Innovation Centers: How Incumbents are nurturing digital innovation globally

1. Leader in Digital Transformation
Compiled By: Anshuman Acharya
Innovation Centers:
How Incumbents are nurturing digital innovation globally

2. © Capgemini Consulting 2017. All rights reserved. 2
The project focuses on the role of Innovation Centers and their increasing importance in driving digital
transformation in the global scenario
Innovation Centers: Incumbents are nurturing digital innovation globally
Description
Project Overview
 Innovation centers catering to the needs of a digital revolution within or outside the company have become the much
needed platform firms have been looking for
 Background of the project lays out the concrete database and trend analysis of Innovation centers across the world in
the last few years, while studying their cause, pattern and impact on current business scenario
Background of the project
 The market findings are a comprehensive representation of the direction of development in the global business scenario
 The scope of the project extends beyond the innovation in sectors and may focus on individual technologies
implemented to drive innovation
Scope of the project
 Data Validation: Innovation and research, often involve behind the scenes operations which makes it difficult
accumulating accurate data about the centers
 Data Authentication: Acknowledgement of data in its truest form and maintain uniformity through all data points
 Data Representation: Depicting scattered data elements in a coherent, understandable manner
Challenges faced
Objectives of the project
 The primary objective of the project is to capture the latest Innovation centers launched by firms across various sectors
and analyze the market findings
 The secondary objective requires the identification of pattern, correlating of trends and formulating forecasts based on
concrete data findings

3. Characteristics of an Innovation Center Key Challenges
Decoding the Innovation Center DNA
Every innovation must have a trigger point, a medium of execution and a platform to grow in future
© Capgemini Consulting 2017. All rights reserved. 3
 Recognizing the true purpose and
future propositions in the centers
 Elimination of data not fit for the scope
of the project
 Capturing actual geographic spread of
centers of innovation
 Magnifying the subtle reasons for
geographic likeliness of projects
 Sifting of cluttered data on a time
frame basis
 Checking actuation of previous
announcements
 Identifying specificity of technical
implications in Innovation centers
 Establish concrete reason for choice of
digital platform
Checking digital credibility
Factors of influence
Adherence to time frame
Technological implications
Elimination of Redundancy
 Innovation pertaining strictly to last
quarter time frame
 Scope of research must remain within
the digital boundaries of innovation
WHAT:
Recognizing the format of
operation and way of execution
WHY:
Understanding the primary objective of
Innovation centers
WHERE:
Identifying region and geographic
significance of location of centers
WHEN:
Capturing launch and announcement
dates
HOW:
Analysis of the technology used
and their sustainability

4. Trend Analysis: Innovation Center profile
A comprehensive study and analysis of Innovation Centers of the world reveal some typical and thought
provoking trends and patterns which may pave the way for future innovations
© Capgemini Consulting 2017. All rights reserved. 4
Trends Observed Analytical Inference
The Innovation Exodus
In-house Vs Outsourced
 Contrary to the Accelerators programs boom two years
ago, In-house innovation mode of approach has taken a
front seat
 Tie-ups with world class universities of Technology have
proved to be reason for proximity of innovation outposts
to universities
Partnerships: Key to Innovation
Asia-PacifichasemergedasthemoreprevalentchoiceforInnovationCenters
North
America
34%
AsiaPacific
37%
Europe
14%
NotAvailable
8%
Africa
5%
Australia
2%
NOV’16-APRIL’17
AFRICA
5%
EUROPE
16%
NORTH
AMERICA
42%
ASIA
31%
TILLNOV-16
APACregionhasaccountedformaximumnumberofInnovationCenters,leavingbehindEuropeandAmericainthelasttwoyears.
Emergingcities
Shenzhen
TelAviv
Nanyang
Wellington
Sydney
Asiaaccountsforoverhalf(56%)
oftheworld’stotalpatentgrants.
Duringthelastdecade(2005-15),
Europe’sshareofglobalpatent
grantshasfallenfrom24%to
13%.Clearlythemajortalent
poolliesinAsia.
PatentedTalent Thrivingstart-upculture Diversetechnologyaccess R&DInvestment
CountrieslikeIndia,Singapore
haveadoptedstartupfriendly
policiessuchasgrants,incentives
andloanstobuildaplatformfor
thebuddingTechnopreneurs
Asianindustriesthrivingoncurrent
technologysuchasA.I.,IoT.4out
of9A.I.orientedcentersarein
China.Asiaoffersfasterand
cheaperaccesstovarious
technologies
Singapore’sbusinessexpenditure
onR&DhasgrownfromS$0.3
billionin1990to$6.2billionin
2016.China’scurrentR&D
spendingaveragegrowthrateis
18.3%,muchhigherthan
Europe(4%)orNorthAmerica
12
28
8
36
13
25
7
10
0 5 10 15 20 25 30 35 40
InnovationOutpost
In-houseInnovationLabs
UniversityResidence
Accelerators
TypesofInnovationCenters
Nov'16-April'17 TillNov'16
Incumbentgiantsareoptingforin-houseinnovationsmorethanever
UniversityResidentialprograms
Thehot-spotofInnovation
Multi-disciplinarycapabilities
Shiftingfocusonreallife problems
Placeoftechnologicallytrainedminds
oftheworld
In-HousePreferences
AccesstoCustomerdatabase
Skillenhancementofworkforce
Venturingintonewbusinesses
Outpostbenefits
Workingoffthebalancesheet
Exclusivetechnologicalexpertise
Collaboration,M&AandJVshave
positiveimpactonshareholders
Acceleratorsoraggregators
primaryobjectivetoattractnumerous
start-upsandothertechnologically
inclinedresearchunits,
Innovation
Centertypes
Whyareacceleratorsfailing?
 Internalacceleratorstakealotintermsofresourcesandperson-powertomanage.
 TheyrequireheavyR&D,extensiveprepwork,andahigh-touchapproachtoprogramadministration
 Lackofmeasurablestrategy,goalsandworkingmodel
 Inabilitytoconjureto‘active’investorswithcredibility
 Actionorientedshorttermprojectionsofcorporateskillsthesparkofinnovationwithpotentialforvaluecreation
Partnershipprovestobethemostpreferredmodelofinnovationforbigfirms
Innovationcentersestablishedinequalnumbers,throughinternalprogramsaswellasstrikingstrategicpartnerships
15
4
6
5
0
2
4
6
8
10
12
14
16
INHOUSE ACCELERATOR OUTPOST UNIVERSITY
 Interestingly, 80% of partnerships have the common primary objective of “New
product/conceptdevelopment”
 AcceleratorandInnovationoutpostsaccountformorethan60%ofthepartnershipdeals
 Financial funding and access to newer technology such as IoT, Big Data, Fintech are the
primaryreasonsforpartnerships
 Outof29partnershipmodelsofinnovationcenters,14areIn-houseinnovationhubs
 Amajority,15ofthepartnershipsestablishedinAsia-Pacificregion
14
8
6
1
0
2
4
6
8
10
12
14
16
ASIA NORTH
AMERICA
EUROPE AFRICA
38
14
0
29 28
4
0
5
10
15
20
25
30
35
40
Internal Partnership NotAvailable
ModeofInnovationprograms
Feb'16-Oct'16 Nov'16-Apri'16
InnovationthroughPartnership(Nov’16-Apr’17)
 Asia-Pacific region has edged past North America in
number of innovation centers built or operated
 A staggering 27 innovation centers launched in Asia in the
last quarter
 Bangalore in India, China with Shenzhen and Guangzhou
and Singapore have emerged as a new favorites
 Over crowded Silicon Valley hubs
 Go to the source, rather than extract
resources
 New drive of innovation investments
 Innovation accelerators, rampant a few
years ago, have now subdued, due to
lack of vision and funding
 Big firms are cultivating In-house
innovation centers with outside
technological assist to expand expertise
 Innovation through a partnership
model is the more prevalent choice of
execution
 Assistance on platforms such as Big
Data, IoT, A.I. and Fintech, for new
product/concept development are the
primary reason for
 80% of partnerships have the common primary objective
of “New product/concept development”
 A majority of the partnership innovation programs are
established in Asia-Pacific

5. Trend Analysis: Riding the Digital Wave
© Capgemini Consulting 2017. All rights reserved. 5
Trends Observed Analytical Inference
 Innovation centers in auto-sector saw a jump from 5
centers to a staggering 15 new centers opened in the last
quarters
 Urban Mobility and Autonomous driving are the key areas
of focus where A.I. is being implemented
 Customer participation and design feedbacks are crucial to
research and innovation
 Focus shifted from new product development to customer
experience enhancement
Digital Transformers: Future heroes
AUTO: King of Sectors
Customer driven Innovation
AreaoffocusinInnovationCentersacrosssectors
0
1
2
3
4
5
6
7
8
9
10
NOV'16-APR'17
BigData IoT CloudComputing Mobility A.I.
 Automotivesectorhasseenthemostintenseandrapidimplementationofdigitizationprocesses
 UrbanMobilityisthestandoutconcept,with9outof14automotiveinnovationcentersstatingitastheirprimaryobjective
 Bankingsectorisinvestingequallyinthethreemainstaysofdigitizationi.e.BigData,CloudandIoT,withemphasisoncyber-securityandcustomer
userexperienceenhancement
FocushasshiftedfromnewProductorConceptdevelopmenttoEnhancedcustomerexperience
NewProduct/Concept
Development,Product
Innovation
27%
EnhanceCustomerExperience
18%
Partneringwith
Ecosystem
25%
ImproveOperational
Efficiency
11%
DesigningNew
BusinessModels
5%
Developingan
InnovationCulture
withintheOrganization
14%
ICDISTRIBUTION-OBJECTIVE
(OCT2016-MAY2017)
NewProduct
/Concept
Development
,Product
Innovation
41%
EnhanceCustomer
Experience
11%
Partneringwith
Ecosystem
32%
ImproveOperational
Efficiency
6%
DesigningNew
BusinessModels
6%
DevelopinganInnovation
Culturewithinthe
Organization
3% Others
1%
ICDISTRIBUTION-OBJECTIVE
(MAR2016-OCT2016)
Developing
InnovationCulture
within
Organisation
New
Product/Concept
Development
ProductInnovation
The prime objective behind setting up an IC by a manufacturing
company is not only for outright innovation, but also improving
operationalefficiencyandenhancedcustomerexperience
Although there has been a drop in the overall objective of Partnering
with Eco-system, still accelerator type IC has been the preferred one,
thankstothereducedtimeofoperationsandfocusedinnovation.
Increasedconcentrationofcompaniestowardsoutrightinnovation(only)
rather than focusing on other parameters has led to the hike in the
objectiveofDevelopinganInnovationCulturewithintheOrganisation.
IC’s were prominently seen in companies serving B2C business rather
than B2B business, where end customers play a critical role, thus
directlyimpactingthe overallperceptionaswellasthebusinessofthe
company.
CustomerEccentricity:InnovationCenterstodayaredrivenbyobjectiveofenhancingcustomerexperience
Automobiles:Inthedriverseatofinnovationcenters
 “UrbanMobility”istheprimaryobjectivefor9outof14centers
 7 out of 14 centers are In-house programs, with most of them aiming at “new
product/conceptdevelopment”
 Automotive sector emerges as the busiest sector with regard to innovation
researchusingA.I.
 Urban Mobility and Autonomous driving are the key areas of focus where A.I. is
beingimplemented
 InvestmentsinA.I.basedinnovationforecastedtoreach$37.8billioninthenext10
years
ArtificialIntelligence:ThetopgearinAutoWorld
644
833
6172
21178
38521
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
2014 2016 2018 2020 2022 2024 2026
ForecastedinvestmentinA.I.($Million)
Source:Statistica,Tractica
NationalAutomotiveInnovationCentre
•OpenedatUniversityofWarwickin2017byTATAMOTORS
•A.I.basedmostadaptableandadvancedfullyimmersivedrive-incar
simulator.
NissanResearchCenterSiliconValley(NRC-SV),California
•A.I.basedAutonomous vehicleandconnected carsarekeyfocus
• Renault-Nissantolaunchmorethan10vehicleswithautonomous drive
technology
UberAILabs
•Uber’snewdivisionbasedinSanFrancisco
•CoreteamformedbyacquiringGeometricIntelligence,anA.I.start-up
VolkswagenAutomotiveInnovationLab(VAIL)
•PartnershipwithStanfordArtificialIntelligenceLab
•DeepLearningandcomputer visiontoautomatedrivingprocess
14
11
2
5 7
12
2
5
1 1
0
5
10
15
20
25
30
Innovationcenterslaunched
Feb'16-Oct'16 Nov'16-Apr'17
Innovationcentersinauto-sectorsawajumpfrom5centerstoastaggering15new
centersopenedinthelastquarter
Leader’sTalk
“The disruptive triangle of autonomous drive
technology, electric vehicles, connected cars
andservicesmeanwewillseemorechangein
the next 10 years than we did in the last 50
years.”
-CES’17KEYNOTEADDRESSbyCarlosGhosn,
CEO-Nissan
 Big Data’ and ‘IoT’ lead the pack among
key focus areas of Innovation Centers
 A.I., to be the next big thing in the future
with major investments in the platform
for its urban mobility and interactive
infotainment system
 Future investments expected in large
figures for A.I. powered innovation
campaigns by major car manufacturers
 Automated driverless technology and
fully interactive infotainment system
are key areas of innovation focus
 Innovation to be driven more by
customer experience and necessity,
rather than firm’s think tank
 Customer experience enhancement
programs have resulted in cultivation of
innovation culture within the
 Automotive and manufacturing sector have registered the
most intense and rapid implementation of digitization
processes
 Banking sector is the newest member to join the
innovation drive, with implementation of Big Data
analytics and cyber security modules
Auto sector taking the front seat, with a customer driven market emphasizing the need for digital transformation

6. Learnings and Insights
© Capgemini Consulting 2017. All rights reserved. 6
Insights into Innovation
Understanding scope of project
 Recognizing the potential and scope of conclusions and their
relevance for future study on the subject
 Documenting potential analysis of upcoming trends
Establishing good practices


Laying future roadmap
Citing potential future areas of research and study
 Follow up of profiled companies with credible innovation
pedigree
Lessons on job
Time Management
 Establishing milestones for project completion within
stipulated time of internship duration
 Simultaneous work on data search and sorting, along with
deck alignment modifications
Data search and sorting
Research alignment with project
 Maintaining consistency of extracted data and analysis with
objective and scope of the project
 Sifting through irrelevant conclusions to prepare storyline for
deck
 Studying multiple reports to establish degree of credibility of
source before locking facts and figures
 Capturing of database compatible information from multiple
resources
 Creating process flowchart with help of inputs from
colleagues to map the work flow
 Establishing credible source database for future findings

7. Leader in Digital Transformation
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