Companies all over the world are becoming increasingly worried about their ability to innovate and compete in the fast-changing technology world. That’s according to GE’s third annual “Global Innovation Barometer” released Jan 17.
The survey of 3,100 senior business executives in 25 countries showed the anxiety that these executives feel about innovation and how confused they are about global competitiveness. One in three said the increased competition and accelerated pace of technological advancement is having a negative impact on their local economy. And while 71 percent said they favor the opening of their markets to foreign trade, investment, and technology imports, an equal percentage want protectionist government procurement policies that favor domestic technological development. There was a 53 percent overlap in the people who expressed these two opposing views. Executives from the U.S. were only a little less divided than Indian executives on this issue.
Business executives agree on some things. They agree, for example, that they need to better understand customers and anticipate market evolutions, attract and retain innovative people, and stay ahead of the technology curve.
It’s clear to me from the GE study that companies may have become more fearful of the future. They are really confused about what lies ahead and what they and governments should do.
It has been said countless times, but it still bears repeating: Technologies are advancing at exponential rates in fields such as robotics, artificial intelligence (AI), computing, synthetic biology, 3D printing, medicine, and nanomaterials. These advances are making it possible for small startups to take on the largest corporations in the world by developing technologies that make established products obsolete. Combinations of exponential technologies can, as I’ve written before, threaten entire industries — as robotics, AI, and 3D printing promise to do to China’s manufacturing industry, as cheap tablet computers will do to the personal computer industry, and as advances in sensors and genomics will do to the medical devices and pharmaceutical industry.
The “disruptive innovation” that Harvard professor Clayton Christensen has long talked about is happening at an ever-increasing pace. Changes that would take many decades in the past are now happening in a fraction of this time. Witness the evolution of mobile telephones and the changes that these have caused to our work habits and family connections. This has had an even greater impact on hundreds of millions of families in the developing world who were cut off from each when they went to cities to work. Over a 10-year period, the number of cellular subscriptions increased from a few million to almost 6 billion — or 87 percent of the world’s population.
Changes in technology are already toppling giants. Look at what happened to digital camera pioneer Kodak. The company went from being a powerhouse in the photography industry to a laggard. Even though a Kodak engineer invented the digital camera in 1975, the company couldn’t adapt its business model fast enough to take advantage of the technology. Kodak filed for bankruptcy in January 2012. This will be the fate of many of today’s leading companies if they don’t leverage the advancing technologies and evolve their ways of doing business.
They don’t have as much time as they might think.
On a call to discuss the findings of the GE research, I asked the company’s marketing chief, Beth Comstock, why companies don’t have a greater sense of realization about what lies ahead — about the impact exponential technologies will have on their businesses. Comstock agreed that technology change should be a real cause of concern and said, “Perhaps some of the fear that’s coming through is the recognition that it is happening at a faster pace than many of us can comprehend.” She noted that countries such as Saudi Arabia, aware they will run out of resources one day, are spending the most on innovation, and that Israel is “trying to run a different play” — as a “startup nation.”
Every big company that wants to be in business at the end of the decade needs to “run a different play,” as Comstock put it, and they need to disrupt themselves before some startups — coming out of nowhere — do. Instead of trying to raise protectionist barriers, large companies need to build the same types of innovative products and services that the startups would.
Vivek Wadhwa is a fellow at the Rock Center for Corporate Governance at Stanford University and is affiliated with several other universities. Read more about Vivek Wadhwa’s affiliations. You can also follow him on Twitter — @wadhwa.
[Editor’s note: This story previously appeared on WashingtonPost.com]
More: MobileBeat 2016 is focused on the paradigm shift from apps to AI, messaging, and chatbots. Don't miss this opportunity: July 12 and 13 in San Francisco.