Industries embracing open innovation and co-creation

12 May 2015 Consultancy.uk

For companies in engineering intensive industries innovation is key for their competitive position. While nowadays firms still predominantly invest their innovation resources into internal R&D programs, a new study from PA Consulting Group reveals that the long term trend will see organisations transition their investment toward more collaborative innovation, with relative spending in collaboration networks to increase 50% by 2025.

Innovation remains a key strategy through which companies are able to outperform competitors. A recent study from Aecus and HP for instance revealed that 91% of managers believe innovation is (critically) important to realising the long-term objectives of their organisation. In a new report from PA Consulting Group and the ESB Business School, titled ‘Innovation for peak performance’, the authors seek to determine the key components of a successful innovation strategy in engineering intensive industries*.

Participants

The survey involved 61 participants from 4 industries, with respondents from automotive 17%, consumer goods 22%, high-tech 26% and mechanical engineering 35%. Most of the respondents came from Europe (83%), with Germany providing 38% of respondents – the final 17% came out of the US. 36% of the companies surveyed have revenues of more than €5 billion and 25% have less than a billion.

R&D priorities
In terms of the current trends among companies, the survey shows that most are playing it safe. Between the sectors not a great deal of difference in activity was observed, with innovation generally remaining an incremental process with only a few of the respondents going for the challenge of bringing new products to market. As it stands, the top priority is for existing markets and products, followed by creating new products in existing markets. The lowest priority is in developing new products for new markets, under respondents.

Respondents priorities for R&D Positioning

R&D function remains powerhouses
In terms of the source from which innovation within business springs, the authors note that internal sources – thus without collaboration – remain the driving force for innovation. R&D employees are not surprisingly the main innovators, followed by non-R&D employees, with sales employees the least innovative group selectable. In terms of external partners for innovation, technology partners and academic partners were the most high impact collaboration partners for innovation, with suppliers and social media scoring the lowest – even if social media is rapidly on the rise.

Source of innovation ranked by importance

Long term collaborative success
The long term trend toward 2025 indicates according to PA Consulting Group that externally focused collaborative models – centred around the principles of partnerships and co-creation – will gain terrain, with the level of internal innovation relative to external innovation to have a difference of 23%. Partly collaborative models around intellectual property are forecasted to grow by 12%, while collaborative networks are expected to grow by 50%.

Changes in innovation landscape to 2025

* Innovation itself is a broad term that covers the whole value chain – from idea creation to market introduction. It is thus a term with a wider reach than the concept of R&D which refers to the corporate function of turn promising ideas into economically beneficial technologies, products and services.

** The Ansoff Matrix

Strategic framework - Ansoff Matrix

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