Now that we understand how important RQ is, it’s useful to see what high RQ looks like. The RQ50 are the publicly traded companies whose R&D investment creates the greatest value for their shareholders. To create the list in Table A-1, I compiled the set of all publicly held U.S. companies investing $100 million or more in R&D FY2015, ranked them according to their RQ, and took the top 50.
Note: the RQ50 portfolio discussed in Chapter 8 differs from this list in that it has no R&D spending threshold and it includes foreign firms that trade on the U.S. exchanges.
TABLE A-1. Fiscal Year 2015 RQ50
The companies represent a broad swath of the economy (Figure A-1). The biggest representation (16 percent) comes from semiconductors, followed by biotech (10 percent) and pharmaceuticals (10 percent), but fully 18 percent of the RQ50 are the only companies in their industry to make the cut. So it’s not the case that these companies are all riding the same wave of opportunity. The RQ50 is fairly stable—on average 70 percent of companies who make the list one year appear the following year. Perhaps the most surprising revelation from the list, however, is that you probably don’t recognize most of the companies. There is very little overlap between the RQ50 and other innovation rankings, such as those of Forbes, Fast Company, Boston Consulting Group, and Strategy& (formerly Booz). In fact, the only RQ50 company to appear consistently in other rankings is Amazon. Why the discrepancy? In the case of BCG and Fast Company, the rankings are based on opinion. Accordingly, a high ranking requires innovations so visible that editors and executives outside the industry notice them. That is not where opportunity lies. In contrast, the RQ50 captures results before they cross editors’ radar.
FIGURE A-1. Industries in the RQ50
It is not clear from looking at the list what the RQ50 have in common that makes them high RQ. However, it is clear that it doesn’t line up with conventional views of what innovativeness looks like. That’s why RQ is so important—it captures the reality of what makes companies innovative, rather than the perception of what makes them innovative. You may be able to deduce some insights into what characteristics set the RQ50 apart by reviewing the company profiles that follow in greater detail.
