Innovation Leaders … from Bosch and H&M, to Moderna and Samsung … how companies are driving innovation, enhanced and accelerated by AI

November 12, 2023

In fast-changing, uncertain and tech-charged markets, innovation has become the top corporate priority.

Apple is still seen by many as the world’s most innovative company. Microsoft, however is closing the gap, both in terms of perceived innovativeness, and market value (both companies currently closing in on $3 trillion market caps). While Apple is potentially getting sidetracked by AR, with its headsets and spatial computing, Microsoft has embraced ChatGPT, and embedded it into many of its cloud-based services and worksuites.

Two “Most Innovative Companies” reports compete to rank the world’s top innovators each year.

  • BCG take a more analytical approach, based around investment and outcomes. It ranks Apple first, followed by Tesla, Amazon, Alphabet and Microsoft. Asian companies Samsing, Huawei and BYD also make the top 10, as does Siemens, the top European innovator.
  • Fast Company takes a more qualitative look at where newness and disruption are rife, with insight stories about some of the more off-beat creative businesses. It ranks OpenAI top, followed by McDonalds, Airbnb and Holdfast Collective (that’s the non-profit owner of Patagonia). Brazil’s Nubank follows, then Microsoft, Roblox, Webtoon, Ramp and Tiffany &Co.

Overall, innovation rose as a top corporate priority in 2023, with 79% of companies ranking it among their top three goals, according to BCG. As growth has slowed in core markets, the importance of being able to innovate new products and services that carry companies into new markets with new business models has increased.

Innovation at Bosch

German electronics business Bosch states in its annual report that “the basis for the company’s future growth is its innovative strength.” While Bosch has a special ownership structure that facilitates long-term planning and up-front investments, it is a strong culture of innovation that underpins.

Bosch has a global R&D organization of about 84,800 employees, 44,000 of whom are software developers, in 130 locations. From 2018 through 2021, the company has maintained steady R&D spending as share of sales at between 7.6% and 8.2%. A core pillar of Bosch’s innovation strategy is its centralised Bosch Research unit. With 1,800 highly specialised employees, this unit generates about a quarter of all Bosch patents.

Bosch Research focuses on enabling technologies that can be applied across The Bosch Group, such as AIoT, which combines AI and the Internet of Things, to move from fundamental research to actual product innovation and large-scale commercialisation. Bosch builds on a broad ecosystem of internal business units and external partners to generate innovation ideas.

While three-quarters of R&D spending has been devoted to the company’s Mobility Solutions business and topics such as electrification, driver assistance systems, semiconductors, and sensors, Bosch supplements internal R&D investments with targeted acquisitions to support high-priority areas, such as its automated driving product portfolio.

In 2022 alone, the company made three investments to acquire IP for the next generation of mobility, consistent with its goal of making Bosch a one-stop shop for “all the necessary building blocks of automated driving—from actuators and sensors to software and maps,” according to Mathias Pillin, president of the Cross-Domain Computing Solutions division.

For example, Bosch’s Semiconductor Ideas to the Market team specializes in high-frequency-processing “System-on- Chips” used in control units for the automotive industry. Its FiveAI unit provides a modular cloud platform designed for building software components and development platforms for safe automated driving systems, particularly supporting solutions used in complex urban environments. “We want Five to give an extra boost to our work in software develop- ment for safe automated driving,” said Markus Heyn, member of the Bosch board of management and chair- man of the Mobility Solutions business. Bosch’s Atlatec team, meanwhile, creates high-resolution digital maps that are critical to automated driving functionality.

Innovation at Samsung

South Korean consumer electronics giant Samsung is an example of a company that uses all the tools available to drive performance by innovating at multiple stages of the value chain. Samsung regularly brings new technology to the mass market through a focus on component-level technology innovations and advances in scaled manufacturing. Over the years, as its core products and markets (such as smart- phones and TVs) have matured, Samsung, known for its dizzying array of products, has proved adept at pushing into adjacent markets and developing new business models.

Samsung innovates along two dimensions: component- level advances (improving existing technologies with inno- vations, such as foldable phones), and adoption (increasing accessibility to products through mass production, lower costs, and technological advancements). The company is a global innovation leader across R&D, patents, and innova- tion vehicles such as labs and incubators. It invests heavily in R&D, spending more than $17 billion (9% of sales) in 2021 alone, making it the largest non-US R&D spender. Boasting about 10,000 researchers and developers dedicat- ed to the development of future tech, the company has developed a robust patent portfolio: it was granted 6,300 patents in 2022, the most in the US.

As Samsung has developed new products and sought out new markets, it has moved from displays and electronic components into robotics, smart home products, connected cars, medical equipment, virtual assistants, and 5G connectivity. The company has captured significant shares of the global market for smartphones, QLED TVs, and IoT products.

AI in Innovation

BSG’s research suggests key areas where AI can support, enhance and accelerate innovation are in

  • Revealing market trends and competitor activities (such as domains, topics, and technologies)
  • Making portfolio prioritization decisions
  • Identifying players with external innovation potential (such as alliances, partnerships, venturing, and M&A)
  • Informing innovation investment decisions (such as starting an R&D project in a particular field)
  • Identifying new innovation themes, domains, adjacencies, and technologies
  • Providing input to support idea creation (such as surfacing or validating ideas)

Innovation at H&M

AI is having a significant impact innovation. A great example is Sweden’s H&M, which leverages AI to optimize business processes, enhance personalization, and drive amplified intelligence with human collaboration. The company began exploring AI in 2016, using the vast data it had available to enhance communication, personal- ization, and offerings for customers. Management sought to embed the use of AI throughout the organization by addressing various existing business challenges across the entire value chain rather than focusing on a single use case. Working with AI has helped H&M optimise various aspects of its business, from fashion forecasting and quantification to pricing and personalisation. The successful implementation across the organization has led to a reduction in waste associated with raw materials and logistics, bringing H&M closer to reaching its sustainability goals.

H&M combines AI and human input for amplified intelligence; the combination of data-driven AI and human intuition has proven to be more effective than either capability on its own. One example is in end-of-season sales, where AI improved pricing and sales, but when it was combined with human input the results were twice as impressive as with AI alone. In implementing these AI solutions, H&M strongly emphasised ownership for employees, trusting them to drive the execution by following an approach it calls “tight, loose, tight,” which has concrete strategies and metrics.

Innovation at Moderna

Moderna’s use of AI technology in the development of vaccines and therapeutics, is also insightful. Moderna famously leveraged digital technology and AI to accelerate the design of its mRNA vaccine against COVID-19, but the story goes much deeper.

Moderna is applying its technology platform to open a new frontier in cancer treatment: individualized neoantigen therapies. In collaboration with Merck, Moderna has joined the fight against skin cancer with an investigational mRNA-based therapy, which Phase 2b results suggest can reduce the risk of recurrence or death from melanoma by 44%.

Leveraging a proprietary algorithm, the manufacturing process begins by analyzing the patient’s tumor to identify the cancer-causing mutations and then crafts an individualized neoantigen therapy designed to maximize each patient’s immune response to their specific tumor mutation signature. Taking this even further, Moderna recently announced a research partnership with IBM to leverage AI and quantum computing to advance and accelerate the development of breakthrough mRNA-based therapies.

Moderna’s CEO, Stéphane Bancel, has publicly cited “going digital” as a key reason for the biotech’s success. From its inception, Moderna built much of its drug discovery and manufacturing process in the cloud, incorporating AI throughout. By prioritizing a digitally enabled mRNA platform over any one particular product, Moderna has been able to deliver rapid vaccine and drug development that builds quickly on each consecutive success.

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