The faces and voices of the world’s most innovative company.
Careful readers of this magazine may be scratching their heads right now, in light of our recent cover story laying out the many challenges facing Apple. But the company has had, indisputably, one hell of a run. In the past year alone, three major new products — iPhone, iPod Touch, and Leopard OS — fueled triple-digit revenue growth. So while analysts forecast a more earthbound Apple in 2008, it deserves praise. And extra points for style.
In 2007, the social-networking juggernaut had variously impressed with its ability to reinvent the wheel (opening its platform to outside developers) and drawn cyberpickets with its boneheaded missteps (trying to sell advertising by telegraphing its users’ every move). But after a year lived dangerously, Facebook is officially A-list, with a $15 billion valuation to boot, thanks to Microsoft’s $240 million investment. That’s nothing to throw a sheep at.
GE makes our list not on reputation but on the strength of its breakthrough products. Among them: an HD CT scanner that reduces radiation exposure by half, a reengineering of the best-selling CF34 jet engine for the booming Chinese aviation market, and a hybrid locomotive that cuts emissions by 50% — evidence that Ecomagination is more than just marketing babble. Coming up, commercially viable OLED lighting by 2010.
Nobody can accuse the Palo Alto — based design firm of taking on easy clients in 2007. The CDC asked Ideo to help tackle childhood obesity; the Acumen Fund enlisted the shop to collaborate on delivering clean water in the developing world; and the Red Cross hired it to help encourage blood donations. “As social issues increasingly become business issues,” says Ideo CEO Tim Brown, “this will be a critical new direction for design.” Of course, there were awards too. The company’s designs for the Eclipse 500 Very Light Jet cabin and cockpit instrument panel won IDEA Gold medals, as did its LCD monitor for Samsung. But it was Ideo’s “Keep the Change” campaign for Bank of America that had perhaps the most impact. Based on research showing that boomer women with kids tend to round up their financial transactions, Ideo developed a service that rounds up debit card purchases to the nearest dollar, then transfers the monetary difference from the customer’s checking account to her savings. In its first year, 2.5 million customers signed up.
You expect fancy footwear from Nike. But its latest masterstroke is social networking, online and off. From events to the Web to unique retail hubs, Nike is blurring the line between brand and experience.Mark Borden
Once a maker of wood products and tires, the Finnish firm has thrived in the wireless world. Today, Nokia has a 37% (and growing) share of the global cell-phone market, more than twice that of its closest competitor, Motorola. How? A two-tiered design process that identifies the “remarkable similarities in what global consumers want and need in their mobile devices,” says senior design manager Rhys Newman, then adds local insight. Bright colors are key to success in India, China, and the Middle East, “where a phone can show status,” he says. Markets with low literacy rates get phones without written menus. The company’s next challenge is to gain momentum in the U.S., where it has less than 10% of the market. It’s betting big on the feature-rich N95 smartphone — and a strategy of welcoming third-party apps.
When Alibaba went public last November and raised a stunning $1.5 billion — the biggest Internet IPO since Google’s — it also raised eyebrows around the world. But probably not those of founder Jack Ma, who back in 1999 recognized that China’s 42 million small and medium-size companies (the vast majority of businesses in the country) just might create some opportunities for e-commerce. Alibaba provides a point-and-click system for suppliers to get online and connect with distributors and consumers all over the world. The Chinese site today boasts 16 million users, and the English iteration has 9 million. Watch out, eBay.
Without much fanfare, Amazon has more than tripled its revenues since 2002, to $13 billion. The key: giving customers choices, not just among products, but also between buying from Amazon directly or from outside vendors on the site. Amazon’s new digital offerings — in e-books, videos, and music — present a fresh menu of options. The company’s digital music store, launched in May, already comprises 3 million songs, all compatible with any device and any music software. Similarly, Unbox allows Amazon customers to rent or buy films and TV shows, and watch them on a variety of players. In an era of fighting formats and fears of piracy, that’s uncommonly ecumenical.
By now you know the story: After Sony and Microsoft kicked the Mario out of Nintendo’s GameCube in the Video Game War of 2001, the cutest and smallest of the three platform makers needed a new plan. “Nintendo took a step back from the technology arms race and chose to focus on the fun of playing, rather than cold tech specs,” says Reggie Fils-Aimé, president of Nintendo of America. The resulting Wii system, with its intuitive motion-sensitive controller and interactive games, appealed not only to teen boys but also to their sisters, moms, and dads. In 2007, Wii outsold both the PlayStation 3 and Xbox 360. But get this: Unlike its competitors–which lose money on each console and earn it back on software — Nintendo turns a profit on its consoles, makes more selling games, then takes in still more in licensing fees. “Not to sound too obvious,” Fils-Aimé says, “but it makes good business sense to make a profit on the products you sell.” Wall Street thinks so too. The company’s stock has more than doubled over the past year. Nintendo’s upset is doing more than attracting new gamers and bruising Sony and Microsoft. Says Sega of America president Simon Jefferey: “It has opened doors of creativity throughout the video-game business.”
#11 PROCTER & GAMBLE
When Procter & Gamble’s stock tanked by more than half in 2000, CEO A.G. Lafley knew he was facing the dilemma of giant companies everywhere: Despite pouring money into R&D, P&G couldn’t create new products fast enough to keep growing. The only way out, Lafley realized, was to innovate innovation. So he launched the Connect + Develop program, which allows outside developers to get their concepts and designs into P&G’s product pipeline. An applicator developed by Cardinal Health (now Catalent), for example, helped P&G launch Olay Regenerist Eye Derma-Pods, now its top-selling skin-care item. Today, 42% of P&G products have an externally sourced component. And this giant is growing: Revenues rose 8%, to $78 billion, last fiscal year, while profits climbed 14%, to $11 billion.
#12 NEWS CORP.
As if buying MySpace didn’t cement News Corp. as a maverick, Murdoch & Co. last year pledged to go carbon neutral by 2010, launched the Fox Business Network, and, oh yeah, snapped up Dow Jones and The Wall Street Journal.
Imagine going for a half-hour doctor’s visit and coming out with a treatment plan tailored to your unique genetic blueprint. That’s the vision at Santa Clara, California–based Affymetrix, which makes lab tests that scan tissue samples for variations in thousands of genes. The company banked an estimated $405 million in revenue last year, spurred by its AmpliChip test, which identifies people who metabolize drugs slowly. Now the race is on to develop advanced tests for genetic predisposition to heart disease and the most common types of cancer.
Photograph: Chris Greenberg/The New York Times/Redux
Two years into the job, CEO Bob Iger continues to mold Disney into the digital-media innovator to watch. ABC was the first network to sell TV episodes on iTunes and to stream them for free on its Web site. Pirates of the Caribbean and High School Musical showed multiplatform agility. And Pixar’s latest hit, Ratatouille, was a masterful blend of technical brilliance, artistry, and narrative that evoked Walt’s original magic. Pixar cofounder Ed Catmull, now president of Pixar and Disney Animation Studios, is encouraging the Big Mouse to rediscover and build on its rich tradition.
FC: How are you reviving hand-drawn animation?
What worked at Pixar that is now helping Disney?
How do you encourage innovation?
The first bendable OLED screen. An ultrathin double-sided LCD. A solid-state drive to replace the hard disk in your laptop. And soon, in a collaboration with game company Reactrix: a TV that lets viewers move what’s on the screen with the wave of a hand. Just a taste of the impact of the world’s fastest-growing consumer-electronics company.
“I describe it as green trench warfare,” says Adam Lowry, cofounder of Method, the San Francisco–based company that makes ecologically sound cleaning products. Last February, Lowry and his partner, Eric Ryan, launched an assault against Procter & Gamble’s blockbuster Swiffer. Method’s Omop, a sleek silver reusable mop, employs sweeping cloths made from corn-based plastic (PLA). Instead of clogging landfills, they’re 100% biodegradable — and just as effective.
This isn’t the first time Lowry, a 6-foot-6-inch chemical engineer who founded Method with his highschool buddy Ryan eight years ago, has given the middle finger to the consumer-products playbook. Two years ago, Method rolled out dryer sheets that use plant-based oil instead of the industry standard, beef fat. The company had a triple-concentrated laundry detergent a full two years before Unilever and P&G started crowing about all the water and shipping waste they would eliminate with their own. Meanwhile, Method’s were also nontoxic, and packaged in bottles that look more MoMA than Kmart.
Last year’s numbers were a landmark for Method, proving to the industry that clean products are as viable as conventional ones and that slick design can transform even the most mundane commodities into objects of desire — all while priced for the masses. In 2005, Method’s sales clocked in at a mere $15.3 million. In 2007, they hit nearly $100 million. Seventh Generation, the green products pioneer, hit $100 million last year too, but it took nearly two decades to get there. The fast-rising Method is on a completely different trajectory.
“Method changed consumers’ viewpoint from ‘This [cleaning product] is something necessary and not good-looking’ to ‘This is something that’s almost an art object that I want everyone who walks into my house to see,’ ” says Lynn Dornblaser, who tracks consumer-product trends at global research house Mintel. “They’ve lured shoppers who hadn’t thought about environmental cleaners by getting them to come in through the back door.” Method’s minimalist bottles of surface cleaner, detergent, soap, and air freshener — originally designed by Karim Rashid, now designed in-house — can be found everywhere from Whole Foods and Target to Duane Reade and Staples. Last year, Lowry and Ryan opened their first European office, in London; in January, they launched a television show on the Home Shopping Network; and in May, they will release their first book, Squeaky Green, a home-detox guide that reveals some of the industry’s nastier secrets.
None of it has been easy. Ryan, a former ad guy who sports skinny ties and metal-frame glasses, explains that in 2005, when they first set out to create the Omop, he and Lowry met with every U.S. manufacturer of Swiffer-style cloths. “Every single one of them said you cannot make [the cloths] out of PLA,” Lowry says. So the duo scouted out a factory in China that was willing to take on the challenge. Now that Method has proven the formula works and there’s consumer demand for it, Lowry says, the manufacturers who snubbed them are crawling back.
The trench warfare with the majors is only going to intensify, though. Last December, Clorox launched Green Works, the first entirely new plant-based line to emerge from one of the dominant firms. Instead of heading for cover, Lowry and Ryan plan to stay ahead of the competition as they always have–by using ingenuity to feed the product line. “When we started this company, we had a saying that we were never going to try to out-Clorox Clorox,” says Ryan. “We shifted the playing field where now companies are trying to out-Method Method.” — Danielle Sacks
Target’s strategy of rolling out capsule collections by well-known designers has kept the store’s fashion merchandise leading the trends. In 2008, that strategy will take the form of vintage-inspired sports apparel and footwear with Converse, and a line of bedding, linens, and baby goods designed by StudioDwell. Target’s appetite for hip design also extends to its marketing initiatives, such as 2007’s “model-less” fashion show at New York’s Grand Central Terminal (think holograms strutting down virtual runways) and a 2005 “vertical fashion show” at Rockefeller Center (left). Internally, the company encourages non-big-box thinking with a quarterly Big Idea contest. Winners don’t just get a star on their performance reviews; they get a cash prize and a chance to see their ideas brought to life.
When CEO Mark Hurd took over the demoralized post–Carly Fiorina company in 2005, he knew it would be a messy job — and that was before the spying scandal. But in just two years, HP has stolen Dell’s leadership in the PC market, tripled its own stock price, and grabbed some heat with an ad campaign that features Gwen Stefani and Jay-Z. Then there are the new products, such as Blackbird 002, an extreme-performance gaming computer that has opened a new market in high-margin, premium PCs.
Two or three times a week since November, a Fresh & Easy grocery has opened in California, Arizona, or Nevada. It’s part of a plan to open 200 stores in two years envisioned by the chain’s British parent, Tesco, the world’s third-largest retailer. If Tesco’s past is precedent, the U.S. grocery business ought to pay attention: Tesco has already quashed challenges from Wal-Mart in the U.K., and overseas expansion is its biggest growth generator. With more selection than a 7-Eleven but less than a standard supermarket, Fresh & Easy is geared toward the typical American shopper who buys only a few hundred products. The company plans to keep costs low by centralizing distribution, selling more store-brand items, and relying solely on automated checkout. By 2011, sales are projected to reach $4 billion, according to TNS Retail Forward.
Give Ausra CEO Bob Fishman a 92-by-92-mile expanse of desert land — an area less than one-tenth the size of Nevada — and he could power the entire United States. Fishman doesn’t control that much land, of course, and transporting electricity all over the country would get tricky. But that doesn’t make the power of Ausra’s solar technology any less mind-boggling.
While most older solar setups depend on pricey photovoltaic panels, Ausra’s installations boast mass-produced mirror clusters that focus the sun’s rays onto water-filled tubes. When the water begins to boil, it produces enough steam to turn an array of turbines. Fishman estimates electricity generated this way will cost 10 to 12 cents per kilowatt-hour — on par with power from polluting sources such as coal, and 50% less than photovoltaic power. “Photovoltaic is constrained because it uses high-grade silicon,” he says. “We’re using everyday materials — just steel, glass, and water.”
VC extraordinaire Vinod Khosla invested $25 million in Ausra last year, and Kleiner, Perkins, Caulfield, & Byers kicked in another $15 million, a colossal vote of confidence that has proven contagious. In November 2007, Pacific Gas & Electric signed a 20-year power purchasing agreement with the company that will generate more than $1 billion in revenue (Ausra’s first California plant is slated to be up and running by 2010), and Ausra officials are in talks with utilities in Florida and Nevada to cement similar deals. “I don’t think it’s out of the question for us to get 30% of the national grid within 20 years,” Fishman says.
Rather than just going carbon neutral (which it aims to do by 2010) or using sustainable materials (which it does in everything from its products and packaging to its factories and stores), New Hampshire–based Timberland has taken the bully pulpit in its environmental efforts, leading the way to greater responsibility even as it struggles financially. The company aims to influence its consumers’ and employees’ behavior with big benefits for hybrid-car buyers, community-service incentives, green scorecards on its products — even recycling its billboards into tote bags.
IBM racked up 3,125 U.S. patents in 2007, more than any other company — for the 15th year in a row. It also celebrated the first anniversary of InnovationJam: CEO Sam Palmisano pledged $100 million for the best ideas at the companywide brainstorm; he ultimately funded 10 of the 37,000 submitted, including five new businesses. “Everyone’s trying to figure out the holy grail of collaborative innovation,” says IBM VP David Yaun. So now IBM is selling the InnovationJam methodology itself.
Founded 62 years ago, Arup is the graybeard of eco-sensitive engineering and design. Its work represents a world tour of avant-garde architecture — Paris’s Pompidou Center, the Sydney Opera House, the London Eye. Arup’s latest work is no less ambitious: A massive Beijing airport expansion, opening in time for the Olympics, will accommodate 55 million passengers; an eco-village in England will include zero-carbon homes; a “personal rapid transit” system will shuttle Heathrow passengers in driverless pods. Arup has done projects in 160 countries, but its Google-like governing philosophy (set down 38 years ago by founder Sir Ove Arup, a Danish philosopher and engineer) has remained constant: “Our pursuit of quality should in itself be useful.”
There’s a dead body lying on the floor — no actual flesh, just the crime-scene white-tape outline of a 6-foot-tall man frozen in a mad dash. “Here it is, death of the old advertising model,” smirks Jason DeLand, a partner at Anomaly, pointing at the floor of his company’s Soho loft space. “Shot as he was running out.”
It’s worth a chuckle, despite the cliché of yet another new-breed creative agency taking a shot at its predecessors. Unlike most of the hot shops that have emerged in recent years premised on the demise of the 30-second spot, Anomaly has definitely earned its bragging rights.
Instead of claiming to reinvent advertising, Anomaly shirks the ad categorization altogether. In 2004, DeLand set out with four former colleagues from Chiat\Day and Wieden+Kennedy to build a new kind of company: part branding firm, part design shop, part innovation think tank, part VC firm. Anomaly has created a model that attacks the fundamental flaws of the agency machine. Most ad agencies still earn their paychecks from time sheets and media spend, which means they’re motivated to be inefficient and to produce ideas that are wedded to expensive media. Anomaly takes a different approach, negotiating upfront either a predetermined fee or, better yet, royalties or an equity stake in a product. So when a client comes in with an advertising problem, Anomoly addresses it more broadly as a business issue, analyzing everything from design to product development. “They have a talent that goes beyond your typical artist or creative,” says Brian Kelley, president of Coca-Cola’s Still Beverages, a client. “It’s an eclectic group of people who think about driving every piece of your business.”
In thinking about their own business, the partners recognized that as branding experts, they could just as well create original products too. “We would rather invent the next VitaminWater than do the ads for VitaminWater,” says partner Carl Johnson. So while half of Anomaly’s business is doing client work, the other half is building brands from scratch. “What we’re really doing is generating profit from clients, then reinvesting in a venture fund for our intellectual properties,” Johnson says.
Anomaly’s Sand Hill Road–meets–Madison Avenue approach isn’t yet ubiquitous — or dominant — but it is showing results. Profitable in its first year of business, the New York–based agency has doubled its revenue every year since. In 2007, Anomaly brought in nearly $20 million, with new clients including Converse and Bluetooth-headset maker Jawbone. New businesses it has launched include Avec Eric, a culinary line with Le Bernardin chef Eric Ripert; Eu, a high-end skin care line with former Neutrogena chemist Tammy Ha; and EOS, a mass-market skin-care line. As the firm has gained momentum, the ad industry has taken notice: At least two of the major agency holding companies have offered to buy Anomaly in the past two years. Instead, after reaching their self-imposed max of 100 staffers this year, DeLand and crew opted to take an innovative approach to their own growth. Wary of becoming another large agency where creativity suffers with scale, Anomaly launched an offspring: Another Anomaly, an autonomous company with its own balance sheet, partners, clients, and an office just a few city blocks away.
The venture that best illustrates the Anomaly model is the luggage it created for Virgin America last year. Richard Branson’s new airline hired the team in 2005 to feed ideas into every part of its operations. Anomaly realized it could use the crew’s luggage as branding medium and brought in snowboard company Burton to help craft an edgy black suitcase with skateboard wheels and a removable cosmetics pouch. Sales from the luggage, which will be available commercially later this year, will be shared three ways among the companies. “What would have been a cost for Virgin is now an additional revenue stream,” says partner Johnny Vulkan. — Danielle Sacks
Since 1982, designers, engineers, and architects have made Autodesk’s 2-D AutoCAD drafting programs the default choice for creating anything from buildings to sailboards. Last year, sales grew by more than 20%, and revenue reached $1.84 billion. Now Autodesk is targeting the latest growth area in product design: 3-D virtual prototyping that eliminates the need for building physical models. With the company’s Inventor software, designers can not only create a rendering that shows how a product will look (as with the Wuhan Blue Sky Chinese apartment project at left), but they can subject it to tests that show how different elements will respond to gravity or torque. What’s more, whereas competitors’ forays into 3-D prototyping were prohibitively expensive and hard to use, Inventor costs $5,300 and uses click-and-drag functionality that allows objects to be changed, redrawn, and saved as easily as in a Word document. As Buzz Kross, a VP at Autodesk, brags: “We’ve delivered this tool into the hands of designers. It has become one everybody can use.”
Rendering: Courtesy of Anderson Anderson Architecture. Photograph: Herman Miller Inc.
#26 HERMAN MILLER
The first product to emerge from Herman Miller’s secret R&D lab in Michigan just over a year ago has nothing to do with the company’s signature Aeron chairs or modular office furniture. Convia Programmable Infrastructure transforms the way companies install electrical systems, letting you reconfigure an entire building — lighting, outlets, even heat and A/C — with only a two-button point-and-click wand. The result? Not just flexibility in managing space, but also up to 30% energy savings. Times are good at Herman Miller. Among the dozens of fresh developments in 2007 were a personal climate control unit adapted from automotive technology and a voice privacy system that scrambles cell-phone users’ voices to the ears of random passersby. Coming soon: office furniture with built-in cordless charging technology.
“There should never be a day when you don’t have your music wherever you are,” says Michael Bloom, general manager of Rhapsody, RealNetworks’ subscription music service. As a PC-tethered offering, Rhapsody couldn’t overcome a century of ingrained music-buying behavior. But with its DNA now embedded in MTV, Facebook, and tech gadgets from TiVo to Nokia Internet tablets to Verizon VCast cell phones (coming soon), Rhapsody’s ubiquity is starting to seem inevitable.
#28 LG ELECTRONICS
Early on, LG, then a tiny Korean electronics manufacturer, was known as the “lucky group.” It sure looks that way now: Half a century old, LG is one of the world’s biggest producers of cell-phone handsets, air-conditioners, front-loading washing machines, DVD players, and flat-panel TVs. It has gone from near anonymity here just three years ago to $11.5 billion in North American sales in 2007. LG’s killer app, slated for 2009 release, is rumored to be a mobile TV, dubbed MPH, that can pick up robust digital high-def broadcasts — even from the backseat of a car going as fast as 100 miles per hour.
Not long ago, Boeing seemed destined for a future of eating Airbus’s jetwash. But the 787 Dreamliner put the Seattle jumbo back in contention. Fifty percent of the Dreamliner’s fuselage is built from lightweight composite materials, helping shave 20% off fuel consumption. The 787 is also 60% quieter than similar planes and emits cleaner exhaust. Inside, in a bid to reduce the headaches, dry mouth, and general misery of the long-haul hangover, higher cabin pressure and humidity better imitate life on the ground, and lighting adjusts with time-zone shifts. By January, 55 customers had ordered more than 800 Dreamliners, making it the fastest-selling commercial jet ever.
Omniture is like an intelligence upgrade for the Web. It provides thousands of clients, from Bank of America to JetBlue, with real-time information about how visitors use their Web sites; those visitors, meanwhile, find an increasingly personal experience rooted in previous behavior and interests. And the data derived from this sort of high-IQ interaction have made Omniture an essential tool for improving its return on online ad spending.Last year, it managed $500 million in keyword spending that led to $10 billion in actual commerce. “We want to change the online experience,” CEO Josh James says. “If consumers are happy, everyone is happy.” James certainly is: Omniture grew about 80% in 2007, with sales topping $140 million.
It seemed beyond the call of duty. But when iRobot, a technology company in Burlington, Massachusetts, was testing new versions of its military robot, it joined the Army. Specifically, the company sent engineer Tom Frost to basic training and on to Afghanistan, where he helped soldiers clear caves with iRobot’s PackBot, a nimble creature that can shoot audio and video and climb stairs (it even works underwater). Frost, whose army nickname morphed from “Sweet Cheeks” to “Tommy Gun” as he grew into his deployment, sent immediate feedback: “This thing has got to be lighter.”
The wars in Afghanistan and Iraq have provided a sad laboratory for iRobot, a company better known for the Roomba, a robot that vacuums floors, then cruises back to its charger base like a dutiful pet. For Helen Greiner, one of iRobot’s three founders, the war has provided the impetus for the military to fast-track the adoption of new technology. “There is no reason to send a person into a dangerous situation when a robot can help,” she says.
Before robots, the state of the art for cave clearing was to tie a rope around a solider’s waist and have him crawl around with a grappling hook. While in the field, Frost was able to improve the machine in real time, downloading code updates via satellite, cobbling together solutions to signal problems that occur in caves, and suggesting improvements, such as switching from a laptop interface to a more familiar joystick control. The result is the first infantry bot, priced to move at around $50,000 and weighing in at about 40 pounds. In December, the company won a $286 million contract to deliver as many as 3,000 of them to the U.S. Army.
IRobot was born of the purest geek passion. The three founders met at MIT and bonded over their love of robots: Greiner and CEO Colin Angle were undergrads together; CTO Rod Brooks was Angle’s thesis adviser. (Angle’s senior project with Brooks, a six-legged autonomous walking robot named Genghis, was later installed at the Smithsonian’s National Air and Space Museum.) Ultimately, the trio decided it wanted to build robots that real people could use — better living through robotics. “The challenge was that robots cost more to build than they delivered in value,” Angle says. “What would it take to have them touch people’s lives on a daily basis?” The founders left the rarefied air of academia and went into business in 1990. Government and university projects sustained them initially — they built the behavior-controlled rovers for NASA that led to the Mars explorer — but they were seriously strapped for cash. “We went six-and-a-half years never starting the month with enough money in the bank to make payroll,” Angle recalls. “But we always made it.”
While Greiner deepened the company’s military relationships — iRobot joined a DARPA program for robotics in 1997 — Angle spearheaded the consumer division. IRobot spent part of the 1990s making industrial cleaning robots for SC Johnson and toys for Hasbro; when both contracts expired, Greiner and Angle decided to combine what they’d learned into the Roomba. The company raised $38 million in investor cash in 1998, started developing the cute digital domestic (most users name them, as they would a pet) in 1999, and debuted its first version in 2002. The Roomba now accounts for around 2% of the vacuum market.
As the company has grown — it went public in November 2005 — innovation has become a priority. The consumer side runs periodic “bake offs” where inter-disciplinary teams develop ideas that have been languishing in-house. The last round produced the Looj, a gizmo that cleans gutters, currently in beta. The government-and-industrial arm opened the platform for its basic PackBot to outside developers last year as a way of driving innovation based on iRobot’s proprietary operating system. The move paid off quickly. “We partnered with an explosives-sensor company that was able to hook into our onboard computer,” Angle says. The resulting bomb-sniffing bot generated 25% of the revenue for the G&I division last year: “We shipped 150 in 2007,” mostly to Baghdad.
“Nobody wants war,” Angle says, but “the nature of conflict has changed forever.” That’s true of many aspects of life, and the team is always thinking about the future, about a world where houses clean themselves and an aging population uses robots to help them manage the small but frustrating chores of daily life. Says Greiner: “We’ve got the technology. How do we get there first?” — Ellen McGirt
In 2007, Wal-Mart came to symbolize corporate environmental transformation. Most famously, the company doubled the U.S. market for energy-saving CFL lightbulbs, selling 100 million in nine months. It rolled out an online system for tracking how its suppliers reduce their packaging, launched a nationwide program to teach employees about sustainability, installed solar-power systems on some stores and warehouses–the scale is astonishing. But there’s also this: Last year, Wal-Mart hit sales of $1 billion a day, a world record. It was only in 1980 that Wal-Mart broke $1 billion a year.
#33 LIVE NATION
A lot of fuss was made when Live Nation signed Madonna to a reported $120 million deal last year. The Material Matron dropped Warner — her label of 25 years, which still owns her catalog and will get two more albums — and made the Clear Channel spin-off her exclusive music partner: record label, concert promoter, ticket vendor, and merch agent. The usual phrases were thrown around: “paradigm shift,” “artist empowerment,” “death of the label.” But the real big news is what comes next. Live Nation plans to go solo and end its partnership with Ticketmaster at the end of this year. In doing so, it will break up a long-running duopoly, keep a larger share of lucrative ticket fees for itself, and crucially, cut Ticketmaster off from key customer data. “Forty million fans were coming to our door, and we let Ticketmaster have their addresses and email,” says Live Nation CEO Michael Rapino (left). “That’s ludicrous.”
Intel had a rough 2006: Its slipping market share forced layoffs, a reorg, and a complete overhaul of its chip offerings. But adversity fired Intel’s competitive metabolism (even if it did torch a feel-good partnership with Nicholas Negroponte’s One Laptop Per Child, which Intel came to see as a competitor to its own Classmate PC). By the end of 2007, Intel had 83% of the chip market and a new 45-nanometer core processor that has double the number of transistors and uses 30% less energy.
The earth is warming. The snow is vanishing. So snowboard maker Burton now owns … a surfboard manufacturer, Channel Islands. A year after that 2006 purchase, Burton opened a 11,500-square-foot combo surf, skate, and snow mega-store on L.A.’s Melrose Avenue, part of a strategy for breaking down the boundaries that traditionally separated the categories–and for rolling out product year-round in the process. And roll it out Burton does: some 45,000 different items, each replaced annually. We’re not sure if it offers a Greenland longboard yet, but for Burton, there is no bad weather.
#36 WHOLE FOODS
Sure, CEO John Mackey got spanked in 2007 for his anonymous posts on message boards, but the real Whole Foods story remains its relentless drive to raise the bar in terms of the foods it offers, their presentation, and how they’re transported to the store. Sometimes that leadership verges on silly (e.g.,“butter bars,” at which customers can have their butters custom-mixed with special herbs and salts). But more often, Whole Foods’ innovations foster social responsibility — such as its “Whole Trade” concept, which certifies that products from developing countries are produced in economically and environmentally sustainable ways. Perhaps the most innovative Whole Foods effort of the past year was a loan program for its food suppliers. The company, which will pass $7 billion in sales in 2008, created a pool of $10 million per year to provide low-interest loans to small food producers to encourage the local-agriculture movement.
#37 CISCO SYSTEMS
Back in the dotcom boom-boom days, Cisco Systems was synonymous with back-end infrastructure. It built devices consumers never saw that connected Internet servers and made the information superhighway run at autobahn speed. Routers, modems, switches — strictly behind-the-scenes action. But growth stopped with the crash, and Cisco needed a front-end strategy. Badly. Today, the company’s Linksys brand is selling phones and Webcams in addition to its ubiquitous wireless products. And by employing the same Ethernet strategy it used to cash in on connecting office printers and computers in the ’90s, Cisco now plans to use its Scientific Atlanta TV-set-top box to network home computers, entertainment systems, and phones. The new consumer businesses accounted for $3.5 billion in 2007 sales, 10% of the total. Next up: a videoconference technology called TelePresence 3000, which employs flat-panel screens on each end, microphone speakers, cameras, and special lighting rigs. In its debut year, TelePresence was installed in more than 40 countries. Now the company is building a family-friendly version it hopes will one day complete the home entertainment — communication loop and (finally) make Cisco a household name.
Most companies don’t change the world even once. With its role in technologies that light our homes, reduce air pollution, and entertain us, Corning has transformed our lives repeatedly. This year marks the 100th anniversary of Corning’s storied R&D operation, now called “Sullivan Park,” after Eugene Sullivan, who created the firm’s first lab and cultivated the firm’s innovative culture. Corning now spends more than $2 million each workday on R&D, employing 1,800 researchers and a process that’s both rigorously disciplined and near Google-like in its openness. That’s how it has democratized technology over the past century, bringing to ordinary people everything from lightbulbs to light-speed communication. — Charles Fishman
Read More: Corning’s History
The year 2007 will go down as a historic one for Toyota, its 50th in the United States. The company won 16% of the American market — more than double its share 10 years ago — and passed Ford to take the number-two spot in U.S. car sales, despite an uncharacteristic slip in quality ratings. The company unveiled its next-gen Prius (due in 2010), a plug-in with a carbon-fiber body, but ironically, its most successful rollout was the redesigned Tundra pickup. Toyota sold 3,800 of the jumbo 18-mpg trucks per week this year — 300 more than Prius.
#40 REAL D
When Beowulf hit theaters in November, it marked the dawn of the next — some say ultimate — wave of 3-D movies. Making the display possible was a California outfit called Real D, whose technology uses circularly polarized light from digital projectors, avoiding the eye fatigue of the old 3-D. Theaters are banking that the technology will stop the box-office slide, and Hollywood’s biggest players have projects in the pipeline. That’s not enough for Real D: “Our view is that 3-D images change the business on all visual displays,” says CEO Michael Lewis, who envisions Real D at home and even on mobile screens. The company is already experimenting with alternative content, from multiplayer in-theater video games to an NBA game converted into 3-D in real-time. A U2 3-D concert film (above) is out now.
Critics like to crow about Redmond’s stumbles. The struggling Zune. The Xbox 360’s “red ring of death.” And as for Vista, well, cue the clearing of throats. Then again, ever hear of a little game called Halo 3? And maybe you missed the biggest surpise to emerge out of the PR squall this year, the tabletop computer Surface, a foray into multitouch technology that rivals the iPhone in coolness. Windows and Office continue their dominance, of course, and Microsoft’s stock was up about 20% in 2007.
Last September, when actresses Sophia Bush (One Tree Hill) and Brittany Snow (Hairspray) landed backstage in Lela Rose’s showroom at New York Fashion Week, they swooned over the designer’s new shoe collection that was about to debut on the runway. Rose, best known for $1,500 frocks, happily handed pairs of navy peep-toe pumps and polka-dot round-toe pumps over to the young celebs, who would soon be flaunting them on the sidelines of the catwalk. “Did they know they were Payless shoes?” says Rose, who’s now designing her fifth exclusive line for the discounter. “Absolutely. They didn’t care. They looked cute to them and that’s all that mattered.”
Payless? Since when did the dusty dungeon of cheap footwear have anything to do with the front lines of fashion? Since 2005, when Matt Rubel, who previously turned around Cole Haan, took the helm of the now $3.5 billion company and decided it needed a design intervention. While the 4,500-store chain had thrived for years on the low-price, self-service model it pioneered in the 1950s, the last decade saw the company losing the discount wars to beasts such as Wal-Mart. If thrift was no longer its competitive edge, reasoned Rubel, then Payless would have to design shoes that Sex and the City’s Carrie Bradshaw would drool over at prices Roseanne could afford.
To do that, Rubel has injected a fashion sensibility into every arm of the Topeka, Kansas–based company. Last year, he built its first design studio in Manhattan and recruited Robert Mingione, Kenneth Cole’s head of footwear, and Bernard Figueroa, top footwear designer for Michael Kors, to run it. Taking a cue from fashion democratizers like Target and H&M, he has lured up-and-comers such as Rose, Laura Poretzky, and Alice + Olivia’s Stacey Bendet — even Sex and the City’s very own Patricia Field — to design exclusive shoe and handbag lines that sell at higher prices and employ sophisticated materials such as silk crepe, snake skin, and perforated kidskin. At the retail level, Rubel has given a 21st-century facelift to the chain’s 1970s-hued stores with two new formats. He has opened 22 “fashion labs” — more-upscale hubs, with modern décor bathed in pristine white, that offer the pricier fashion-forward lines — and retooled nearly 400 existing locations with an airier design that puts trendy collections in the spotlight. “More and more women who never would have shopped at Payless are becoming Payless customers,” says Lori Holliday Banks, a senior analyst at fashion consultancy the Tobe Report. “Rubel’s reinventing the whole self-service business.”
Rubel, crowned Footwear News’s Person of the Year for 2007, isn’t stopping the extreme makeover there. In 2006, Payless nearly doubled its earnings. Then last spring, the CEO shook up the industry with two major acquisitions: $91 million for Collective Licensing International, a brand-management company that owns names such as Airwalk and American Eagle, and $800 million for Stride Rite Corp., whose brands include Keds and Saucony. Collective Brands Inc. (the parent company’s new name) is now the largest non-athletic-shoe company in the western hemisphere, giving Rubel a triple threat of retail, wholesale, and licensing leverage. Says Rubel, who has become a regular at Fashion Week: “Initially it was pretty difficult getting designers on board to sell cheap shoes. Now we’re getting phone calls from designers who want to work with us.” — Danielle Sacks
Seven years ago, former music exec Tony Fernandes paid 25 cents for an ailing carrier with two creaky planes and $12 million in debt. Today, AirAsia’s bottom-of-the-pyramid strategy has created one of the world’s fastest-growing, most-profitable carriers, with the lowest operating costs in the industry and fares as cheap as $3. “It’s like our bus,” says Yap Choo Ying, who runs a market stall in eastern Malaysia and now regularly jets to Kuala Lumpur to see her grandkids. In November, the Malaysian company made a risky bet by going long-haul, adding flights to Australia; this year, it will add flights to China and India, where billions of people have yet to take to the skies.
#44 CURRENT TV
“We wanted to democratize television,” Al Gore told us last summer, of his quest to create a cable network that piped content pitched to — and created by — young people. But if the initial idea was Gore’s, credit for Current TV’s subsequent traction goes to CEO Joel Hyatt. Launched in August 2005, Current became profitable in 18 months. “I knew nothing, and I mean nothing, about the cable industry,” Hyatt says. But that ignorance freed his team to dream big, and by the end of 2007, more than a third of Current programming was being created by viewers and delivered to Current via the Web. Hyatt reinvented the ad model as well, inviting the likes of Sony and Toyota to tap his audience’s creativity; to date, 39 viewer-generated ads have aired.
#45 SUN MICROSYSTEMS
Data centers account for some 3% of world energy use, and Sun has taken that as a dare. Last year, its mad-scientist approach to energy efficiency — and $2 billion R&D budget–caused ripples across the industry as the company released the UltraSPARC T2, the world’s most efficient processor; Project Blackbox, the first modular data center; and a new Silicon Valley data center that increases computer power by 456% while cutting energy costs by more than 60%. With four straight profitable quarters for the first time since 2001 and 6% revenue growth, the forecast is sunny.
The opening of the new $275 million BMW Welt (BMW World) in Munich was a high-water mark for the automaker’s marketing department. Some 1 million pilgrims a year are expected to push their noses to the glass; 45,000 customers will pick up their cars here. But there’s a better reason BMW remains the world’s number-one premium marque. After overhauling its much-criticized onboard computer, the company has refocused on what’s important: the badass automobile. Look for the $30,000 rear-wheel-drive 1-Series coupe (debuting in the United States this year), the 2008 Mini Clubman (a supersize version of the Cooper), and, most impressive, the prototype Hydrogen 7. Yes, Honda has a hydrogen car too — but if you’re going to be stranded by the roadside for lack of H, wouldn’t you rather it be in a BMW?
#47 TATA GROUP
Within the first 10 days of 2008, Ratan Tata, the magnate behind India’s $72.8 billion Tata Group, made a reported $2 billion bid for Ford’s Jaguar and Land Rover brands and unveiled its long anticipated $2,500 “People’s Car” (called Nano) at a New Delhi auto show. Think about it: In the same week, India’s largest conglomerate shook up both the high-end and the rock-bottom car markets, and made a clear statement that Indian business is not just a tech and outsourcing ghetto.
In truth, it wasn’t the first time that Tata himself, the fifth generation in his family to run the company, had demonstrated his global savvy. In the 1990s, when he first took the helm of Tata, its trucking unit was posting the biggest losses in India’s history. Since then, through a series of international acquisitions (Tetley Teas, steelmaker Corus), the 70-year-old has transformed the company into a mosaic of 100 diverse businesses. Clearly, Tata knows what India’s 300-million-strong emerging middle class is hungry for. Apparently he knows the rest of us, too: This year, more than half of the company’s revenue is expected to come from non-Indian operations.
Most interactive-ad shops master either the creative or the technical; AKQA is expert at both. Whether building a Pixar-quality interactive online universe for Coke’s breathtaking “Happiness Factory” campaign (below), or masterminding a multimedia “alternate reality game” for Microsoft’s Halo 3, the digital powerhouse doesn’t just dream up mind-bending ideas, it actually writes the code that brings them to life. Which is why, after five consecutive years of profitability, AKQA is one of the most dangerous global forces in the ad industry. While ad holding companies and tech firms spent billions in 2007 to snap up digital shops, AKQA fended them off, opting instead for a $250 million investment from private-equity firm General Atlantic. In the meantime, the 700-person agency boosted revenues 39% to $100 million and added new clients such as Unilever, DoubleClick, and Cadbury Schweppes — on top of existing accounts with Nike and McDonald’s.
“What we’re really trying to do is to create an eBay for money and credit,” says Chris Larsen, CEO of two-year-old Prosper (and founder of E-Loan, which he sold in 2005). The company melds the debt market with online social networking, allowing people to borrow money from one another without any banks in the middle. So far, Prosper has facilitated the transfer of more than $100 million, and delinquency rates have been low. Borrowers include stretched homeowners, college-goers, credit-card junkies, and entrepreneurs; lenders are average folks, including Larsen himself (who has funded more than 450 loans).
We started this list with Google; we end it with a startup that has dared to go up against Google — and has won the first round. Baidu, the king of Chinese search (60% market share in 2007), performs better in Mandarin and has more features customized for locals. Cofounder Robin Li is convinced that Baidu will “become bigger than Google,” and he is in a hurry to get there: He recently launched a Japanese search engine, introduced search for ad-supported streaming music, and was first to offer mobile search in China.
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