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The 12 Most Successful Food Startups of the Decade

The 12 Most Successful Food Startups of the Decade

Food startups are insanely hot right now, and these 12 are really cooking

ID 119515305 © Mohamed Ahmed Soliman | Dreamstime.com

It’s a great time to be a food startup. Big venture capital firms are pumping hundreds of millions of dollars into new ventures that are completely changing the way we think about and interact with food, and these 12 companies should definitely be on your radar.

The 12 Most Successful Food Startups of the Decade

ID 119515305 © Mohamed Ahmed Soliman | Dreamstime.com

It’s a great time to be a food startup. Big venture capital firms are pumping hundreds of millions of dollars into new ventures that are completely changing the way we think about and interact with food, and these 12 companies should definitely be on your radar.

#12 Soylent

Photo by Rick Kern/Getty Images for Soylent

Few food items have been getting more buzz lately than Soylent, “a simple, healthy, and affordable drink designed to efficiently serve your staple food needs” that earlier this year secured a $20 million investment led by VC firm Andreessen Horowitz. Developed by a busy entrepreneur who didn’t want to think about food but also didn’t want to sacrifice nutrition, Soylent distills food to its essentials, namely carbohydrates, fatty acids, fiber, protein, fiber, vitamins, and minerals. A day’s nutrition (the mixture looks like a milkshake) can be prepared in three minutes, and it costs less than $10 per day. If there’s a food of the future, this is it. The only problem with Soylent might be what it's called; anyone who saw the 1973 Charlton Heston starrer Soylent Green will remember that the miracle protein of that name on which the world is fed is revealed to have an unexpected source: human beings. "Soylent Green is people!" Heston cries near the end of the movie.

#11 Lyfe Kitchen

Lyfe Kitchen/Yelp

With locations in California, Colorado, Illinois, Nevada, Tennessee, New York City, and Texas, Palo Alto-based Lyfe Kitchen was founded in 2011 and has been quietly gaining steam (and investors) since then. Memphis-based Carlisle Group, a major Wendy’s franchisee, bought a stake in August 2014, and they’re hoping to grow the chain to 60 locations by next year. Breakfast is served until 11 a.m. daily, and items include quinoa buttermilk pancakes; a spinach and avocado frittata; and a Greek yogurt bowl with blueberries, pomegranate, chia seeds, and toasted almonds. Lunch items include barbecue chicken flatbread with grilled chicken sweet corn, caramelized onion, barbecue sauce, and mozzarella; mahi fish tacos with chayote slaw and cilantro and chipotle aïoli; a grass-fed beef burger with Cheddar; “unfried” chicken with roasted Brussels sprouts, butternut squash, and cashew cream sauce; roasted salmon with tomato and fennel; and a Thai red curry bowl with broccoli, eggplant, peppers, peas, wheat berries, and Thai basil. It all sounds healthy and delicious, right? But what sets this chain apart from all the other start-ups? Every single item on the menu, even the burger, consists of 600 calories or less. With a wide assortment of smoothies and beer and wine on tap, Lyfe Kitchen is a chain that’s easy fall in love with.

#10 Krave Jerky

itemmaster.com

Jerky isn’t something we give much thought to, but Krave is turning it into an artisanal food item. All-natural, whole muscle-cut, hand-sliced meat is marinated for 48 hours and then baked, resulting in a premium product. It’s free of the usual jerky additives like nitrites and MSG, and the flavors are unlike any you’ve seen: black cherry barbecue pork; basil citrus and lemon garlic turkey; and pineapple orange, sweet chipotle, and chile lime beef jerky. They’ve also recently released Krave Artisanal, featuring small-batch flavors like sesame ginger and cabernet rosemary beef, honey peach pork, and chardonnay lime turkey. Investors took notice, and so did potential buyers: The company was snatched up by Hershey earlier this year for somewhere in the range of $200 to $300 million. Jerky may never be the same.

#9 Revolution Foods

Monkey Business Images/Shutterstock

School lunches are notoriously far from nourishing, but Revolution Foods is setting out to change that. This company creates more than a million healthy and fresh meals per week, serving foods that are minimally processed; have no high-fructose corn syrup, artificial flavors, or additives; and always contain fruits and vegetables. Revolution Foods is making sure that kids get proper nutrition at school (especially kids on free and reduced meal programs), which is a very good thing. Last year AOL co-founder Steve Case took notice, and invested $30 million in the company.

#8 Beyond Meat

ID 137572599 © Piotr Swat | Dreamstime.com

For vegetarians, finding meat substitutes that actually look, taste, and feel like meat has always been a futile effort. Until now. Beyond Meat hails its creation as “meat from plants,” and they mean it. Instead of putting vegetable protein in a mold and calling it a day (or a burger), they went looking for the same building blocks that meat contains — amino acids, lipids, fats, oils, water, and protein — and found them in plant-based sources. The result is uncannily meat-like, but Beyond Meat’s goal goes beyond that: They want to improve human health, positively impact climate change, address global resource restraints, and advance animal welfare. Investors include Bill Gates and Twitter co-founder Biz Stone, and it recently closed a Series D funding round, its largest to date.

#7 Plated

Anna Zheludkova/Shutterstock

Love cooking, but hate having to find recipes and spend money on pantry ingredients you’ll only use once? Then Plated, which sends you a weekly box of pre-portioned fresh and seasonal ingredients for chef-designed recipes that you choose and customize, may be for you. Each dish comes with a full-color recipe card that walks you through the entire meal, and literally nothing is wasted; if you only end up using half the lemon you’re sent, they’ll tell you to squeeze the other half into a glass of water. Meats are antibiotic-free, seafood is sustainable, and produce is fresh. And if you’re not home when your box arrives, it’ll stay chilled in the box for up to 24 hours. The company recently closed a $35 Series B round from investors including Greycroft Partners.

#6 Sweetgreen

If you’re thinking about visiting a chain restaurant for a quick grab-and-go lunch, you’re most likely not thinking about picking up something nutritious. But that’s all changing with the help of Sweetgreen, which serves healthy and delicious organic food sourced locally. Sustainability is the focus, from the food to the design, and menu items are prepared fresh, use in-season produce, and are sourced from reputable farmers. Plus, salads and grain bowls are completely customizable. There are now more than 30 locations on the Eastern Seaboard and in California. For all intents and purposes, if you’re looking to eat healthily and cleanly, Sweetgreen is your new best friend, and with a $35 million round of funding recently closed, one might be opening near you very soon.

#5 DoorDash

Photo by ERIC BARADAT/AFP via Getty Images

DoorDash launched only two years ago, but has already expanded to eight markets across the country and recently raised $40 million in Series B funding from Kleiner Perkins and three other existing investors. The company partners with restaurants in each market, and its fleet of “dashers” delivers menu items to your door. As opposed to most other restaurant delivery startups, which tend to only deliver food from more expensive restaurants, DoorDash has partnered with fast food restaurants, too, including Taco Bell.

#4 Hampton Creek

ID 41559782 © Patrickmak039 | Dreamstime.com

Hampton Creek is perhaps best known for its egg-free condiment Just Mayo, which is a huge seller at Whole Foods Market and is working its way into major American grocery stores. But the company does a lot more than make vegan mayo (and cookies): They vigilantly research different species of plants, group them by category, and use them to create healthy food items that use as little land and water as possible. When it comes to creating low-impact foods, Hampton Creek knows that it’s all about the data. Late last year the company closed its $90 million Series C round, which brings its total funding to $120 million. Whether the FDA’s concern over their use of the term “mayo” will have any impact on their future remains to be seen, however.

#3 Munchery

ID 119909148 © Mohamed Ahmed Soliman | Dreamstime.com

Munchery is disrupting dinner in a big way by “combining fresh ingredients, culinary expertise, and smart operations to deliver meals with the quality of restaurant food, the ease of ordering in, and the affordability of home cooking.” Local professional chefs devise and prepare an ever-changing roster of dishes that are delivered chilled and fresh with detailed reheating instructions. Munchery is currently up and running in San Francisco, Seattle, Los Angeles, and New York, with more cities on the horizon. All packaging is eco-friendly, and a meal is donated to somebody in need with every order. The company has raised about $30 million since its 2010 funding and is close to finalizing a round that could be worth as much as $85 million, which could put its valuation at roughly $300 million, according to Pymnts.com.

#2 Blue Apron

ID 94764621 © Jaimie Duplass | Dreamstime.com

Blue Apron is a delivery company that provides all the ingredients you need to make three fresh, healthy meals per week. Delivery is free, and once you subscribe you can cancel any time before the weekly cutoff. All of Blue Apron’s recipes are designed to be prepared in 35 minutes or less and contain between 500 and 700 calories for a well-balanced meal (they even have a vegetarian plan). Customers are provided with the ingredients to create dishes like pulled chicken sliders with homemade pickles and Mexican-style corn, grilled shrimp cocktail with asparagus and eggplant, and steak and summer squash kebobs with blue cheese potato salad. It’s a crowded field, but Blue Apron has emerged as the leader; in June, it landed a $135 million investment led by Fidelity, which gave the company a valuation of about $2 billion.

#1 Instacart

From big cities to small towns across the country, Instacart is making grocery shopping a whole lot easier. The site connects you with personal shoppers in your area who take your grocery list, go shopping for you at your local supermarket (including Costco and Whole Foods), and deliver your order to your door within a few hours. It’s that easy — and revolutionary. The company now has about 4,000 personal shoppers (independent contractors), and charges $3.99 for two-hour delivery, $5.99 for one-hour delivery if users spend $35 or more, or a $99 per year membership. Revenue jumped 10 times in 2014 and doubled in the fourth quarter, according to CNBC, and in the past year it’s doubled its full-time employee base to 100. It closed a $220 million funding round in January, raising the new financing at a $2 billion valuation.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


The Top 20 Business Transformations of the Last Decade

The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. The T-20 study identified the global companies that have achieved the highest-impact business transformations over the past decade as measured by new growth, respositioning the core business, and financial performance. Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

In 2012, Denmark’s biggest energy company, Danish Oil and Natural Gas, slid into financial crisis as the price of natural gas was plunging by 90% and S&P downgraded its credit rating to negative. The board hired a former executive at LEGO, Henrik Poulsen, as the new CEO. Whereas some leaders might have gone into crisis-management mode, laying off workers until prices recovered, Poulsen recognized the moment as an opportunity for fundamental change.

“We saw the need to build an entirely new company,” says Poulsen. He renamed the firm Ørsted after the legendary Danish scientist Hans Christian Ørsted, who discovered the principles of electromagnetism. “It had to be a radical transformation we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.

Our aim was to identify the global companies that have achieved the highest-impact business transformations over the past decade, using the same methodology as our 2017 study. Our research team screened all the firms in the S&P 500 and Global 2000 using three lenses:

  1. New growth: How successful has the company been at creating new products, services, new markets, and new business models? This includes our primary metric: the percentage of revenue outside the core that can be attributed to new growth areas.
  2. Repositioning the core: How effectively has the company adapted its traditional core business to changes or disruptions in its markets, giving its legacy business new life?
  3. Financials: Has the company posted strong financial and stock market performance, or has it turned around its business from losses or slow growth to get back on track? We looked at revenue CAGR (compound annual growth rate), profitability, and stock price CAGR during the transformation period, which was different for each firm.

Our initial phase of research identified 52 companies making substantial progress towards strategic transformation—merely 3% of the public companies in our data set. From this second-round list, an Innosight partner panel voted to narrow it down to 27 finalists. For the third round, the following companies were selected as the Transformation 20 and ranked by a panel of management experts (see judges).

Each of these companies developed new-growth businesses outside its traditional core which have become a significant share of the overall business. However, we believe it’s the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success.

The #1 company, Netflix, is a case in point. In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

As the memo said, “We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

Since unveiling that new purpose, Netflix revenue has roughly tripled, its profits have multiplied 32-fold, and its stock CAGR has increased 57% annually, versus 11% for the S&P 500.

Finding new purpose

In a comparable way, the purpose-driven mission of preventative healthcare has spurred major change at other large organizations that made the list. China’s AIA Group has moved beyond insurance to become a wellness company, whereas Dutch electronics giant Philips has largely divested its legacy lighting business to focus on healthcare technology.

The technology companies on our list also discovered ways to infuse purpose into their organizations as part of their fundamental change.

Siemens moved beyond a purpose of maximizing shareholder value to a mission of “serving society.” This transformation began in 2014 with a plan called Vision 2020 that called for harnessing technologies such as AI and the Internet of Things. However, changing the mission also called for changing the culture. “The biggest obstacle to any transformation is literally just the way we’ve always done things,” says Siemens USA CEO Barbara Humpton. Infusing a higher purpose into the company called for pushing decision making out from the center to every business unit, so that managers and rank-and-file employees feel they have a stake in future success. “Ownership culture is central to everything,” Humpton says. This shift in the culture at Siemens has propelled plans to divest its core oil and gas business and redeploy the capital to its Digital Industries unit and Smart Infrastructure business focused on energy efficiency, renewable power storage, distributed power, and electric vehicle mobility.

In the case of Tencent Holdings, the company was founded in 1998 to harness the Internet opportunity, launching online chat forums and video games for China’s new generation of digital natives. As of 2005, shortly after its IPO, Tencent defined its purpose in terms of “implementing our Online Lifestyle strategy, which strives to cater to the basic needs of our users.”

Only in subsequent years did founder and CEO Pony Ma Huateng broaden the firm’s outlook by embracing a mission of “improving the quality of human life through digital innovation.” Since 2011, Tencent has invested heavily in new growth ranging from education and entertainment to autonomous vehicles and ride sharing to fintech and the industrial internet—areas that together now represent 25% of its $46 revenue. Through its Tencent Education business unit, the firm is now developing educational content and services for individuals, schools, and education management. All of this growth helped Tencent become the first Asian company to surpass $500 billion in market valuation.

In 2019, Tencent refined its mission once again, in response to the growing global backlash against technology’s dominance in our lives, boiling it down to: tech for social good.

Several companies found that refocusing the organization to help save the planet can be especially powerful. Ecolab, #16 on our list, is a prime example.

In the early 2000s, when Douglas Baker Jr. became its CEO, Ecolab was an 80-year-old firm growing 10% annually by selling industrial cleansers and food safety services. “Our strategic plan was to sell more of what we had,” Baker says. To grow much beyond its $3.8 billion in revenue, the company could have kept moving into adjacent markets or new geographies, but Baker felt that wasn’t bold enough.

The transformation began by talking to customers, Baker says. The same customers who were buying its core products were also voicing concerns about access to clean water. And they weren’t alone. Projections for the year 2030 showed that 70% of the world’s GDP would be based in water-stressed regions, California and Southern India being prime examples.

In 2011, Ecolab had a $12 billion market cap when it acquired water technology company Nalco in an $8 billion deal. The combined company is now one of the world’s leading suppliers of hardware, software, and chemistry that helps manufacturers and service firms become more efficient users of water. A primary metric driving the organization is how much water is saved by its clients annually, which now stands at 188 billion gallons, against a 2030 target of 300 billion gallons.

“We broadened our vision and our purpose changed,” Baker says. “As our teams widened their awareness of global issues, our pride has been enhanced.” So has Ecolab’s market value, which has surpassed $55 billion, placing it among America’s top 100 most valuable firms.

Performing mission impossible

Such transformations are never easy. When the firm now known as Ørsted divested its oil and natural gas businesses and began phasing out coal, that created a giant earnings gap that urgently needed to be filled. The company had invested in offshore wind power, but the technology was too expensive, producing energy that was more than double the price of onshore wind.

Under Poulsen, Ørsted embarked on what critics called an impossible mission: a systematic “cost-out” program to reduce the price of offshore wind while achieving scale. The company managed to cut the cost by more than 60% while building three major new ocean-based wind farms in the U.K. and acquiring a leading company in the U.S.

The result: Previously about 80% owned by the Danish government, Ørsted’s IPO in 2016 was one the year’s largest. Net profits have increased by $3 billion since it began the transformation, and Ørsted is now the world’s largest offshore wind company, with about a third share of booming global growth market.

The takeaway lesson from these mission-changers is clear: In an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end. That’s why strategic transformation may be the business leadership imperative of the 21st century

Click here to see the full T20 study results and methodology.

T20 Panel of Judges

  1. Rita McGrath, management professor at Columbia Business School
  2. BEH Swan Gin, Chair of the Singapore Economic Development Board
  3. Phil Coughlin, Chief Strategy Officer at Expeditors (Seattle)
  4. Amantha Imber, CEO of Inventium (Sydney, Australia)
  5. Nathan Furr, Professor of Strategy, INSEAD

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.


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