What companies will live or die by 2030? At Quantumrun, we wanted to explore ways in which companies could look into their future by assessing how their current practices affected their ability to survive and thrive until at least 2030. The Quantumrun Global 1000 ranking was born, along with the supplemental US 500 and the Silicon Valley 100 rankings.
The team collected data for over 1000 of the highest revenue-generating public companies globally, as well as over 100 culturally significant companies such as Twitter, GoPro, and others. Over 80 different data points were researched and collected for each company, and each variable was evaluated to determine how it contributed to a company’s long-term success.
Report links are provided below:
We identified 28 unique criteria that were found to fundamentally impact company success and assigned scores that took into account as many as 12 data points collectively to rank companies on these 28 criteria.
After each analysis was complete, we reviewed results against our hypotheses to see if results were aligned, and took steps to evaluate the scores and the criteria based on factors such as universal applicability, the percentage of companies that had sufficient information to be accurately scored, and the degree to which the scoring paradigm for each criterion accurately reflected realistic results. We gradually fine-tuned the final criteria to best fit the wide cross-section of industries we were analyzing and create the most robust final rankings.
Overall, we saw a fairly standard distribution of scores across the spectrum for the Global 1000 report, as well as the US 500 and Silicon Valley 100. We divided companies into scoring zones to highlight the forecasted likelihood of staying in business until at least 2030 based on a company’s final score.
Of note, companies in the red zone, scoring below 145 (140 on the US 500 and SV 100 rankings), were determined to be in dire need of re-evaluating and strengthening their business practices as, at the moment, they were not well-poised for future success and longevity and were highly likely to go out of business or be absorbed by another company well before 2030.
Several of these companies, including well-known retailers such as Bed, Bath & Beyond, Chipotle, Dick’s Sporting Goods, and Toys R’ Us, were already exhibiting signs of their demise with dropping share prices and several poor quarterly earnings reported back-to-back.
Yellow zone companies scoring between 145-210 in the global rankings meant that they had the potential to stay in business until 2030, but their mid-range score signified that caution needed to be taken.
In 2016, companies operating within certain sectors, on average, allocated a larger proportion of their budget to research and development (R&D) investments.
However, this did not necessarily or directly correlate with the average score by sector. This weak correlation led me to investigate further the impact R&D has on a company’s ability to innovate for long-term success, and how to determine the effectiveness of their R&D spending.
I found that a stronger culture score had a direct correlation to both patent development and R&D spending. This, unsurprisingly, means companies that prioritize a culture of innovation tend to prioritize a higher budget (as a percentage of revenues) to reinvest into their R&D activities. They are also accruing more patents as a result.
Interestingly, when viewed purely as a function of the average total score, we can see that simply having a larger R&D budget alone (as a proportion of total revenue) does not directly correlate with a high number of patents being developed.
Given that this is an average across all industries and revenue levels, this tells us that the size of an R&D budget also does not correlate with a higher level of patents—a fact which is further confirmed in our analysis of the same criteria in our 2017 Silicon Valley 100 report, where average budgets (and profits) are drastically lower by comparison, but the same relationship between culture, R&D investment, and patent development persists nonetheless.
“It was such an asset to have Lua on the team for this project!”
David Tal – Founding Partner @ Quantumrun Consulting & Forecasting