Harald Zapp, CEO of the Company Builder Next Big Thing AG (NBT), puts Europe’s innovation abilities to the test. He proposes a solution: co-innovation with tech experts to realize innovation that leaps ahead of the competition.
Historically, exclusive access to scarce resources has always been a decisive competitive advantage. In agrarian societies it was the ownership of land and livestock; in the industrial age sufficient machinery and raw materials were crucial for success. In the information age, success is achieved by those who digitize and analyze information, who use it to create global networks and build platforms. However, data is now so omnipresent and fully accessible that data alone is hardly enough to create competitive advantages. In the future, efficiency gains and economies of scale will be achieved by linking sophisticated sensor and actuator technology with Artificial Intelligence, enabling completely new types of value chains in the Machine Economy.
From the information age to the innovation age
Disruptive technologies such as Blockchain, Machine Learning and Artificial Intelligence are shaping the Internet of Things (IoT) and give us an idea of the enormous potential to be tapped from the Machine (to Machine, or M2M) Economy over the next decade. Tech startups from the IoT sector provide a good outlook. Be it ConcR, the venture recently founded by NBT, which equips concrete with functional sensor technology and thus opens up new paths to smart services for the construction industry, or METR, which is driving the digitalization of the housing industry with a multi-protocol-capable gateway, an intelligent platform and a portal adapted to the needs of customers.
Other prime examples who point the way toward the innovation age include SENSRY, which is building sensor modules for IoT applications of the future in cooperation with Globalfoundries and Fraunhofer, or Weeve, which is building a platform for remote proofing, integrity-certification, quality control and safe transport of IoT data before use. In cooperation with industrial companies, science institutions, as well as companies from the finance, insurance and healthcare sectors, NBT is working on real-time control of networked machines, sensor-based logistics, and solutions for autonomous driving.
The potential is there, it just has to be implemented. The success of Germany as an industrial center will depend to a large extent, on how well we use these disruptive technologies to develop and deploy innovations in the coming years. After all, the Machine Economy is about high-level B2B exchange - offering Germany the chance to position itself as a digital leader within Europe and globally. We must seize this opportunity.
Turning ideas into real B2B business models
There’s still much catching up to do in this area: the research and development departments in German SMEs (small-to mid-size enterprises) work far too often towards short-term successes, continually following proven paths. Provided funds and investments are closely linked to the expectation of a prompt return on investment. This may increase productivity in individual areas, but has little in common with the necessary disruption of their business models.
If we take a look at the budgets for classical R&D, Germany is not in too bad a position at all: according to the UNESCO Institute for Statistics, 109 trillion USD of investment corresponds to 2.9 percent of gross domestic product (GDP). Compare this with the US, where 476 trillion USD accounts for 2.7 percent of GDP. But we see budget allocation in the wrong place!
Traditional R&D is about incremental, linear innovation - disruptive innovations require venture capital, and in that respect, Germany still looks outdated by global standards. Since 1995, around 50 billion USD in venture capital has been invested in Germany, which corresponds to around 1.3 percent of German economic output. By comparison, the figure in the USA is 870 billion USD and young tech companies account for around 34 percent of economic output.
This indicates that in Germany, the discrepancy between developing future-oriented innovation and the transition to market-ready B2B solutions is simply still too great.
Innovation management requires fundamental rethinking
European SMEs, but also corporations, must think differently about the framework of conditions for innovation and dare to take a completely new approach to innovation management. Only rarely can this be achieved with solely the SME’s own resources. Genuine innovation management requires an ecosystem of networked experts who come from different fields and who develop, test, and implement ideas in outsourced innovation laboratories – far removed from traditional structures and in the shortest possible time.
A company builder like Next Big Thing AG, with its tech focus on the Machine Economy, offers the necessary infrastructure and access to industry. As technological co-founders, NBT enables a rapid implementation of market-ready IoT business models in B2B, making newly-founded companies' capital marketable.The next few years will determine whether Germany succeeds in making the transition from the information age to the innovation age. We are definitely working on it!
Harald Zapp is the founder and CEO of Next Big Thing AG (NBT), a Company Builder for the Machine Economy based in Berlin, Germany. NBT provides a full range of services for building IoT ventures with a focus on Machine Learning / Artificial Intelligence and Blockchain. In founding NBT, he set himself the goal of making Germany more attractive for data-based B2B business models and establishing a higher level of innovation dynamics - even in traditional fields. With 25 years of experience in US companies, including many years as head of marketing for Cisco Germany, Harald Zapp is one of the pioneers of the Internet. The IoT platform relayr, which he co-founded and which was taken over by Munich-based reinsurer Munich Re in 2018, was one of the largest tech startup exits in Germany. Harald Zapp is a sought-after advisor and expert on the Internet of Things and Industry 4.0 as well as an active board member of Germany’s Bitkom association.