Whenever we talk about the future, technology and life improvement, we cannot bypass the topic of innovation. I decided to talk about Innovation with a person that made a career, consulting multinationals on their way into innovation and market growth.

Frost & Sullivan is one of the biggest international companies involved in growth strategy consulting, and market intelligence across multiple industries. So in my interview with Art Robbins, Company’s President, we addressed innovation as a prerequisite for growth.

I tried to understand what are the forms of innovation, its application in different cultures and a common denominator for a company’s success, if there is any.

According to Art Robbins, “If you do not innovate, you stagnate”. The concept of innovation is, however, very often rightly mixed with an ability to adopt to a rapidly changing economic environment. “Everyone is so entrenched in the way they do things that the incremental change is often perceived as a big move”.

Art gave Japan as an example of a successful “incremental innovation” or “Kaizen” example

, painstakingly evaluating all possible options and choosing the best one to bring its products to perfection.

Very often, however, incremental is simply not enough. A rare company has a luxury of operating in the blue ocean, and today this ocean is full with small fish, more reckless and flexible when it comes to its strategy to conquer. Many new companies are “Born Digital”. They have got no infrastructure, no customers’ preferences, no existing baseline, – nothing that would dictate them to operate with caution and risk-aversion.

An absolute majority of new companies fail within a few years of operation. According to Americas Frost & Sullivan President, having a personal and professional network is a differentiator between the fraction that survives and the majority that fades away.

Mr. Robbins says it is the very access to an entrepreneurship community, or “ecosystem”, that creates a winning starting position for any start-up. Your first clients would be most probably your business colleagues, co-students or friends so the importance of a meticulously built social network cannot be overestimated.

Many cities, countries and regions, however, went an extra mile in creating the so-called “Incubators” for entrepreneurs, – the places, where your idea will have a real chance of being conceptualized and brought to the attention of investors. Indeed, sometimes I have an impression there are more eager investors than the ready-to-market business ideas out there.

In only a few years back such communities were the privilege of Silicon Valley and NYC, now those places are everywhere, – says Art. Austin has been one of the first “Silicon Valleys” outside of California. Frost & Sullivan President cites Austin-based Dell as one of the first companies which grasped the essence of a “new business model” innovation – disrupting the purchasing and supply chain of computer hardware.

What would be the major driver of innovation in each particular area then? According to Art Robbins, the profile of existing regional giants will very much define whether your start-up will survive. An example in hand would be Orange County, that has been a holy land for Med Tech start-ups just as Detroit has been for automotive.

A reason for this is that there is the industry knowledge you need and the “friendly” money that sits where your start-up is speaking.

I believe there is no better person to ask where we can expect those so-called innovations to emerge in the nearest future. “Infrastructure, industrial, and energy sectors were lagging behind since pretty much all innovations till now were neatly crammed into consumer sector, creating often times a useless series of PokemonGo’s and Snapchats of the world. It will be their turn to catch up now”.

Industrial IoT will be the biggest innovation boom of the coming decade, – comments Art Robbins.

Smart Cities will be a $1+ trillion industry over the next ten years. They have emerged through effective collaborations of municipalities and major companies forming motivated public / private partnerships. These connected, digitally transformed cities will enhance the quality of life and services across all aspects of urban living – health, traffic, networking, energy, safety, environment, government, etc.

Application of digital technology in the industrial sector will be the defining innovation trend for years to come, with Thomas Edison-founded General Electric given as an example of a company that managed to leverage its assets and use its history (read between the lines – accumulated data) to become a truly digital company.

Indeed, in the Information Age it is not really a sharing economy or a sexy start-up name that would define the success or failure of a company, but rather its ability to leverage and monetize its data. Intelligent data analytics will drive new business models fueling digital transformation across all industries.

GE got timing right when investing into digital platforms, AI and predictive analytics (i.e., Predix) to make sense of its amalgamation of data. IBM is yet another great example of a reinvented company, which shifted its focus from metal boxes and into decision analytics (i.e., Watson), deep learning and nanotechnology. Looks like it’s worth tracking Warren Buffett’s investments (he is the biggest IBM’s shareholder).

Data is the currency of today, – says Art Robbins, – And the people who understand it first are very likely to be first in the innovation race as well.

When asked to comment on the telecommunication sector, Mr. Robbins rightly notes that “cables do not create loyalty”. It is the smart analysis of your customers’ data that would create stickiness. Consequently, telecom operators have every chance of avoiding a “dumb pipe” scenario if only they take a drastic move towards customer-oriented data analytics. And it is definitely not telecom that can complain about a shortage of that one.

Mr. Robbins says innovation is cultivated differently in different cultures and the preconditions for growth are not always meticulously thought-out internal factors, but these very well might be spurred by so-called “external forces to innovate”, case being Olympic Games in Beijing or Rio.

Dwelling on the political impact on innovation, Art gave China as an example of a government-driven and government-regulated approach, while the US being a more market-driven one. Commenting on the pace of growth in LATAM, Mr. Robbins mentioned that a favorable political climate has been a major success factor in improvements in Mexico and Chile, while also being an unfortunate barrier for Argentina and Venezuela.

When asked to comment on the developments in the European continent, Art said Nordic countries have been the most successful when it comes to defining an attractive and distinguishable brand as well as creating most favorable environment for trying new things and coming up with breakthrough ideas. According to him, the rapid growth in CEE region gives every hope to believe the countries will define a brand that would go further than the “cheaper labor force”.

An abundance of factories and heavy industry is yet another hint of CEE region coming at the vanguard of industrial IoT revolution. What best probing ground for IoT transformations than a region where all European industrial facilities are brought together? Poland alone is the biggest car manufacturer in Europe. Ukraine has been USSR’s machinery and aircrafts’ manufacturer for decades.

With a gradual shift from the services economy and into infrastructure monetization, those are the heavy lifters of today’s economy that might become tomorrow’s arenas of breakthrough innovation, given the will and a favorable investment climate.

Today I would invest in Scandinavia and bet on Central Eastern Europe,
– comments Frost & Sullivan President.

To sum it up, it won’t be fancy customer social applications that will define the face of innovation in the decades to come. Rather it will be a company’s ability to have a lasting impact on human life while maintaining a fine balance with the fragile natural environment. Innovation driven by social responsibility will be the most impactful.

We have got our time for experimentations and recklessness, for one-day fads and show off apps. The time has come for pragmatic innovation, fundamental and life-changing, the innovation that would make us wake up 10 years from now and ask ourselves:

How the heck did I live without that?


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