Innovation doesn't equal stock market success

In its last two issues Business Week has produced cover stories on two great topics. The first was the poor stock performance by America's largest companies despite some impressive performance over the last five years. The second is the current issue's coverage of the "World's most Innovative Companies." The thing that caught my attention was that there were actually a number of companies that feature in both stories. Of course the second story makes no reference to the first because if it did it would have to point out that sadly investors don't give a hoot about innovation (assuming the research is true). There are of course some notable exceptions. Among Business Week's top 10 most innovative companies are Apple, Google and Toyota. In all cases their stock has done well in recent years. Also in the list however are GE ( stock is down 30% over the last five years), Microsoft ( stock has declined 20% in the last five years) and 3M (stock is unchanged for the last two years). In Business Week's current issue they applaud GE's move to challenge its reliance on six sigma, in the previous issue they lament the fact that despite the company's great performance its stock is, to put it crudely, in the toilet. Of course what is clear from these two articles is that many of the companies that have embraced innovation are performing very well as businesses and perhaps that is something that sooner or later Wall Street will accept and give them credit for.