Four changes on the road ahead

So why the sense of urgency now? Most companies in our study say that more than 40 percent of their revenue is at risk by 2030 if they don’t innovate, and 93 percent say they are “not fit for purpose” in at least one crucial aspect of managing innovation. To secure and grow their revenue, forward-thinking companies will need to close the gaps in their innovation management capabilities and adapt their innovation strategies accordingly.

How are companies planning to shift their approach to innovation? Here’s what we discovered:

Leaders intend to spend more on innovation to stay ahead of the curve. In fact, two-thirds of the companies we surveyed plan to spend at least 20 percent more on innovation by the end of the decade.

Companies are planning to take their innovation activities into new markets and tap into areas beyond the core. Nine out of 10 companies are planning to enter adjacent and entirely new markets beyond their current scope of business. As their core markets become saturated, innovation leaders perceive the boundaries between markets to be less distinct, which allows for a transfer of capabilities. And this requires an open and collaborative innovation process that allows industry experts to help companies deploy capabilities in new areas.

Speeding up the pace of innovation has emerged as a core strategic priority for many companies. Half the organizations in our study listed the acceleration of their development processes as the key priority in the coming years, recognizing the importance of staying competitive in an increasingly fast-paced market. To do so they’ll rely on a multipronged approach ranging from adopting agile methodologies and enhancing collaboration across teams and organizations to leveraging advanced technologies such as AI and streamlining workflows.

AI is seen as the key to realizing R&D ambitions. Artificial intelligence is increasingly viewed as a transformative force in research and development (R&D) management. Already more than a quarter of companies have integrated AI into every stage of their innovation processes and this share will continue to grow through 2030. Companies are leveraging AI to automate routine tasks, incorporate real-time data into decision-making, and enhance ideation through generative AI tools. Additionally, AI enables rapid prototyping through machine learning models, significantly accelerating testing and validation phases. By 2030, 77 percent of companies plan to fully integrate AI into their innovation efforts, highlighting its pivotal role in shaping the future of R&D.