Why, where and how companies will innovate in 2015
If patents are viable proxies for innovation, then “innovation is on the rise”, states the Thomson Reuter’s 2014 State of Innovation report. The computing sector alone logged in 300,000 unique inventions. Rounding out the report’s top five most innovative industries were telecommunications (126,000 patents), automotive (123,000), semiconductors (97,000) and medical devices (75,000). All five industries had more R&D activity in 2013 than in the year before.
Patents are the just measuring stick, though. A key question therefore is what is driving this increase in innovation? Some factors are reactive — for instance, when companies respond to market demands. In the auto industry, for example, concerns around safety recalls might have helped account for the 40% uptick in safety and airbag R&D last year. In the energy industry, the market’s demand for alternative power resulted in nearly 30,000 patents in 2013, one-third more than in 2012. Proactive drivers fuel innovation as well: R&D in healthcare, for example, is focusing on the future of medicine, which will be less about blockbuster drug research and more about developing targeted, even personalised medicine and therapies. (Nearly 16,000 patents were filed in the medical aids sub-sector of medical devices in 2013.). This makes innovation a strategic priority for 91% of companies, according to GE’s global innovation barometer — a global survey of 3,200 senior executives across 26 countries.
Another major driver of innovation is the tantalising prospect of being the first to successfully address a major issue and to own that segment of the market. Google CEO Larry Page calls such aims “moonshots.” For Google, such initiatives include designing solutions around ageing and its attendant health conditions, with the implied mandate of extending human life. To that end, the company in 2013 launched Calico, a spin-off focusing on those issues. Then, in late 2014, Google X research announced a project aimed at inserting magnetic nanoparticles into the bloodstream to bind to any suspicious proteins or disease molecules; the particles would then talk to a magnetically active wristband. Once perfected, this product, which could in theory diagnose or track conditions in their very early stages, could be ready before 2020.
Not everyone has Google’s $8 billion R&D budget, however. Still, the steady drop in the cost of technology is enabling small-and-medium-sized enterprises (SMEs) and research institutions to be players as well. For example, over the past 13 years, the cost of sequencing DNA has dropped by two orders of magnitude, from $100 million per human genome to only $1,000, leading to the nickname “the genome at home.” The start-up ElectroSeq hopes to use sensor-based sequencing technology to create a $100 genetic screening test. ElectroSeq’s CEO, Paul Szauter, comes from academia, a favourite talent and R&D incubator for industry. Indeed, perhaps the next big start-up in home-based genetic testing will spring from this year’s research at the University of Illinois at Urbana-Champaign: Scientists found that nano-pores (tiny holes) in a material called molybdenum disulfide allowed for inexpensive, detailed and relatively fast sequencing, thanks to an electric current that drives the DNA through the nano-pore. The goal is to help medical professionals detect diseases at their earliest stages.
Many of the innovations listed above are being pursued in an increasingly open manner: 77% of executives report that the risks associated with collaboration are worth taking; two-thirds of executives are already implementing collaborative strategies, according to the Global Innovation Barometer. In some industries, competing firms also take the risk of working with one another to create a new sector. The Industrial Internet Consortium is an example, bringing together members such as GE, IBM, Hewlett-Packard, Dell and Toshiba to create standards for the burgeoning Internet of Things.
Collaboration across disparate industries is also a trend. The digital and big data realms, in particular, are attracting partners in fields ranging from transport and energy to healthcare. By delving into the potential of sensor-based wearables, for example, medical device companies can expand their range of services. And collaborating with leaders in data services, such as contract research organisations or data lake providers, can allow a pharmaceutical company to unlock the potential of clinical-trial data in simulations, demonstrating results at lower cost and with lower risk.
Attitudes towards innovation — and towards failure — also matter. In Sweden, for example, 83% of executives believe it is important that creative behaviours and disruptive processes in businesses be encouraged, according to the 2014 Global Innovation Barometer. In South Korea, that number was only 67%. Happily, culture can be changed and innovative skills can be learned. Accelerator programmes, such as those being developed in Africa, can also help create a culture that encourages wide-ranging thought and innovation.
No matter the form or the approach, those willing to innovate need to be ready to go to the next frontier—in some cases, literally. Low temperatures — as low 200 nano-Kelvin — may be achievable on Earth, for example, but getting to 100 pico-Kelvin (where atoms theoretically cease thermal activity and the concepts of solids, liquids and gases no longer come into play) will have to take place in an atomic refrigerator at the International Space Station. At that temperature, atoms could create new forms of matter — quantum in nature — that could lead to such possibilities as atomic lasers and quantum sensors. But we’ll have to wait well past 2015 to see the results.
Top image: Courtesy of Adam Berry, Getty Images
This piece first appeared in GE Look ahead.