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The Business Issue

What it takes to be one of our “50 Smartest Companies.”

What does it mean to be on our list of the 50 Smartest Companies?

It does not necessarily mean that you are the biggest in your industry—though we have some of those—or even the most profitable. We don’t depend on a tally of patents granted. Nor do we care where a company operates or how large its market capitalization is.

Instead, the list is our take on two factors: technological leadership and business acumen. These 50 companies combine a high level of technology innovation with a business model that will help them make the most of it. Public and private, large and small, based in countries around the globe, this group of companies is creating new opportunities and pouncing on them. These are the ones that competitors must follow.

Artificial intelligence, a technology that we believe will drive much of the economic growth over the next few years, is sprinkled throughout the list. The company at the top, Nvidia, has gained expertise in AI and used it to transform itself. Once known as a maker of chips for gaming, it is now a leading player in deep learning and autonomous vehicles. Amazon, No. 3, is on the list again for its ambitions to build an AI-powered store and place the technology at the heart of the home of the future.

Companies focused on DNA analysis and developing gene therapies are a dominant group on the list—23andMe (No. 4), Spark Therapeutics (No. 10), Illumina (No. 22), and Oxford Nanopore (No. 32) among them.

Since 2010, SpaceX has been highlighted six times. It’s on again in 2017 (at No. 2) on the strength of its ability to stick rocket landings and then recycle its crafts for another go-round, potentially changing the economics of space travel. IBM has made the list every one of the past seven years; this year it’s at No. 39 for its work with blockchain, cloud AI, and quantum computing.

Many companies are here for the first time. Among them are companies like China’s iFlytek, debuting at No. 6, which has created voice-assistant software that can accurately translate between Chinese and a number of other languages (including English, German, and Uighur), overcoming challenges such as dialect, slang, and background noise. Another new name is Face ++, No. 11, a Chinese startup. Face ++ is using its novel face-recognition technology to help detect fraud and make payments more convenient.

It’s been a tough year even for some of our smartest companies. Tesla, No. 4 last year, fell to 31 this year, hurt by maintenance problems, issues with its Autopilot feature, and the challenges of absorbing the nation’s largest installer of solar panels into its business following its $2.6 billion purchase of SolarCity.

We also decided that some well-known firms just aren’t smart enough these days. Neither Uber nor Airbnb made the list. In the case of Uber, a cascade of bad news about its business practices, management style, and claimed technology theft combined to keep it off. For Airbnb, it wasn’t a matter of bad news but, rather, a lack of big technology news that cost it a slot among our top 50.

Seen all together, as our editor David Rotman argues in his essay introducing the list (“It Pays to Be Smart”), this is our best guess as to the firms that will be the dominant companies of the future. These are the companies with the inside track on the technologies, such as artificial intelligence, that will define the economy in the coming years—and have the best shot at building great businesses around them.

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