SCENARIO

Revolutionary Innovation: The Megatrends of Transformation


  


In short

  • Companies need new strategies to harness the pace of technological evolution, create breakthrough innovations, and thrive in an era of disruption.
  • Legacy technologies limit a company's ability to change, but a strong digital core based on cloud, AI, and the metaverse enables continuous reinvention.
  • It's time to harness the power of the cloud, AI, and the metaverse to create a digital core and capitalize on advances in next-generation technology.

A new era of innovation

While the cloud, AI, and the metaverse are disrupting businesses, they are also catalysts for productive business change.

Technological change has accelerated significantly over the past decade. No company can sustain or survive long-term without constant reinvention. Over 93% of companies continue to expand their IT capabilities. Over the next year, half plan to increase their investments in AI (51%) and cloud services (50%). More than a third will continue to develop their digital core in areas such as data technology (42%), security (39%), and communications networks (37%).

75%

of companies have already integrated AI into their business strategies, both to accelerate R&D timelines and to improve customer experiences.

$1tn

This is the value of the business opportunity the metaverse is expected to reach by the end of 2025.

6x

Companies with high interoperability saw annual revenue growth 6 times higher than their competitors with low interoperability, gaining 5 percentage points.

What creates a revolutionary innovation? One of three characteristics.

1. New products, services and experiences that define the category

Disruptive innovations go beyond growth and profitability. They create new businesses and business categories. Sometimes they create entire industries, doing so by creating something never seen before: at the product, service, or experience level. Such as the biometric sensor technology integrated into smartphones. Or India's UPI payment infrastructure, which allows users to transfer money between platforms regardless of the payment standard. Not only have they generated major blockbusters and other products in the industry, but they have laid the foundation for sustainable economic development worldwide.

2. Reduced time to value creation

While radical innovation begins with a great idea, success lies in a company's ability to realize that idea in a very short time. Consider Moderna's process for designing the mRNA that carries the instructions for cells to produce a disease-fighting protein, thus leading to the COVID-19 vaccine. Not only has Moderna benefited, but it has empowered the entire pharmaceutical industry. Rather than betting on a single idea in a single field, leading companies build a dynamic portfolio of ideas for new products or initiatives at different stages of development. This increases the likelihood of success and diversifies risk.

3. Drastically reduce development costs

Profitable ideas are increasingly difficult to generate as research investment increases rapidly, resulting in high innovation costs and questionable returns. But new technologies promise to reverse this trend. By implementing disruptive technologies such as digital twins, cloud-powered computer vision, edge, and private 5G alongside Manufacturing Operations Management (MOM) architecture, manufacturers can extract greater value from years of technology investments and avoid the need for complete "rip and replace." This dramatically reduces development time and associated costs.

How will the next generation of innovation happen?

1. Unleashing the power of the platform economy

Companies can join forces to offer a new and differentiated product or service to their customers. This involves bringing the power of social graphs, or social network models, to the business world. A prime example is the auto insurance industry, where drivers can obtain personalized car insurance tailored to how, when, and where they drive. Companies should collaborate with partners and other industry players within their own and related markets. This way, they can introduce new products or services that leverage a platform-based business model and offer differentiated value to customers.

2. Implement next-generation intelligence

Once companies master data management, they can aspire to next-generation intelligence. It will be real-time, multimodal, and multifunctional, drawing conclusions from internal and external sources. Chinese company Shein has become the world's largest fashion retailer by using next-generation intelligence to reinvent product design based on demand. Product teams rapidly adjust their designs based on clicks and sales. An algorithm determines the production plan, automatically orders additional materials, and recommends items to multiple users with similar profiles. This type of model could be applied to other industries to avoid wasting large quantities of inventory and minimize warehousing costs.

3. Exploit advances in computing and algorithms

We are entering an era of supercomputing and advanced AI that has made innovation cheaper and more accessible, less risky, and with greater choice. But advanced computing systems like quantum computing are still a long way off. In the meantime, a hybrid approach will be needed, combining traditional computing systems with next-generation elements. This will allow for improvements in the performance and efficiency of advanced computing by leveraging the scalability and reliability of traditional computing systems. These mixed solutions could offer recognized value in the next 12 to 24 months.

Transforming technology into revolutionary innovation is truly possible.

Apply next-gen technologies in new ways to unlock opportunities and meet more compelling business needs.

We are inspired by the many examples of disruptive innovations already underway and the promise of disruptive technologies like cloud, AI, and the metaverse. By leveraging these megatrends to define a digital core and capitalize on next-generation technological advances, every company—and not just digital natives—can reinvent itself with greater revenue growth, operational efficiency, and innovation. If executives abandoned the mindset of incremental innovation and embraced innovative approaches, they could radically reshape their companies, entire industries, and society at large.