For innovative companies, the current landscape is still marked by the growing importance of digital technology. In particular, a new BCG report entitled The Most Innovative Companies 2019: The Rise of AI, Platforms, and Ecosystems, reveals that companies that excel in innovation increasingly implement more AI tools to develop new products and services, and improve internal innovation. In addition, they create technological platforms and ecosystems that allow them to take advantage of external innovation sources.
“Digital technology and external innovation have become key factors,” says Ramón Baeza, BCG’s Senior Partner and co-author of the report. “The main challenge for companies will not be to identify and access cutting-edge technological development, which will have to be sought outside of organizations, but to implement that technology within the company itself, integrating it with existing processes.”
As the main conclusion of the report, companies agree that the application of artificial intelligence in their processes is gaining ground. 90% of respondents (2,500 senior managers in the innovation area) stated that their companies are investing in AI, more than 30% expect AI to be one of the innovation areas with the greatest impact on their business during the next three or five years and another 30% give AI a leading role in their respective innovation programs.
“AI will have a substantial impact on business processes, but its greatest potential lies in its ability to develop new products and services that provide large revenue streams over time,” says Michael Ringel, BCG Senior Partner and co-author Of the report. He also affirms that “the ‘leaders’ in AI are already making their way,” noting that, in these companies, the products and services based on AI solutions introduced in the last three years had meant a much higher percentage of sales.
Some 46% of “leaders” in AI declare that products and services based on AI tools represented 16% or more of their sales, compared to a mere 10% among “laggards”. Both agree that AI will gain ground in the future: 54% of “leaders” and 22% of “laggards” expect that AI enhanced products and services will contribute more than 16% of sales in the next five years.
Great Innovators Take Advantage of External Resources
The increasing use of AI is one of the factors that have fueled interest in platforms and ecosystems. The “leaders” in AI claim that they are more likely to turn to external providers for their AI projects. Moreover, some 36% depend entirely on external suppliers and another 48% mainly uses external services or a combination of internal and external capacities. This approach may be helping “leaders” to travel quickly through the AI learning experience curve, since knowledge is still scarce at present.
This year’s report shows that companies increasingly look abroad in search of new ideas. Collaboration models are booming: between 2015 and 2018 the number of great innovators using incubators grew (from 59% to 75%), as well as collaboration in the academic realm (from 60% to 81%) and in business (from 65% to 83%).
“Digital technologies facilitate collaboration platforms and these in turn enable ecosystems that bring together a group of organizations to develop new capacities or offer new products or services, even to promote a new field of science or technology,” says Florian Grassl , BCG Partner and co-author of the report. “However, not all ecosystems are the same. Participants are united by different types of incentives/interests. Of course, one of them is financial, but the knowledge, data, skills and community can be equally important.”
Some ecosystems are mere extensions of traditional ways of organizing and doing business. They tend to revolve around an orchestrator with whom all other participants interact and have established hierarchies and structures. Other ecosystems, including many of those involved in the first phase of R&D, tend to be more dynamic. They depend less on a central orchestrator and more on versatile interactions among the participants.
Since 2004, the Boston Consulting Group has surveyed the top managers of the innovation area from a wide range of sectors and countries on 13 occasions in order to better understand the role and status of innovation in companies.
With the ranking of the 50 most innovative companies, for the first time there have been notable movements in the first five positions on the list. Following the global survey, Apple, which led the ranking in all previous editions, descended to third place, while Google (or its parent, Alphabet) and Amazon rose to first and second place respectively. At the remainder of the top 5 table were Microsoft and Samsung.
Although technology companies occupy nine of the top ten, conventional companies account for more than half the list. Adidas (10th), BASF (12th), Johnson & Johnson (14th) and DowDuPont (15th) are among the top 15 and there are newcomers such as T-Mobile (13th), DowDuPont, Stryker (35th) and Rio Tinto (49th).