the ones who have a strategy of innovation. And not just Google and Apple, but even staid Colgate-Palmolive, with their new disposable toothbrush with built-in toothpaste, or #1 Gilead, with a single-dose timed-release HIV drug.

In fact, recessions are precisely the time when companies get ahead by doing things better, cheaper and faster.  Pepsi gained huge market share against once-invincible Coke by selling in bigger bottles during the Depression. The iPod launched during the last recession.  And according to a McKinsey study, the companies that were most profitable over the last two decades were the ones that increased spending on R&D and acquisitions during recessions.

So whether you’re contemplating strategy for your own company, or looking to invest, now more than ever is the time to look toward disruptive innovation.

Print, podcasts and video: The BusinessWeek 50
 

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About Lynda Lawrence

Lynda Lawrence is an innovation consultant with Ideaworks Consulting. She teaches Strategic Innovation and Design Management at the Merage School at UCI, and is an advisor to the Beall Center.