–20%020406080%NASDAQ INDEXS&P 500 INDEX2019 FUTURE 50 INDEX*NOV. 20, 2020
71.4%OCT. 21, 2019 NOV. 20, 2020TOTAL RETURN SINCE PUBLICATION
FOR THE 2 0 19 FUTURE 5 0 INDEX
* EQUALLY WEIGHTED SOURCES: BLOOMBERG; S&P GLOBALTHE FUTURE 50 • INTRODUCTIONback to longer time scales, such as what it will take to succeed in the
postcrisis future and how to rebuild their businesses accordingly.
Even before the pandemic, however, change and uncertainty
were on the rise. That’s why BCG and Fortune created the Future 50
index together more than three years ago. We wanted to identify
companies with the greatest capacity to continually reinvent their
businesses and sustain long-term growth—what we call corporate
“vitality.” The past year has shown that vital companies don’t just
survive adversity. They use it to create a competitive advantage.A PROVEN FORMULA
THIS IS THE FOURTH ANNUAL EDITION of our Future 50 index,
which assesses the long-term growth prospects of large public
companies and identifies who comes out on top. It is intended as a
forward-looking companion to traditional business metrics, which
generally show only what has happened in the past.
The index is based on two pillars: a “top-down” market-based
assessment of a company’s potential, and a “bottom-up” analysis
of its capacity to deliver growth. For the bottom-up view, we have
quantified and tested numerous theories about what drives long-
term success across four dimensions (strategy, technology and
investment, people, and structure), and we use machine learning
to select and weight factors based on their empirical contribution
to long-term growth.
Our analysis incorporates a wide range of financial and nonfi-
nancial data sources. For example, we assess the growth and qual-
ity of each company’s patent portfolio as an indicator of technology
advantage. And we define metrics for strategic orientation, such as
long-term focus and tendency to serve a broader purpose beyond
financial returns, based on natural language processing analysis of
each company’s annual reports.
As we have done previously, we screen out companies that have
sustained negative operating cash flow, indicating businesses that
are highly vulnerable to unfavorable disruptions. We have also strati-
fied our ranking to account for companies that have elevated uncer-
tainties, such as reputational risk or a discontinuity in the direction
of the business. (For more on the methodology, see page 125.)
Vitality operates over long time periods, so it will not always be
reflected in immediate performance. In particular, one might have
reasonably expected highly vital companies to struggle to deal
with the COVID-19 crisis, given the short-term nature of the chal-
lenges involved. Yet our index has greatly outperformed the mar-
ket amid the turbulence of 2020—the 50 companies we identified
last year have produced a cumulative shareholder return of 71%
since publication, compared with 18% for the MSCI World stock
index. This demonstrates that vitality is a critical part of sustain-IN STABLE TIMES, sticking with a proven for-
mula makes sense. For successful companies,
it’s a good bet that the products and models
that are working well today will continue to
work in the future. But in volatile and uncer-
tain times—when the need for resilience rises
to the forefront—adapting to new circum-
stances and reinventing businesses become
central challenges.
The events of 2020 have reminded us howquickly the pattern of challenge can change.
When the COVID-19 pandemic first swept
across the world, companies focused primarily
on the immediate problems of how to maintain
operations and survive. But as time has passed,
business leaders have shifted their attention
FINDING ADVAN TA G E I N ADVERSITY
B usinesses with the most “vitality” thrive in times of crisis and beyond. And in the fourth edition of the Future 50
index, we used our proven formula to identify global companies best positioned for growth in the years to come.
By MARTIN REEVES & KEVIN WHITAKERTHRIVING THROUGH CHAOS
Last year’s portfolio has tripled the
the S&P 500’s return and outpaced
the tech-heavy Nasdaq as well.