Winning the innovation race: A challenge that needs to be embraced and incorporated

The Deloitte survey “Innovation in Europe: A Deloitte survey on European companies and how digital technologies can strategically enhance innovation” explores the role of digital technologies within European companies, as well as trigger points and hurdles that exist when it comes to innovation. This is the first article of a series focusing on the Swiss perspective on innovation. The following articles will highlight the innovative organisation, how to foster innovation, and provide a spotlight on technology and the human factor.

Innovation is often cited as a competitive differentiator for firms across most industries, but it is not always well understood. Based on our experience and research, we define innovation as the creation of a new viable business offering. This is often related to new products and services, but innovation can also be related to processes, customer engagement, and other part of a firm’s business model ¹.

From a country perspective, there is a common notion of European companies lagging behind their competitors in the US and China. Headlines belong to non-European companies, from new global platform and ecosystem innovation empires being built in China and the US to new technologies such as AI or data analytics. However, our survey shows that European companies treat innovation as a strategic priority and have an opportunity to win in the market: 88% of respondents want to spend more on innovation over the next two years.

The biggest overall trigger to innovate are new technologies. Traditional business models are increasingly disrupted by digital and companies need to innovate to adapt. For consumer goods, technology as well as logistics companies, rising consumer expectations are a particularly strong trigger. Consumers are increasingly demanding sophisticated digital interfaces, technology companies are appearing in several sectors as competitors to traditional suppliers; the only way then is to keep up with digital innovations. Cost efficiency remains a strong trigger as well across the board, especially for insurance companies.

It appears however, that if Europe and Switzerland can still do better, and the pace of the innovation race could accelerate. Digital innovation has been largely focused on consumer technology and consumer convenience, and still provides opportunities in a business context. Consider smartphones: while almost everyone in Switzerland has one and uses it on a daily basis, mobile business applications are often neglected, as Deloitte’s Global Mobile Consumer Survey shows: Only 6% of employees record their working hours on their smartphone, and only 2% their expenses. Once companies fully tap into this potential, productivity growth is likely to accelerate.

We see a clear shift from talking about digital to increasing digital maturity, albeit most often in a not connected fashion. The business model in several industries such as in the pharmaceutical and high-tech agricultural industries is being challenged, as R&D productivity is declining and products tend to get commoditized, making it more difficult for companies to command a premium. New technologies such as imagery (satellite, drones), AI and machine learning are being applied for use cases such as recommending the right seeds for farmers, based on R&D data.

Some companies have endeavoured into digital transformation, but we are seeing in our projects often “some digital” but not much “transformation”. Incumbents in many industries such as financial services, biopharma, or manufacturing face challenges when moving to a more digital business, oftentimes around defining the digital strategy, hiring the right people, and creating a digital culture.

According to Ben Ninio, Chief Digital Officer of Syngenta, talent is the most important driver for success. It is really hard to train and upskill people, and drive the shift in mind-set. To facilitate this, Syngenta employs a 50:50 rule, where half of a team came from Syngenta and was being upskilled, while half of the team came from outside the company.

One crucial element to drive innovation is senior leadership commitment. It is the key to energising the enterprise and unlocking digital opportunity
Ben Ninio, Chief Digital Officer, Syngenta

Winning the innovation race is a challenge, a challenge that can be overcome and turned into an opportunity. Managerial attention to the innovation practise is required. The challenge needs to be embraced and incorporated, by utilising the full breadth of innovation and by organising for innovation – a concept we will explore in more depth in the next article of this series.

¹ See the Ten Types of Innovation of our innovation arm Doblin