Top 10 Companies The Market Is Rewarding For Their Unique Innovations

Market pressures can drive companies to innovate, but corporate innovation can also drive market value.  One of the biggest drivers in how the market rewards companies and drives their stock prices higher is how well they can sustain innovation and invest in that innovation.  Across industries, as companies successfully innovate, valuations tend to move higher.  By identifying the companies the market is rewarding for continued success in innovation, we might be able to understand what kind of companies the market will reward in the future.

The GIM Institute (GIMI) and Valens Research worked together on this piece, leveraging GIMI’s deep insights in innovation and Valens knowledge of the UAFRS framework and corporate performance and valuation to identify great innovators who the market is rewarding for their innovation.  We’ve found 10 unique companies across the global corporate universe that are worthy of highlight.

We identified these companies using a multi-step process:

  • Identified firms with an excellent history of innovation, in products, processes, creating new markets and other areas.
  • Reviewed that universe of companies to see which companies have been able to generate value in terms of innovation based on their UAFRS-adjusted Return on Assets (ROA) being well above their required rate of returns for a multi-year period of time.
  • Verified those companies continued to invest in innovation and to grow, as identified by rapid investment in UAFRS-adjusted Asset growth into high ROA businesses.
  • Identified which of those companies the market was rewarding for their innovation with premium valuations.

To read more about GIMI and Valens and the processes we use to analyze companies, read at the bottom of the article.

 

Below are the 10 unique companies

 

List of Top 10 Corporate Innovators The Market is Rewarding:

 

About

Global Innovation Management Institute

Business innovation has continued to gain meaningful significance in organizations as a way to grow. This is evidenced by the increasing number of publications on innovation, innovation management, business innovation strategy and the creation of diverse roles required to manage innovation. However, many efforts to date, to both certify and study innovation, have left the discipline of innovation fragmented and overly diverse.

Founded in 2009, the Global Innovation Management Institute, GIM Institute or GIMI (pronounced as \ˈji-mē\) in short, is the global nonprofit standard certification board for innovation and innovation management. GIM Institute was initiated by a group of chief innovation officers, innovation executives, academics and consultants from around the world. GIM Institute’s worldwide advocacy for making innovation a professional business discipline is reinforced by our globally recognized standards and certification program, extensive academic programs, communities of practice, and professional development opportunities.

Over 200 Fortune 500 companies have participated in developing competencies in innovation based on the innovation frameworks and processes of GIM Institute. Companies such as Johnson Controls, Cigna, Natura, Verizon, EmiratesNBD, BAE Systems, Bunge, P&G, Eastman Chemical, Alibaba and many others around the world have been trained. Additionally, over 10,000 MBA students worldwide have developed mastery of innovation through the structured courses and manuals of GIM Institute. We have delivered innovation training at top MBA universities such as Yonsei University, Rotman School of Management, Singapore Management University, Thunderbird School of Global Management and Hult International Business School.

 

Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.  As such, Valens has been a key adopter of Uniform Adjusted Financial Reporting Standards (UAFRS), and has leveraged it to help improve insights into corporate profitability, valuation and credit risk analysis.

UAFRS is an alternative set of standards for financial reporting aimed at creating more reliable reporting of corporate financial activity.

UAFRS does not require management teams to restate their financials. Instead, it adjusts the reported financial statements to create as consistent report of financial activity as possible, free of distortions from changing or inconsistent financial reporting policies from year to year or across firms.

The term “uniform” suggests that all financial reporting rules should be made consistent for analysis of financial reports. This desired uniformity reflects that GAAP and IFRS financials are an antithesis to uniformity in financial statement reporting.

This specifically highlights the extensive research and documentation of the inconsistencies, misclassifications of categories and terminology, and lack of reliability of as-reported financial statements under GAAP and IFRS. (Generally Accepted Accounting Principles in the United States and International Financial Reporting Standards.)

The term “adjusted” suggests that the process of achieving UAFRS is by adjusting the as-reported financial statements by disassembling and then re-building the financial statements with an entirely consistent set of accounting rules.

More detailed disclosure of financial activity by management is desirable, however it is not necessary to achieve significant benefits from simply adjusting the as-reported GAAP and IFRS financial statements into UAFRS-based financial statements.

 

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