Electric car maker, battery maker, software developer, vaccine assembler. Its founder, Elon Musk, defined Tesla as a chain of startups that carry out activities that are not necessarily related to each other. The market believes so much in the potential of this innovative ecosystem that it has recognized the company with a stock market valuation of over 500 billion dollars. For the same characteristics Tesla falls permanently in theFortune Future 50 index, elaborated by BCG Henderson Institute (BHI) to identify companies capable of continuously reinventing themselves and therefore maintaining constant growth. Indeed, in a black year for the car industry, Tesla even managed to climb 30 positions in the fourth edition of the ranking. A sign that vital companies are able to seize the opportunities offered by the crises, quickly returning to prosperity, explains the latest report by the Boston Consulting Group entitled "The Durable Benefit of Corporate Vitality".
Strategy, investments, people: the qualities of vital companies
Revenues, margins, profit. Traditional balance sheet indicators are a measure of a company's past performance, but not always a good indicator of future performance. To assess the prospects for success of large companies, therefore, the BHI has elaborated the company vitality index, using machine learning algorithms to screen and weigh predictors of long-term growth. The index rests on two pillars. The former has a weight of 30% on the judgment and measures the financial market's expectations on the future of a company. Defined as the present value of growth options (Pvgo), this parameter estimates the share of market capitalization that cannot be attributed to the potential of the activities already started by the company.
The second pillar accounts for 70% and combines 19 factors representative of a company's ability to innovate and thrive over the long term. Among the decisive elements of the judgment there are, for example, a strategy that embraces goals other than mere financial performance, spending on research and development, the consistency of the patent portfolio, the quantity of women in decision-making bodies and more generally in the strength -Work. While even viable companies are still a long way from achieving gender parity, half of the companies in the index show more than 25% of women in top positions.
China and the US dominate the vitality map
The United States and Greater China (including Hong Kong and Taiwan) are home to 40 of the 50 vital enterprises. This data is not surprising given that 70% of the companies with the highest growth in the last three years are also concentrated in the two countries. Europe's share of the Fortune Future 50 list increased slightly for the second consecutive year at the expense of China which saw its representation drop by 8%. Nonetheless, with only four companies in the index, including the Dutch Adyen (6th) and the Swedish Spotify (10th), the Old Continent remains far behind the two superpowers. The gap is partly explained by the lack of digital samples in Europe which again occupy the majority of the index.
This year, on the other hand, the number of companies belonging to the pharmaceutical and biotech sector that have had to divert their research efforts on the coronavirus vaccine or find innovative solutions to offset the damages have risen from 12 to 22% in the pandemic the postponement of non-urgent care. Finally, in general viable firms tend to be young and medium-sized because usually maturity and size stiffen decision-making processes, hindering innovation. However, as Amazon, Adobe and Dassault demonstrate, the decline is not inevitable. The important thing is to keep the entrepreneurial spirit alive in the workforce, adopt flexible development plans to seize opportunities when they present themselves and measure one's results with prospective metrics such as, for example, the percentage of sales deriving from new products or services.
The recovery of viable companies is faster and broader
The pandemic has also been a shock for vital companies which, however, have been able to recover faster and to a greater extent. Companies included in the 50 Future 2019 list took 15 weeks to recover to pre-Covid-19 levels on the stock market compared to six months for the Msci World index and today they travel 20% above that threshold. In fact, the crisis has suddenly made current long-term trends to which vital companies had already been prepared for some time or towards which they were able to promptly redirect their strategic plans. Their ability to look ahead and continually reinvent themselves has thus turned into an immediate competitive advantage. To paraphrase the writer Francis Scott Fitzgerald, vitality is not only demonstrated by tenacity, but also by the ability to start from scratch.
