Innovation Report
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- Public companies in Fast Company's list of 50 Most Innovative Companies outperform their sector peers in total shareholder return, suggesting that high performance in innovation correlates with higher financial performance.
- Almost all top innovators we surveyed plan to enter new sectors or markets, demonstrating a commitment to growth beyond their core.
- About half of the leading innovators do not outspend their sector peers on R&D, suggesting innovation success is not solely about spending levels, but also about how spending is allocated.
This article is part of Bain's 2025 Innovation Report.
Each year, Fast Company publishes its list of the 50 Most Innovative Companies, highlighting organizations that are reshaping industries and setting the pace in business, tech, and culture. This year’s list includes a diverse range of global companies—from established giants like Nvidia and Waymo to fast-growing challengers like Athletic Brewing, Duolingo, and Budderfly. These firms are reinventing their industries: Waymo is transforming transportation, Athletic is tapping into a new era of social drinking, and Duolingo is gamifying education.
Despite their diversity, these companies share one clear belief: Innovation is not peripheral; it is vital to their mission.
Financial results from these companies suggest that success in innovation is correlated with significantly higher than sector-average total shareholder returns. Of the 10 public companies on the list with a track record of more than three years, eight have a higher three-year total shareholder return than their sectors, and four ranked in the top quartile of their sectors.
Innovation is not a function; it is the strategy
We asked 20 of the companies from Fast Company’s list to share their approach with us. Through interviews and surveys, we conducted a deep dive into how they invest and operate when it comes to innovation. In our conversations with their leaders and with leaders of other high-performing firms we’ve worked with, one insight consistently emerges: Innovation is not optional—it is their strategy.
What we heard was consistent with Bain & Company research that finds the best companies achieve growth from a mix of core activities and new growth engines—which we call Engine 2. Some 70% of the world's 100 largest companies successfully launched new businesses and grew them to scale. Among the subset of Fast Company innovators we examined, that ambition is even higher: 94% are committed to entering new sectors or markets, even when their core businesses remain strong.
We also found that 88% of those companies have embedded innovation into the top tier of their strategic agenda, ranking it as one of their top three priorities and elevating it alongside financial performance. These organizations recognize that future competitiveness won't come from marginal improvements; it will stem from a company’s ability to anticipate shifts, move early, and build entirely new businesses.
Clarity is an innovation multiplier
Equally important as commitment to innovation is clarity about it—knowing where to focus innovation efforts for maximum impact. Leading innovators are aligning their innovation strategies around three interdependent elements:
- Quantified ambition: Innovation has clear targets tied to revenue, profit, or market impact.
- Strategic coherence: Innovation themes are tightly linked to the company’s unique assets and capabilities.
- Prioritized domains: The company makes investments in specific markets, technologies, or customer problems where it believes it can lead.
Innovators don’t outspend; they out-allocate
Contrary to conventional wisdom, the most innovative companies do not always spend more than their competitors on R&D. Instead, they do a better job allocating that spending. Approximately half of the companies we examined said they spend the same or less than their competitors as an absolute R&D investment, suggesting that out-spending is not required to out-innovate.
What matters more than the amount spent is how it is spent. Typical companies devote a significant portion of their R&D budget to sustaining innovations—that is, enhancing or evolving existing products, services, or processes. But the vast majority of the leading innovators we studied devoted more than 60% of their R&D to transformative or disruptive innovation—investments focused on expanding into untapped categories or business models ... or creating entirely new ones.
This signals a fundamental shift: from managing innovation as a cost center to treating it as a dynamic capital allocation exercise. Innovation leaders are constantly adjusting investment portfolios—rebalancing from sustaining to transformative, from product to platform, from near-term to long-term—as the market evolves.
Innovation requires conviction
Innovation isn't a side project. Increasingly, it's the main act. The companies leading the next wave of growth don't dabble in innovation; they make bold bets, intentionally allocate or reallocate resources to those bets, and treat innovation not as an expense, but as the engine of strategy, growth, and value creation. It's not how much they spend that sets them apart; it's the clarity of their ambition and their conviction to act on it.
Read our 2025 Innovation Report
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First published in September 2025