This is what innovation looks like in the DACH region

Innovation in the DACH region Study

In order to shed light on current innovation practices, challenges and outcomes, Pioneers has conducted a first major corporate innovation study in the DACH region (Germany, Austria, Switzerland). The study offers deep insights into the way companies deal with innovation and sheds light on the reasons for success and failure. The study data was collected from senior executives (mainly innovation or digitalisation managers) in 104 companies with an average of over 1,000 employees.

Reasons for innovation in the DACH region

Technological developments are on the rise and new megatrends such as automation, data analytics, AI and IoT are changing the way entire industries work. At the same time, a large number of fast-growing companies are entering or even creating new markets with new, often digital, business models. Faced with this challenging environment, many companies have stepped up their innovation efforts to keep up with the pace of change. Looking at the overall results of the study, three main reasons were found why DACH companies invest in innovation activities: to stay ahead of the competition, to increase the company's turnover and to respond to customer needs. But this is nothing new. It is much more important to know how innovation exactly takes place. Namely through intrapreneurship, multi-corporate collaboration and startup-corporate collaboration.

Intrapreneurship

Originally described as an entrepreneurial behaviour of employees, it is now seen as a proven tool to foster innovation throughout the organisation. More and more companies are giving employees the time, space and resources to develop their own (business) ideas during their working hours or even during predefined and structured innovation programmes. The latter are in high demand, and last year the majority of companies started to run one or more intrapreneurship programmes with the aim of helping employees to develop new solutions internally. The study showed that the majority of DACH companies are already harnessing the innovative power of their employees through intrapreneurship. 82% of the participants surveyed were engaged in the practice, while 18% did not yet offer employees the opportunity to work on their own ideas. DACH companies mainly engage in intrapreneurship to develop new products and services (82%), foster a strong culture of innovation (56%) and improve internal processes (47%). The majority of companies offer employees budgets (63%), mentors ( 51%) and time (51%) to work on their own ideas. In terms of organisational formats, internal idea competitions (60%) and innovation or entrepreneurship training programmes (41%) are the most common innovation formats used in practice. Intrapreneurship activities lead to product innovation (57%), improved innovation cultures (49%) and motivated employees (43%). The general results show that there is still a lack of effective programmes and formats in relation to intrapreneurship to fully exploit the innovative power of employees.

Startup-Corporate Collaboration

Young, innovative companies are putting more pressure than ever on the market position of established companies. Obviously, these companies can no longer be ignored and, as a result, companies are now looking for collaboration in the form of open innovation. According to the study, 88% of DACH companies are already working with start-ups. The reasons for DACH companies to encourage collaboration between start-ups are clear. 86% seek product innovation through inspiration from fresh ideas from start-ups or the joint development of specific products using the latest technological solutions, all aimed at creating competitive advantage. Other goals are process innovation (41%) and entering new markets (39%). Due to cultural differences and new agile working approaches, most companies (72%) seek external support when entering into a start-up collaboration. In fact, 38% employ external consultants, while about 20% work with universities or external mentors. Looking at the level of satisfaction with project results, it is clear that companies that do not have external support are less satisfied with the results than those that do.

Multi-Corporate Collaboration

When companies collaborate with different reference groups, be it suppliers, customers or cross-industry colleagues, to jointly achieve their innovation goals, we talk about multi-corporate innovation. 78% of the DACH corporate respondents have tried multi-corporate collaborations in the past, the majority of which are either from the automotive & mobility industry (14%), the chemical & healthcare industry (14%), the finance & administration industry (14%) or the manufacturing industry (22%). During a successful collaboration between several companies, innovations can become more profitable, shorten time-to-market using the partners' existing infrastructure, reduce costs through joint R&D and create additional revenues through combined marketing and sales efforts. Consequently, cross-company innovation, as in start-up collaboration, is used to develop new products (65%). However, building a network is the second critical factor for this innovation model. Even though there are many challenges associated with cross-company innovation, the study shows that more companies (81%) want to innovate multi-corporate collaboration in the next two years.

Outlook innovation

Looking at the market from today's perspective, innovation will undoubtedly continue to be important for companies in the DACH region. However, the forms of innovation are evolving and the focus of innovation activities is shifting from simply looking for the most creative ideas and the best partners to innovation activities that help determine whether an idea is worth pursuing and how valuable ideas can be implemented effectively. Innovation must not only take the form of state of the art products, but more importantly in terms of delivering and capturing value through new channels and business models.