BCG Weekly Brief: Future-Ready Companies Outperform Today
To BCG’s network around the world,
Back in 2017, Fortune CEO Alan Murray and I were having breakfast when he told me how much he wished he could devise a better method for predicting the long-term success of a company—one that would go beyond the traditional peer survey approach.
With that challenge in mind, I reached out to my colleagues Martin Reeves and Gerry Hansell, who created an audacious solution. They used artificial intelligence to mine nonfinancial data for predictive signals of future growth capacity.
They designed a way to measure both the potential for growth and the capacity to deliver against this potential, using 20 signals in five buckets: market-implied growth potential, strategy, technology and investment, people, and structural factors. Part of the solution was to create algorithms based on natural language processing in order to examine adaptability and other strategic orientations.
The resulting corporate vitality index, the Fortune Future 50—now in its fourth year—has been able to consistently beat both overall market and various growth indices. And the fact that the companies from last year’s list have outperformed their peers during the COVID-19 crisis reinforces recent BCG Henderson Institute research on resilience and the durable benefits of vitality.
I talked through the latest findings with Martin, and here’s what really struck me:
- Technology is even more important than you think.
- Valuing diversity and purpose is not just a nice sentiment; it drives the success of businesses.
- Corporate growth has an increasingly bipolar structure, which will likely shape geopolitics and economics in the decade ahead.
- It may seem counterintuitive, but long-term vitality seems to be at least as important in bad times as in normal times.
- Understanding the drivers of vitality are key to leading in a forward-looking manner.
The 2020 Future 50 list and analysis came out a few days ago, and I hope you’ll take a look. It gives us a fascinating snapshot of the corporate economy, including some trends that have continued from last year as well as some interesting new shifts.
There’s so much we can learn from these companies and their capacity to innovate and reinvent themselves. I hope you’ll find our analysis on this and related topics below helpful, and I look forward to connecting again next week with some year-end reflections.
Chief Executive Officer
|The Durable Benefit of Corporate VitalityChange and uncertainty will surely outlast the current crisis. Companies must continue to build and measure their capacity for innovation and reinvention.CLICK TO READ MOREHow to Transform amid a CrisisTransformation has never been easy. Amid the pandemic, it’s never been more essential.The Serial Innovation ImperativeFacing turbulent and fast-changing markets, innovators need a well-tuned innovation system that can spot emerging product, service, and business model opportunities—and then rapidly develop and successfully scale them—over and over again.|