US and China most likely places for disruptive innovation

19 June 2017 Consultancy.uk

A new study highlights that the US remains the country most likely to host a company whose innovation becomes disruptive, while China ranks a close second, followed by the India and the UK.

Innovation is seen as a double-edged sword by many businesses, as while technological development often presents new opportunity, it can also cause the upheaval of entire markets. In spite of this risk, most companies and governments remain willing to invest in such disruptive innovation due to its potential for developing new offerings and cutting costs; the key for them is to remain two steps ahead of industrial disruption in order to avoid negative consequences impacting on their profit margins.

In a recent report aimed at helping companies stay ahead of the curve in this manner, KPMG surveyed 841 global technology industry leaders, 86% of whom are in the C-suite, in order to map where those creating potentially disruptive tech expect the most and least negative impact.

Which country shows the most promise for disruptive technology breakthroughs

The US remains the country touted by respondents as showing the most promise for disruptive technology breakthroughs that will have a global impact, at 26%. The country has seen its disruptive potential standing eroded slightly on the year previous, when it stood at 29%. China, which has continued to see investment funnelled into R&D, takes the second spot on 25%, up from 23% the year previous. India and the UK take third and fourth spots on 11% and 10% respectively.

In previous years, the threat of market disruption had only registered as 4% in the UK, and KPMG notes one of the key trends in their climbing potential is government led initiatives, such as Innovate UK, which focus on investing in small, high calibre, innovative startups.

Which function or role has the responsibility to drive innovation in your company

The research also analysed the perceptions of the world's foremost leaders of innovation, including the CEOs of some of the world's most famous technological developers. Tesla's Elon Musk ranked first for his drive for fully autonomous electric vehicles, as well as wider support of transformative energy solutions. Apple and Google execs were listed after, with Tim Cook taking the number two spot, while Alphabet’s Jack Ma, Larry Page, and Sundar Pichai came in third, fourth and fifth respectively.

CEO innovation leaders on the scale of the above are few and far between however. The research found that the C-suite officer responsible for driving innovation tends to be the Chief Innovation Officer, cited by 35% of respondents, followed by research & development, at 18%. The Chief Information Officer, follows on 17%. Corporate development take fourth spot on 12%, while the CEO position ranked last at 6%.

What is the top metric used in your organisation to measure the value of innovation

While innovation continues to make headlines as key for survival in a period in which whole industries face major disruption if not existential threats, little agreement exists about how best to measure the value of innovation to an organisation. The task is a relatively complex one, with the measurement of impact from true breakthroughs and wider technological advance hard to separate from each other.

The top metric noted by 35% of respondents, however, is the number of patents. This is followed by revenue growth (34%) and brand/reputation barometer (33%). Market share takes the number four spot on 32%, while market value is close behind on 31%. ROI is last on the measurements listed, at 30%.

Key factors to enable technology innovation by region

Respondents to the survey were asked to rank, on a five point scale (1 = not at all important; 5 = extremely important), the key factors to enable technological innovation (by region). Across the globe the ‘availability of talent’ was the most highly ranked, at almost a 3 on average, with the EMEA region scoring the highest and the US the lowest. ‘Access to tech infrastructure’ takes the number two spot with a global 57%, the US scoring slightly above the average at 58%. Access to alliances and partnerships comes fourth equal with access to capital, both on 54%.

Approach to build and sustain an innovative corporate culture

In terms of the approach used to build and sustain an innovative corporate culture, different regions tended to leverage different techniques – although broad trends between regions are evident. Financial incentives rank highest, selected by 27% of respondents. Career progression cane in second globally, selected by 24% of respondents, but was nominated by Chinese respondents as the top approach on 28%. Internal reorganisation was the top approach in the EMEA region, on 15% of respondents. Time allocation and external recognition were picked by 12% and 10% of respondents respectively as the most effective means to motivate employees in an organisation to be innovative.

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