US edges China as global hotspot for disruptive innovation

25 May 2018

Global tech leaders believe disruptive innovation is most likely to come from the US, a new study has found, but China is catching up quick on its rival technology superpower.  

C-Suite leaders in the technology industry still consider the US the most likely market for disruptive innovation to emerge. China ranks a close second with a quarter of industry leaders believing the world’s second largest economy has the most potential to unleash radical change on the tech sector.

KPMG’s global survey found that a sizable minority of the 841 leaders consulted viewed India and the UK as leading lights in the innovation sphere. Asked which countries show the most promise for disruptive technology breakthroughs that will have a global impact, 11% said India and 10% cited the UK.

Which country shows the most promise for disruptive technology breakthroughs

The US and China jostled for supremacy, with 26% favoring the home of Silicon Valley and 25% looking east to innovation hotspots such as Shenzhen. Broken down by region, elements of local pride could be detected. Almost half (49%) of American leaders said the US showed the most promise, while 59% of Chinese respondents expected the next wave of global change to originate in China.

Responses by region

Respondents ranked Shanghai as the world’s top city for tech innovation. New York came second and was complemented by Washington DC, Boston, and Chicago in the global top ten. Beijing also made the list, making six of the top ten cities either American or Chinese. Together the dynamic rivals have been described as the “world’s only true technology superpowers,” by Richard Ji, cofounder of Asia All-Stars Investment.

City chart

Despite narrowly edging out the competition, US-based innovators have no room for complacency. A similar poll conducted by KPMG in 2016 found that 29% expected the US market to generate globally disruptive technology, showing that C-Street’s confidence in the US has since dipped.

China’s threat to American tech hegemony is perceived as a bottom up phenomenon, KPMG’s research showed, with lavish R&D spending expected to strike gold sooner rather than later. But North America easily leads the pack when it comes to visionary corporate leadership.

Asked to identify the world’s pioneering leaders in innovation, the 841 industry chiefs settled on Tesla’s Elon Musk as number one. Tim Cook, CEO of Apple Inc, took second spot and Alphabet’s Larry Page and Sundar Pichai shared third spot with Jack Ma, executive chairman of Alibaba Group and the only Chinese national in the top five.

CEOs, however, are not perceived as the key idea generators. More than a third (35%) of global leaders in the KPMG survey identified the Chief Innovation Officer as the person most likely to initiate disruptive change. Another 17% thought the Chief Information Officer was the person for the job. Just 6% considered CEO’s to be the main innovation strategists, well behind corporate development on 12%.

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

Measuring innovation

Digging a little deeper, KPMG also asked its sample of global leaders how they measure the value of innovation to an organisation. Calculations are difficult in a field where hundreds of patents can be made redundant overnight by a major technological breakthrough.

As a yardstick patents still came out on top, noted by 35% of respondents as the best metric for determining success. Revenue growth was a close second cited by 34%. Other important metrics were brand/reputation barometer (33%) and market share (32%). Market value and ROI were also identified as valuable indicators.

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

Asked to rank the top factors for enabling technological innovation, the ‘availability of talent’ topped the list. US-based leaders were more likely to view ‘access to tech infrastructure’ as the critical enabler for innovation. Access to capital and R&D partnerships were other vital factors.

Key factors to enable technology innovation by region

Leaders were also asked to identify a single approach they considered best to build and sustain an innovative corporate culture. Financial incentives came out on top globally and among US-based leaders. Career progression was second, while time allocation shared third spot with recognition (both internal and external).

Approach to build and sustain an innovative corporate culture


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Google topples Apple to take top spot on BCG's list of innovative firms

28 March 2019

After ranking first on strategy consultancy Boston Consulting Group (BCG)’s top innovators list for 13 years, Apple has finally been knocked off the top spot, landing at third place.

Google usurped Apple’s crown, and Amazon rose to second place on BCG's ranking of the top 50 global innovators. Microsoft and Samsung rounded out the top five, with Netflix, IBM, Facebook, Tesla, and Adidas filling out the top 10. BCG’s ranking was based on a global survey of more than 2,500 senior innovation leaders.

Tech firms dominated the top end of the innovators list. Traditional industries, however, still accounted for more than half of the top 50: Adidas, Boeing, BASF, Johnson & Johnson, and DowDuPont all ranked in the top 15.

The rising importance of digital technology – including artificial intelligence (AI), platforms, and ecosystems – was the central touchpoint of BCG’s survey. Top innovators are increasingly embracing AI in particular to develop new products and services, and to improve the internal innovation process itself.

"Digital technology and external innovation have become watchwords," Ramón Baeza, a BCG senior partner and the report's coauthor, said. "All of the top 10 companies – and many in the top 50 – use AI, platforms, and ecosystems to enable themselves and others to pursue new products, services, and ways of working."

2019 Most Innovative Companies

Platforms provide a foundation on which companies can develop their business offerings, with Amazon Web Services (AWS) and Microsoft's Azure offering some of the leading cloud-based platform services. According to BCG, ecosystems go a step further, pulling together technologies, apps, platforms and, other services to build an integrated solution. Android and iOS, for example, are now a complex ecosystem of telecoms, phone manufacturers, and app developers. AI, meanwhile, simulates human intelligence to achieve groundbreaking new technologies such as self-driving cars and "smart" digital assistants.

The top firms on BCG’s list extensively use AI, platforms, and ecosystems. Google has invested heavily into AI, which is apparent in the company's smart speaker Google Home, the accurate autocompletion of sentences in Gmail, or in its autonomous driving venture. Android, meanwhile, is a truly expansive ecosystem.

Amazon utilizes the cutting-edge Alexa AI voice technology as well as the widely used AWS platform. Apple offers Siri and iOS.

Of survey respondents, 90% said their firms are investing in AI, with more than 30% expecting it to be the innovation area with the highest impact on the businesses in the next three to five years.

Just under 20% of respondents said their companies were strong innovators and above average in AI innovation (what BCG terms "AI leaders"). Among the subgroup of AI leaders, 94% said they see AI as important to their companies’ future growth, as opposed to 56% of AI "laggards" (who rate their AI capabilities as below average).

"AI will have a significant impact on business processes, but its biggest potential lies in developing new products and services that can yield major revenue streams over time," Michael Ringel, a BCG senior partner and the report's coauthor, said.

Which areas of innovation are you actively targeting?

McDonald’s (21st on the list) is using AI algorithms on digital menus that change according to time of day, restaurant traffic, and the weather. Philips (29th) last year launched an AI platform that allows healthcare industry workers to access advanced analytics that curate and analyze healthcare data.

AI is already unlocking value for advanced users: 46% of AI leaders said AI-enhanced products and services represented 16% of sales, versus 10% for laggards.

In a world of platforms and ecosystems, the BCG report found partnership models are gaining steam. Strong innovators have upped their partnership usage from 2015-18, with incubator use rising from 59% to 75%, academic partnerships from 60% to 81%, and company partnerships from 65% to 83%.

Platforms and ecosystems help facilitate innovation, while expanding reach and collaboration, allowing for stronger, multiparty solutions. “Not all ecosystems are alike, however. They have different types of glue that bind their participants. Money is one type, of course, but knowledge, data, skills, and community can be equally important," Florian Grassl, BCG partner and report coauthor, said.

Four companies on 2018's top 10 list were also in the top 10 in 2005: Google, Amazon, Microsoft, and IBM. BCG deems these companies “serial reinventors,” which sets them up well for continued innovation dominance. Google continues to revise its offerings and algorithms, Amazon disrupts new categories and builds new services, and Microsoft and IBM have successfully transitioned into cloud-based services.

"The tools and technologies of innovation evolve,” BCG’s report states. “The basic orientation toward change – never being satisfied and always being willing to reinvent oneself – remains part of some companies’ lifeblood.”