Good morning. David Meyer here, filling in for Alan from Berlin.
Boston Consulting Group has put out its latest rundown of the most innovative companies, as nominated by 2,500 executives the consultants interviewed. Unsurprisingly, there’s a big tech presence at the top.
Here’s the top 10:
1) Alphabet/Google
2) Amazon
3) Apple
4) Microsoft
5) Samsung
6) Netflix
7) IBM
8) Facebook
9) Tesla
10) Adidas
So what makes these companies innovative? The big themes in this year’s BCG report are the use of “A.I.”—meaning automation and advanced analytics—and of platforms and ecosystems.
I had a chat with Michael Ringel, one of the BCG partners who authored the report, and asked whether the companies winning out now are innovative because they use A.I., or are innovative and they use the technology.
“It’s a bit of both,” he said. “In order to be using A.I. now and getting real value out of it, you have to be a company that’s forward thinking, that’s made investments in the area, that’s willing to disrupt your own model… There has to be the necessary breeding ground for the right kind of behavior that would allow you to invest in A.I.” But the use of A.I. can also create new business opportunities that were not necessarily anticipated at the start, he added, citing Gmail’s newfound ability to complete people’s sentences for them.
The companies on the list are of course mostly pretty huge. So is scale a prerequisite for being innovative these days? Ringel pointed out that, at a company level, the academic literature says innovation is scale-invariant—universal, in other words; both startups and large companies are coming up with great ideas.
However, he noted, “you do need to be able to access a set of data, a set of platforms, in order to be able to drive value.” Even for companies that are already in a strong position, good ecosystems are increasingly necessary to provide the sort of data scale that’s needed.
You can read the full report here. News below.
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Top News
Fed Rates
The Federal Reserve isn't planning a rate rise this year due to slower economic growth. Chair Jay Powell: "It may be some time before the outlook for jobs and inflation calls clearly for a change in policy." WSJ's Greg Ip: "By any historical benchmark, this 'normal' stance of monetary policy is extremely stimulative…Should the economy stumble again, the Fed won’t have much ammunition with which to respond." BBC
China Tariffs
If you think the potential trade deal between the U.S. and China will cancel the former's tariffs on the latter's exports, think again. President Trump: "We're not talking about removing them, we're talking about leaving them for a substantial period of time. Because we have to make sure that if we do the deal with China that China lives by the deal because they've had a lot of problems living by certain deals." CNN
Assault Rifles
New Zealand has banned semi-automatic weapons and assault rifles with immediate effect, less than one week after the Christchurch mosque massacre. There will be a nationwide buyback of the banned guns, and the ban is immediate in order to prevent stockpiling. More gun control laws are coming soon. Bloomberg
Brexit Latest
At this point, most Brexit-watchers have curled up under the table for a hearty sob. Theresa May's request to the EU for a short extension will only be granted (partly—she won't get the full three months she asked for) if she gets her Brexit deal through Parliament on a third attempt, which is deeply unlikely. Last night she made a speech to the nation blaming everyone but herself for the mess, and trying to target voters' ire at their MPs for not green-lighting the deal. She's supposed to be winning over those lawmakers, not demonizing them. Eight days left until a no-deal Brexit. BBC
Around the Water Cooler
Tencent Fall
Tencent's Q4 profits fell 32%, marking their worst quarterly fall yet. Why? Regulation affecting its gaming business. Revenue was up 28% though, with the company attributing the rise to growing sponsorship ad revenue. Shares were down 3.8% at the time of writing. Reuters
China Rights
The Journal has a disturbing report about how China's persecution of the Uighur minority in its western Xinjiang province seems to be escalating into ethnic cleansing. Now neighborhoods are being demolished and the Turkic, Muslim culture being erased. From the piece: "As Uighurs were forced out of the city, government money flowed in. Beijing wants Urumqi to serve as a hub for the Belt and Road Initiative, [President] Xi’s plan to build infrastructure across Eurasia and elsewhere in an updating of Silk Road trade routes." Wall Street Journal
UBS Warning
UBS CEO Sergio Ermotti says the first quarter of this year "was lacking any of the elements of positive seasonality," meaning it was pretty awful for a first quarter, and not just for UBS. Ermotti: "In this environment, it’s true that equity markets have recovered but the conviction level of both institutional and private clients is not there…the Chinese market is up 25% and Hong Kong is up, U.S. is up, but the volumes supporting that rally are not there." CNBC
Uber Data
A group of Uber drivers in the U.K. are making data-protection complaints against the company because it refuses to give them the data it holds on them that tell its algorithms whom they should pick up, the routes they should take and the rates they can charge. As the Economist reports: "The case will test whether the data rights that European privacy laws afford to individuals also apply to gig workers." Economist
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
