Advanced technologies

Analysis

Advanced technologies

Manufacturing and innovation

Nations have long striven to advance to the next technology frontier and raise their economic well-being. In today’s highly dynamic environment, advanced technologies have become even more essential in improving economic competitiveness and national prosperity. The manufacturing industry, propelled by advanced technologies and innovation, plays a key role in enhancing economic prosperity through increased productivity, higher GDP output, and creates higher-income jobs.

About the Advanced Technologies Initiative

Deloitte and the Council on Competitiveness (Council), as part of their multi-year Manufacturing Competitiveness Initiative, embarked on the Advanced Technologies Initiative study to better understand the US innovation ecosystem, identify the most promising technologies impacting the manufacturing industry, as well as understand current and future trends in US and global scientific research and development (R&D).

To this end, over the course of the last year Deloitte and the Council interviewed nearly three dozen chief technology officers, chief research officers, chief executive officers, and company presidents from the manufacturing sector, as well as nearly a dozen directors of US national laboratories and research facilities.

Deloitte and the Council have consolidated the interviewees’ thoughts and perspectives to develop a set of high-priority recommendations detailing immediate and longterm critical needs to improve the national innovation ecosystem vital to sustaining US competitiveness.

Highlights from the study include:

  • The linkages between national prosperity and advanced technologies, manufacturing and the innovation ecosystem
  • Global R&D trends and America’s relative position
  • Opportunities as well as challenges for US industry
  • An Industry Innovation Playbook

Exponential manufacturing technologies

Linkages between national prosperity and advanced technologies, manufacturing and the innovation ecosystem

In today’s highly dynamic environment, innovation through advanced technologies has become essential in improving economic competitiveness and national prosperity. As a result, many nations, including the United States, have invested heavily in establishing national innovation ecosystems which connect people, resources, policies, and organizations to collectively translate new ideas into commercialized products and services.

Given the number of significant trends emerging in the technology and innovation space, it is imperative to analyze America’s relative position within the global innovation environment to accurately assess the myriad challenges that threaten its competitive standing.

“The impact of next generation technologies on advanced industries will be significantly high. From creating high-value jobs to increasing worker prosperity and productivity, they will alter the way these industries operate.” —Executive interviewee

Global R&D trends and America’s relative position

Nations have different research strategies and approaches. Both the United States and China have spread their R&D expenses across various industries including: computers & electronics, pharmaceuticals, and industrial machinery. However, other countries take a more focused approach–i.e., both Japan and Germany center their R&D efforts on the automotive and computers & electronics sectors, while more than half of South Korea’s manufacturing R&D expenditure is in computer & electronics alone.

Opportunities as well as challenges for US industry

Opportunities for US companies include:

  • An expanding middle class and rapid urbanization across Asia
  • Increased global demand for commercial aircraft
  • The rapid technological advances in the auto industry (e.g., autonomous vehicles)
  • Increased output in the US chemical sector supported by low-cost domestic natural gas
  • Improving economic conditions resulting in increased industrial machinery demand

Challenges faced by US companies include:

  • A significant talent shortage and widening skills gap
  • Alignment to foreign market conditions and business environments
  • Coping with the risk of weak Intellectual Property (IP) protection around the world
  • The high cost and complexity of compliance in an uncertain US regulatory environment

“A host of promising long-term global trends will help US companies spur growth through innovation, but there are also a number of significant challenges US companies are grappling with on both domestic and international fronts.”

Industry Innovation Playbook

In order for companies to grow and succeed in the highly competitive global innovation space, there are a number of key insights to guide solid business strategy development, including:

  • Thinking like a venture capitalist to adopt a risk tolerant portfolio approach
  • Operating outside of traditional walls to take advantage of collaboration opportunities across the innovation ecosystem
  • Understanding there is no singular solution where the path to success is forged in synergistic solutions and perseverance

Next steps

Deloitte and the Council see the Advanced Technologies Initiative study as a foundation for ongoing dialogue with key stakeholders, such as industry, government, labor, academia, and national labs. The insights and recommendations developed here can further foster and enable an innovation ecosystem in which research institutions and the manufacturing industry work together to mutually benefit and the betterment of society.

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