Asia to overtake US and Europe in innovation centers

Asia has for the first time overtaken Europe in its number of innovation centers built and operated, with the region now host to nearly a third (29%) of all such centers globally. So strong is Asia’s growth that it could soon overtake the US as the biggest hub of innovation centers, if it continues to grow at the same rate, according to a new global report from Capgemini Consulting.

Eric Turkington, director at Fahrenheit 212, which produced the report as part of the Capgemini Group, said, “We are witnessing a rapid changing of the guard for global investment in innovation centers. The US and Europe have traditionally been viewed as dominant forces in innovation and technology but Asia could soon surpass the US for number of innovation centres built and operated. Moreover it is clear that funding alone is not enough — the success or failure of any innovation centre hinges on how effectively it taps into the surrounding ecosystem, and the role it plays in driving a broader corporate innovation strategy.”

Asia’s emergence as a leading hotbed of innovation is underscored by its position as a world leader in patent applications, a key indicator of technological and scientific breakthroughs. The region now accounts for over half (56%) of the world’s total patent grants. During the last decade (2005–15), Europe’s share of global patent grants has fallen from 24% to 13%.

“Innovation centers are corporate attempts at thwarting digital disruption. And companies seeking to out-maneuver disruption usually become the disruptors in their space. With Asia’s dominance in this edition of our research, it’s clear that innovation is becoming globally democratised. Furthermore, by tracking associated technology trends, the focus on AI suggests that the future of corporate innovation will realise new business models, products and processes emanating out of Asia with global effects” said Brian Solis, co-author and principal analyst at Altimeter.

The study also found:

Silicon Valley’s dominance increasingly being challenged

Silicon Valley’s reign as the epicenter of innovation continues. Today it hosts 65 innovation centers, up from 53 in July 2015 — a 23% increase in little over a year.

Despite its continued growth, Silicon Valley no longer claims sole ownership of innovation. In each report, there is inevitable erosion of its dominance. Between July 2015 and October 2016, its share in the world’s total innovation centers has fallen from 18% to 14%. This is a result of increasing competition from a diverse set of hubs across the world. In particular, the top three cities in Asia — Singapore, Bangalore and Tokyo — together added more innovation centers (9) between March and October 2016 than Silicon Valley (7).

Image: Capgemini Consulting, Fahrenheit 212, Altimeter Analysis

What are innovation centers?

The definition of innovation centers in this report represents enterprise investments in understanding new market dynamics, acquiring new expertise and resources, and also aligning with entrepreneurs, startups, investors, academic institutions, and related ecosystems driving new trends.

Innovation centers assume many shapes, but at their core, they are comprised of special teams of intrapreneurs in house or moved into dedicated sites within relevant global tech hubs. They function outside of the traditional operational landscape with the goal of accelerating digital innovation, rethinking customer experience, improving operational efficiency and testing new business models.

Current priorities shared among innovation centers focus on digital technologies such as big data, the internet of things (IoT), social media, mobile, robotics, augmented reality and 3D printing.

Why this data matters

The indicators in this report show how many important shifts in cities and countries change and attract corporate investments. Keeping an eye on these dynamics helps companies identify potential locations for their innovation centers and better leverage innovation ecosystems. Different hubs around the world tend to unify specific expertise and technology trends, which align uniquely with outside industries.

This analysis serves as a barometer to firms that want to identify new growth opportunities, extend existing brands and leverage digital technologies to transform customer experiences, operations and business models.

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