MUMBAI: Federal Express and Procter & Gamble were placed in the top slot in an innovation study conducted by Hay Group, in partnership with Fortune magazine.

The eighth annual analysis of the Most Admired Companies, Hay Group surveyed executives to identify the leading traits of the world's most innovative companies. For the study, Hay Group sought to understand how organisations develop, implement, and sustain innovation.

Other companies that ranked high were Alcoa, Texas Instruments and Walgreen's. No Indian company has found a place in the ranking.

Hay Group surveyed executives at 160 companies in the fourth quarter of 2004. The research identified two groups: innovation leaders and peer group companies. Innovation leaders were the two companies in each industry that had the highest score for innovation. All the other companies in the study were included in the peer group.

"Innovative companies are distinguished from their peers by having the right people in the right environment with the right leadership. Innovation is not spontaneous--these companies plan for and manage their organizations to be innovative," said Stark.

Respondents from the innovation leaders report that managers were given the decision-making latitude they needed (91 per cent, versus 82 per cent of peer companies) and that their companies are patient with ideas that didn't generate immediate results (75 per cent, versus 62 per cent of peer companies). Innovation leaders also reported that they invested greater resources in research and development than their competitors (65 per cent, versus 44 per cent of peer companies).

According to the study, executives at the innovative companies surround themselves with people who are not afraid to challenge them on their thinking. "Innovation starts at the top with the CEO and senior executives setting the tone and vision for the company," added Stark.

The study also found a number of common characteristics of the employees at the most innovative companies. They were high achievers, intellectually curious, and risk takers. They also evidenced a high tolerance for ambiguity in their jobs and a high level of empathy and sensitivity to others. Hay Group's proprietary data and experience working with a number of the innovation leaders correlate highly with the Fortune research and the competencies and qualities found in the Most Admired Companies.

Hay Group's research showed that innovative companies are patient with ideas that don't generate immediate returns and don't withdraw funding or support too quickly. However, these same companies are not afraid to admit mistakes and cut their losses on ideas that fail.

"You can generate innovation within a company if you are willing to create the organisational conditions that allow it to flourish. It starts with screening for the right people that will fit into the corporate culture, hiring and retaining them, and developing systems to manage them," said Stark.

Hay Group partners with Fortune magazine annually to identify and rank the World’s and America’s Most Admired Companies and uncover the business practices that make these companies both highly regarded and successful.

To identify and rank America's Most Admired, Hay Group asked the top managers at 582 companies (the largest by revenues in each of 65 sectors) to judge their competition. In all, 10,000 executives, directors, and securities analysts rated the companies in their industries on eight attributes: innovation, employee talent, financial soundness, quality of management, use of corporate assets, social responsibility, long-term investment, and quality of products/services.

The World’s Most Admired companies were measured on the same eight attributes plus effectiveness in doing business globally.