IMD’s Center for Future Readiness has today published its latest ranking of the world’s top finance, automotive, and consumer packaged goods (CPG) companies, shedding light on their readiness to face tomorrow’s challenges.
Tesla secured the top spot in its industry, followed by Chinese automaker BYD, then VW. The conservatism of Toyota dragged the company down; it fell outside of the top five positions for the first time in a decade.
“Future readiness is not just a source of resilience during crises, but also a capability that allows companies to capture new growth when normality returns,” said Professor Howard Yu, Director of the Center.
“To invest in the future, you need to have strong cash flow and healthy profit margins, but also a diverse board of directors who can embrace change. R&D intensity is important, so are the actual results of a company’s innovation in the form of new products or services. All of these factors contribute to investors’ expectations, which are rewarded by the extent of the share price performance.”
Unique to the research method in this twice-yearly ranking is a balanced scorecard based on hard data, and the use of an AI-powered big text analytics tool that offers insights into companies’ behaviors, by analyzing reports and articles from 70 news sources over a decade.
Data sources include financial reports, investors’ calls, the LinkedIn profiles of management teams, Crunchbase and Factiva. Only hard data is used in a bid to avoid survey biases.
The top-ranking CPG players were Coca-Cola, P&G and L’Oréal, which displayed a tendency to use artificial intelligence to innovate and to keep consumers’ interest. Laggards in this sector can blame their reliance on traditional methods, resulting in stagnant offerings and unnecessary complications.
Mastercard, Visa, and JPMorgan dominated the finance ranking, and can thank their expert integration of financial services into apps and digital wallets. Firms that hesitate to embrace digital transformation found themselves struggling to keep up with customer expectations.
Tesla triumphed due to increased revenue and profit, despite pressure from rising competition. BYD followed thanks to its enormous ability to produce both batteries and microchips, making it completely self-sufficient. And VW’s aggressive push towards battery-run electric vehicles and autonomous vehicles paid off.
“Chipset factories typically run close to maximum capacity, leaving production extremely susceptible to disruptions. Natural disasters like earthquakes and floods can cause problems, as can accidents such as fires and power outages. Geopolitical or military tensions, including those between the US and China, could also affect production in the future,” said Yu.
However, while the US chip ban presents certain challenges and costs for China, it’s not likely to halt China’s AI aspirations entirely.
“China has some buffers: US chipmakers like Nvidia have designed slower versions of their chips that comply with US regulations but are still very effective for AI tasks, such as natural language processing. Moreover, China has made significant investments in its own chip industry, yielding domestic alternatives like the Cambricon MLU270 and Huawei Ascend 910. They also have access to other chip sources, like Taiwan’s TSMC and Samsung, which aren’t currently affected by the US ban. Lastly, China boasts a vast pool of data, software programmers, and applications. These resources could help them innovate and work around some hardware constraints,” Yu explained.
The ranking assessed 68 major companies worldwide. It took an average score of companies’ performance across the seven areas of: financial fundamentals, investor expectations, business diversity, employee diversity/ESG, research and development, early innovation results, and cash and debt.