The simplest reason Facebook and Twitter are not on this year's Most Innovative Companies list: Neither produced innovations worth celebrating. A spot on MIC, as we call it, is not a tenured position. Every year, we assess innovation and the impact of those initiatives. In the history of our list, fewer than one-third of the companies return from one year to the next. This year, only seven are consecutive honorees, an indication of how more companies in more corners of the world are innovating to seek a competitive edge, with the stakes only getting higher.
Facebook and Twitter deserve special comment because they have been among the rare perennials, and their recent moves reveal two companies engaging in innovation's evil twin: short-term thinking at the expense of long-term value. Facebook's most notable product achievement in 2012 was Poke, a facsimile of Snapchat, the trendy-with-teens (and sexters) photo app. Poke stumbled almost immediately. In fact, Facebook has made a cottage industry out of chasing hot Internet services (Pinterest and Yelp included), instead of developing new ideas to delight its billion users. Similarly, Twitter's product strategy feels wholly defensive. Its most notable new feature is photo filters, a plainly unoriginal addition.