Roland Berger

Trend
Compendium
2030
Megatrend 5
Dynamic technology &
innovation

October 2017
About the Roland Berger Trend Compendium 2030

What is it? Our approach Use it!

> The Roland Berger Trend > We first screened relevant trend, > For your own presentations,
Compendium 2030 is a global scenario and future studies for discussions with clients and
trend study compiled by worldwide business partners or as
Roland Berger Institute (RBI), > Then we verified, analyzed and springboards for acquisition
the think tank of Roland Berger consolidated the results, using approaches
> It describes the most important them to define the megatrends > Following the description of the
megatrends that will shape the > Next, we broke down the mega- subtrends and the recommended
world between now and 2030 trends into subtrends, looking at corporate actions, you will find the
> The megatrends have a broad each from a global perspective most important sources to help
impact on the environment of and the viewpoints of industriali- you keep track of the changes in
companies, strongly influencing zed and developing countries the world, as well as dig deeper
challenges and opportunities of into the trends presented
> Finally, we identified corporate
their business actions that companies worldwide
should consider taking today

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 2
The Roland Berger Trend Compendium 2030 focuses on stable long
term developments

> The Roland Berger Trend Compendium covers megatrends – long-term developments with major impact (usually
global) on companies, economies and the natural world
> The forecasts are based on estimates reflecting the "normal" case, i.e. a stable development of the global economy
with no unexpected events ("black swans"). Major political or financial crises, large-scale natural disasters or similar
far-reaching events are not integral to our assumptions
> To incorporate today's volatile, uncertain, complex and ambiguous (VUCA) environment into strategic planning we
recommend to combine the megatrends of the Roland Berger Trend Compendium with the Roland Berger scenario
planning approach

Methodology

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 3
It covers seven megatrends that shape the future development of
our world

1 2 3 4 5 6 7
Demographic Globalization Scarcity Climate Dynamic Global Sustainability
dynamics & future of change & technology knowledge & global
markets resources ecosystem & innovation society responsibility
at risk

Megatrends

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 4
T5 Dynamic technology & innovation: Subtrends

Dynamic technology & innovation are at the core of major forces

in today's business environment – There are three key subtrends
Subtrends of megatrend "Dynamic technology & innovation"

Power of innovation – Driver of economic prosperity

Life Sciences – Addressing major challenges of humanity
Digital Transformation – The digital economy is here

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 5
1. Power of innovation – Driver of economic prosperity

The power of innovation is rooted in its ability to solve important

problems for humanity
The Problem-Innovation-Solution-Chain

Problem Innovation Solution

> Demand for large scale > Trains > Construction of railway
transportation of people and networks
goods

> Growing demand for food > Synthetic > Higher crop yields through
fertilizer intensive use of synthetic
fertilizer

> Global warming through > Lithium > Reduction of CO2 emissions
rising CO2 emissions batteries through the usage of electro
cars or storage of renewable
energy such as solar

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 6
1. Power of innovation – Driver of economic prosperity

Today we still face major challenges, yet many promising fields

of innovation are poised to overcome these challenges by 2030
Selected major challenges and fields of innovation towards 2030

Major challenges Fields of

for humanity innovation

> Provide enough water, food > Life Sciences

and healthcare > Digital Transformation
> Use resources more efficiently > Materials science
> Cope with increasing energy > New mobility
and transportation demand
> Environmental science
> Reduce waste and pollution
> …
> Fight climate change
>…
2030
Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 7
1. Power of innovation – Driver of economic prosperity

Over the next decades, disruptive as well as sustaining innovations

will change our lives
> Innovation is the most important lever to overcome current and future challenges, such as aspects of demographic
dynamics (see trend 1), scarcity of resources (see trend 3) or climate change (see trend 4). Innovation will impact across
many different fields. To solve a broad range of pressing problems, innovations in Life Sciences and in Digital
Transformation are of particular importance; we will therefore analyze these subtrends in chapters T 5.2 and T 5.3.
Examples of further important fields of innovation are materials science, new mobility and environmental science
> Innovations can be classified in different ways. In this context, a useful classification is to differentiate between
sustaining and disruptive innovations. A sustaining innovation evolves existing markets with better value (e.g. higher
speed micro-chips improving the performance of PCs), while a disruptive innovation (such as cars, PCs, downloadable
digital media) helps to create a new market, drastically altering an existing one
> Most innovations are technology-based. Product innovations generate added value for people and companies, but the
greatest added value is generated when innovations result in new work and manufacturing processes or even new
business models. In particular, new web-based business models from companies such as Apple, Google and Facebook
have dramatically changed our lives and work habits in the past – and are expected to further change them in the future
> Materials science is expected to develop new high-tech, high-performance materials such as new superalloys and
nanomaterials. These help to reduce weight, enhance the performance of devices, machinery and vehicles and allow for
entirely new engineered materials with artificial properties not yet encountered (metamaterials). Innovation with regards
to new mobility, e.g. in battery technology will push demand for electric cars. Autonomous cars are expected to
come to market within the next few years and suggest significant growth potential. Environmental science is trialing
innovative solutions to eliminate garbage patches littering the world's oceans and to reduce air pollution

Source: Clayton Christensen, BBC, Wonderfulengineering Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 8
1. Power of innovation – Driver of economic prosperity

Innovation drives wealth – BRIC countries have to catch up but

Chinese corporations gain pace
GDP per capita and PCT1) applications relative to population in 2016
GDP per capita [USD] Largest corporate
90,000
PCT applicants 2015
80,000
Switzerland 1. Huawei (3,898; CN)
70,000 2. Qualcomm(2,442; US)

60,000 3. ZTE (2,155; CN)

USA
Singapore 4. Samsung (1,683; KR)
50,000 Sweden
Belgium Austria Netherlands 5. Mitsubishi (1,593; JP)
40,000 France Germany
UK Japan 6. Ericsson (1,481; SE)
Israel
30,000 Italy 7. LG (1,457; KR)
South Korea
Spain
20,000 8. Sony (1,381; JP)
Brazil
China 9. Philips (1,378; NL)
10,000 Patent applications
India Russia per 1 mio inhabitants 10. HP (1,310; US)
0
0 50 100 150 200 250 300 350 400 450
Developed countries Emerging markets
1) Patent Cooperation Treaty: Intellectual property rights enforced in 148 countries worldwide

Source: IMF, Wipo, WEF Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 9
1. Power of innovation – Driver of economic prosperity

Creating wealth and increasing prosperity through innovation is

more sustainable and stable than through resource exploitation
> There is a strong link between the number of patent applications per capita and the level of a country's prosperity:
countries with few (exploitable) natural resources, such as Switzerland, Sweden and Japan, have the highest rate of
patent applications per 1 mio inhabitants, suggesting that innovation is more than a viable substitute for natural
resources in terms of wealth creation. However, patents cannot be seen as stand alone drivers of economic prosperity
since possible benefits depend on their degree of utility and efficient, intelligent marketability. Emerging markets like the
BRIC countries are still lagging behind advanced economies regarding patent applications, with the exception of a
number of Chinese corporations e.g. Huawai (rank 1) and ZTE (rank 3) who belong to the leading global patent
applicants. While resources are finite and resource prices remain highly volatile, countries such as Russia need to shift
their focus from resources to innovation to make their economic model more sustainable
> Low income countries accounted for only 0.3% of worldwide total patent applications in 2015 and lower-middle
income for 2.7%. The upper middle-income countries increased their share from 26.2% in 2010 to 43.5% in 2015, with
China accounting for the majority of this, sustaining progress especially in telecommunications and consumer
electronics. Africa equates to 0.5%, Latin America and the Caribbean to 2.3% of worldwide patent filings in 2015.
This illustrates the huge gap of innovational power, resulting in disadvantages on world markets. Governments of both
developed and developing countries need to exploit their knowledge effectively and invest in scientific infrastructure
> The basis of competitive innovation strength lies in an adequate amount of R&D. Thus, R&D expenditure
expressed as a share of GDP, both public and private, is an indicator of future competitiveness. Of the countries
displayed previously, highest shares of R&D expenditure (% of GDP) in 2015 fall to South Korea (4.3%), Israel (4.1%),
Japan (3.6%), Sweden (3.2%), Austria (3.0%) and Germany (2.9%) respectively. In addition, venture capital fosters
innovation in the private sector. Here the US leads with more than USD 70 bn of venture capital invested compared to
only about USD 18 bn in Europe, and nearly USD 40 bn in Asia in 2016

Source: Wipo, IMF, World Bank, EVCA, KPMG Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 10
1. Power of innovation – Driver of economic prosperity

Increasingly, innovations are reaching significant diffusion

milestones faster
Time from introducing a product to an adoption rate of 25% across US citizens [years]

Electricity (1873) 46

Telephone (1876) 35

Radio (1897) 31

TV (1926) 26

PC (1975) 16

Mobile phone (1987) 13

World Wide Web (1991) 7

Facebook (2004) 4

Source: FAZ Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 11
1. Power of innovation – Driver of economic prosperity

Fast diffusion of technology is a global reality and not restricted to

advanced economies
Mobile smart devices and connections1) as share of total number of devices and
connections 2013 vs. 2021 [%] 92
92
99

65 45
Central &
Western 15
Eastern Europe
North
America Europe 81

71
Asia &
17
Pacific
80
Latin Africa &
10
America Middle East
14

2013 2021
1) Defining mobile smart devices and connections as those having advanced computing and multimedia capabilities with a minimum of 3G connectivity

Source: Cisco Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 12
1. Power of innovation – Driver of economic prosperity

Technology diffusion accelerates globally and drives economic

growth, especially in developing markets
> The overall importance of technology will increase within the next twenty years as new technologies are being
adopted more widely, reaching significant diffusion milestones earlier and innovation cycles become shorter.
This development follows a long-term trend. In the US, for example, time to an adoption rate of 25% in fundamental
technologies decreased significantly since the second half of the 19th century. This trend is set to continue to 2030 as
product life cycles become ever shorter with numerous new smart products penetrating multiple markets
> Fast technology diffusion is not restricted to advanced economies. Other clusters face strong growth rates e.g. in
mobile smart devices and connections as a share of the customer's device mix. By 2021, Central & Eastern Europe
(92%; + 77%-points since 2013) will draw level with Western Europe (92%; +47%-points). In the same time frame,
North America reaches nearly 100% while Africa & Middle East (71%), Latin America (80%) and Asia & Pacific (81%) will
have even higher shares of mobile smart devices and connections than Western Europe today (69% in 2016)
> Technology diffusion enables new business models and the ease of doing business, ultimately fostering economic
growth especially in developing countries. For example, in Africa mobile phones are used to facilitate remote pricing
between farmers and intermediary sellers in crop markets, improving price transparency and delivering real time
demand. Also, transactions via cash-backed payment systems connected to mobile phones can be processed in real
time, fostering financial inclusion. The influence of spatial distance between innovators and adopters, which in the past
played a significant role in adoption speed, diminishes as accelerating digitalization reduces obstacles e.g. in
communication, and fosters an even stronger exchange of information worldwide

Source: FAZ, Cisco Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 13
2. Life Sciences – Addressing major challenges of humanity

The powerful network of biology, pharmaceutical and chemistry in

Life Sciences provides answers to future challenges of humanity
Selected fields of Life Sciences
> Life Sciences are concerned with the study of
Biophysics living organisms and their direct and indirect
Ecology impacts on the environment, such as humans,
animals and nature
Biochemistry > It encompasses research fields of biology,
Health sciences pharmaceuticals and chemistry, making Life
Sciences a broad and powerful intersection for
addressing challenges stemming from areas
such as a rising/aging population, a threatened
Genetics natural environment, and the increasing spread of
diseases
Neurosciences
> The interdisciplinary approach of Life Sciences
Pharmaceutical creates synergies, e.g. early detection of
sciences symptoms through neuroscience and treatment
with pharmaceuticals
Marine biology
Medical devices

Source: PwC, Deloitte Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 14
2. Life Sciences – Addressing major challenges of humanity

Huge challenges across the globe are calling for solutions from
Life Sciences …
Selected important challenges associated with Life Sciences

Contagious Chronic and

diseases age-related
diseases

Life
Sciences
Pollution Growing
of air, soil, demand for food
… and water

Marine pollution

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 15
2. Life Sciences – Addressing major challenges of humanity

… to deliver approaches to overcome these global challenges (1/2)

Challenges of diseases & selected solutions

> Poor access to health care currently affects about 1 billion people. With fast growing populations and economic
challenges, developing countries should follow different pathways in healthcare compared to the developed world.
An extensive hospital/doctor network is hardly feasible: Nigeria, for example, would require about 12 times as many
doctors by 2030 as currently available just to reach OECD standards. Instead, this gap needs to be narrowed with
innovative medical technologies allowing for remote medical analysis, diagnosis and, ultimately, treatment advice
and medicine/drug delivery
> In developing countries relatively fast improvements are achieved in terms of longevity goals to 2030. Cheaper
generics and new biotechnological methods address diseases such as malaria or dengue fever. For example,
genetically modified mosquitos are breed specifically in order to "crash" malaria-carrying species. Life Sciences also
help to address the three P's, combating pathogens and pollution as well as decreasing the use of pesticides.
Genetically modified crops and nutrient-fortified plants will help diminish natural deficiencies or climatic challenges
> Chronic diseases are expected to increase by 2030 due to an aging population and changing living habits.
Currently 60% of all deaths worldwide are caused by chronic diseases (e.g. heart disease, stroke, cancer, chronic
respiratory diseases, diabetes) and with a similar level of risk for both developing and developed countries.
Innovative companies should align their R&D portfolio to this fact. Innovations such as artificial organs or tailor-
made, 3D printed implants are available to individuals living in countries with a higher level health system. Similarly,
induced pluripotent stem cells (IPS) are promising great progress: IPS are able to heal harmed cells and cure tumors.
Neuro-scientific progress supports brain structure analysis as well as more sophisticated biomarkers, in turn leading to
early diagnosis (and treatment) of diseases such as dementia

Source: Imperial College London, Deloitte, WEF, NIC, ARTE Tech Mag, WHO, Nature, World Future Society Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 16
2. Life Sciences – Addressing major challenges of humanity

… to deliver approaches to overcome these global challenges (2/2)

Environmental challenges & selected solutions

> Climate change, soil degradation (see trends 3 & 4) and a growing world population (see trend 1) are addressed through
the means of a "bioeconomy"1), i.e. the application of biotechnology to primary production2), health and industry.
Solutions are found in so-called white, green and red biotech, whereby white biotech relates to industrial use, green
biotech is concerned with plants and red represents medical solutions
> White biotech can help traditional industrial companies to reduce their dependency on natural resources such as oil,
coal and gas. The Fraunhofer Institute estimates that two thirds of polymer products could be substituted with so-called
Bio-Polyethylene, a chemically identical compound. Its degradability can be modified for individual products and
purposes. Moreover, microorganisms can then help to greatly reduce plastic garbage in the future
> Green biotech holds huge potential for food supply with more resilient crop plants. One example is making rice, a
staple for more than 3.5 billion people, fit for more saline soils. In food production, added amino acids or Omega-3 fatty
acids help provide more protein to humans and animals while also creating higher resistance to illness and help
overcome signs of deficiency
> At the interface of white and green biotech, new biofuels are being developed with a higher energy density and fewer
harmful emissions. To avoid degradation of forests or exploitation of farmland, new ways for the production of biofuels
are explored, e.g. through re-assembling algae's DNA
> One example for red biotech is microbiome composition analysis, which aims to tailor the use of pharmaceuticals
more specifically to the patient's needs

1) The term bioeconomy derives mainly from the OECD 2) Agriculture, forestry, fishing and mining

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx
Source: Fraunhofer, OECD, World Future Soc., NIC, US Rice Producers, The higher education, Biotechnologie.de 17
2. Life Sciences – Addressing major challenges of humanity

Emerging countries in particular face major challenges which

can be addressed with enhanced capabilities in Life Sciences
> The majority of today's Life Sciences markets is centered around industrial countries, especially USA, Japan and
Europe. For example, industrial countries account for 70% of the global pharmaceutical market. In the future,
their share of the Life Sciences market is set to decrease due to other markets scaling up new capacities
> Chinese companies will become global players in Life Sciences as domestic consolidation progresses. China's
pharma sales value has surpass Japan's, becoming the second biggest pharma market worldwide. By 2020, China
will overtake the U.S. as the largest pharmaceutical market, according to IMS Health. The need for new medical
technology is increasing due to lack of ubiquitous healthcare provision and demographic changes in population
> Although a latecomer, India possesses great potential, provided that its government takes action on broader healthcare
access. Currently India ranks fourth in the world among the highest generic pharmaceuticals producers. Low
urbanization rates make health care provision through a traditional hospital system challenging. New cost saving
medical technology will provide basic health care for a more widely dispersed, rural population
> Brazil is the biggest Life Sciences market in Latin American today with strong growth rates, especially regarding
pharmaceuticals (generics in particular). Green biotech innovation can help increase crop yields without requiring
additional farmland, thereby protecting the rainforest, in itself a unique and valuable source of indigenous drugs
> Indonesia, as the world's 4th most populated country and a GDP below 4.000 USD PPP per capita, strongly depends
on progress in Life Sciences. However, to become a global player in this field, it has a long way to go. Latest
policies aim at reducing Indonesia's high raw materials import dependency of pharmaceutical ingredients (currently
90%). Additionally, intellectual property rights need to be strengthened. Biodiversity may provide solutions regarding
green biotech and help to mitigate national ecological problems, reshaping its economy towards more sustainability

1) Patent Cooperation Treaty: Intellectual property rights enforced in 148 countries worldwide

Roland
Source: WEF, Global Data, PwC, Forbes, IBIS World, Evaluate Group, USDA, JLL, Deloítte, BCNet Staff, EY, World Berger
Bank, IMSTrend
HealthCompendium 2030 - Trend 5 Dynamic technology and innovation.pptx 18
2. Life Sciences – Addressing major challenges of humanity

Life Sciences markets are shifting – In terms of patent publications,

the US are losing share while Asian countries are gaining
Selected PCT Life Sciences1) publications by filing office [% of global total]

2006 2016
Other countries 22.5 12.8 Japan Other countries 15.2 15.0 Japan
1.5 China
7.6 China
2.2 South Korea

6.0
13.9 South Korea
EPO2)

USA 47.1 USA 39.5 16.7 EPO2)

1) PCT (Patent Cooperation Treaty: Intellectual property rights enforced in 148 countries worldwide) applications here refer to analysis of biological materials, medical technology,
biotechnology, pharmaceuticals, food chemistry, environmental technology 2) EPO = European Patent Office

Source: Wipo Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 19
2. Life Sciences – Addressing major challenges of humanity

Similarly, in terms of patent publications by origin of applicant –

Asian countries are catching up, the US and Europe are loosing
Selected PCT Life Sciences1) publications by origin of applicant [% of global total]

2006 2016
Other countries 8.9 12.5 Japan Other countries 8.6 14.2 Japan
1.5 China
6.9 China
2.1 South Korea
5.6
South Korea

USA 43.2 31.9 Europe USA 36.6 28.1 Europe

1) PCT (Patent Cooperation Treaty: Intellectual property rights enforced in 148 countries worldwide) applications here refer to analysis of biological materials, medical technology,
biotechnology, pharmaceuticals, food chemistry, environmental technology

Source: Wipo Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 20
2. Life Sciences – Addressing major challenges of humanity

New research competition in Life Sciences: National research

clusters in Asia are showing signs of promise
> The strong growth of Asian markets in Life Sciences can be observed in PCT applications with parts of Asia, in
particularly China, attracting the biggest increase in patent protection as measured in patent publications filed.
Within the last 10 years, publications by filing offices in China increased more than fivefold while global publications
grew by only 21%. This shows the fundamental importance of the Chinese economy for Life Sciences and its demand for
Life Sciences solutions regarding pollution, an aging society and the need for a stable food and water supply. Also by
origin of applicant, the global share shows that the Asian market is catching up (+11.8%-points from 2006-2016 to
31.5%) to the US market (-6.6%-points to 36.6% in 2016). China has five times more publications today than in 2006
and thus increased its share by +5.4%-points to 6.9% in 2016
> Boosting biotech, one of the strategic, emerging industries in China's Five-Year Plan, is paying off in terms of strong
research: Shanghai and Beijing incorporate strong national research clusters. The awareness of Chinese government
for the need of Life Sciences solutions with a view to health care and environmental challenges drives positive
developments in Life Sciences fostered by strong institutional research
> The Indian government aims to improve its Life Sciences positioning by transforming itself from imitator to
innovator. As stated in the official Indian "Pharma Vision 2020", the country is expected to become a global leader in
end-to-end drug manufacturing. Overall, the country has a good starting point: India supplies domestic and certain
foreign markets with a need for cheaper drugs and generics, such as Latin America and Africa. Expiring patents on
pharmaceuticals will also ease the entry into markets abroad
> Singapore, with its highly skilled labor force and well functioning intellectual property rights regime, is an attractive
research alternative to China or India from which to penetrate Asian markets by 2030. The shift from manufacturing to
a research-based Life Sciences market has been realized with the establishment of high quality R&D facilities

Source: WEF, IBIS World, Evaluate Group, Financial Times, IMS, Adroit People, Deloitte Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 21
2. Life Sciences – Addressing major challenges of humanity

Life Sciences are not without criticism – Genetic engineering,

use of nanoparticles and other methods give rise to controversy
> Genetic engineering offers huge potential for more stable, less chemical intensive farming and food supplies,
particularly in developing countries facing climate and resource challenges. However, genetically modified crops can
sideline traditional crops and further research is needed into long-term effects of the consumption of genetically
modified foods. Equally, effects on ecology and bio-system dynamics, e.g. in the insect world, have yet to be understood
> Use of embryonic stem cells for medical research brings the promise of new treatments for certain diseases and
disorders, e.g. spinal cord injuries. Ethical concerns about using embryonic stem cells are a matter of debate,
ultimately depending on legislation varying from country to country. Also, fast reproduction of stem cells is complex and
challenging, with mutations and other longer term problems requiring further research
> Use of nanoparticles and endocrine disruptors are making headlines. Nanoparticles e.g. from cosmetic products find
their way into drinking water supplies, causing new challenges at purification plant level. Endocrine disruptors, i.e.
chemical compounds found in many household and industrial products, interfere with hormone systems of animals
and humans leading to infertility, tumors, birth defects, or developmental disorders
> Legislators and consumers react very differently, depending on their origin. In certain countries, mixed views
regarding genetic engineering from politicians and consumers can pose a direct obstacle to growth and R&D itself.
The corporate innovations portfolio management responsible has to specifically target beneficial projects for
certain regions while culling dead-end projects elsewhere, or address/identify other markets. For example, BASF
relocated its crop research capabilities to the USA. In the EU, policy makers as well as the general public face crucial
decisions to find a consensus for a strategic pathway in biotechnology and Life Sciences

Source: FAZ, Wissensschau Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 22
3. Digital Transformation – The digital economy is here

After digitalization of the consumer sphere, Digital Transformation is

permeating all areas of the economy – Taking effect via four levers
Levers of Digital Transformation
For consumers, digitalization – e.g. in the form of
Drones e-commerce, mobile internet and social media – has long
Data- Auto- since been part and parcel of everyday life. Now, Digital
based
routing Robotics nomous
vehicles Transformation, i.e. the seamless, end-to-end connectivity
Wearables
Artificial of all areas of the economy, brings fundamental change to
Demand
Intelli-
gence business. Digital Transformation takes effect via four levers:
forecasts Big
Data > Digital data. Capturing, processing and analyzing huge
Additive
manu- amounts of data allows better predictions and decisions to
DIGITAL Fourth-
Predictive Internet TRANS-
facturing
party be made
main- of Things logistics
tenance FORMATION > Automation. Combining traditional technologies with
Social Artificial Intelligence is increasingly giving rise to systems
networks Info-
Cloud tainment that work autonomously
computing
Smart
Mobile
Internet/
> Connectivity. Interconnecting the entire value chain and
factory
Broad-
apps
E- products via networks to synchronize supply chains and
band commerce
shorten both production lead times and innovation cycles
Pure ENABLERS
digital > Digital customer access. The (mobile) internet gives new
products
Remote intermediaries direct access to customers offering choice,
main-
tenance
PROPOSITIONS
transparency and new services

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 23
3. Digital Transformation – The digital economy is here

Digital Transformation has changed everything and is set to

continue, as digital options follow an exponential growth path
Milestones in the digital evolution
Humanoid intelligence
Web 1.0 Web 2.0 Self organizing machines Web 3.0
Learning machines

Crowd investing Predictive analytics

Appification
3D scanner
Autonomous driving
Software defined
3D print structures
Holographic displays
Augmented reality

Big Data Smart city

Blue Tooth Low Energy

(BLE) Smart banking / Algo
Gamification banking / Robo finance

Quantum computing
Crowd funding
Smart everything
UMTS Crowd sourcing
Bitcoin Industry 4.0
GPS on smartphones
Dark Web Smart car
Android Cloud
E-Reader Internet of Things
Smartphone
Video-on-demand Smart home
Social networking Sensor technology
Streaming services
CD Semantic web Individualization of search results
E-mail Bluetooth Free and open software
E-Commerce
Personal computer WLAN Tablets Robotics
Search engine File sharing NFC
Open innovation E-Books Remote
iOS working
QR-code DVD Online Open source Blogs Skype
mp3 Apps & app stores
auction Online banking Micro blogging
Linux VoIP
HTML

Timeline of the Digital

1985 1990 1995 2000 2005 2010 2015 Options Space

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 24
3. Digital Transformation – The digital economy is here

In the digital economy platform thinking is the foundation for new

value creation – Leveraging network effects is key to success
Platform-driven business models
Traditional thinking Platform thinking

Platform Ecosystem

Production Distribution Marketing Consumer

> Creation of two-sided networks
> Traditional one-way pipe business models > Co-creation of value by harvesting resources and capacity of an
> Upstream production and downstream consumption of value ecosystem you do not need to own
> Content is added incrementally > Content is added exponentially

Premium cable and satellite television Video sharing platform leveraging

network providing (self-produced) TV- content from a broad ecosystem of
series, movies and other entertainment vs. contributors and offered for free
content

4.7 bn Revenues 8.2 bn

74 bn (Time Warner Inc.) Market Cap. 80 bn
140 mn Unique users >1 bn
Source: Roland Berger, Yahoo Finance Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 25
3. Digital Transformation – The digital economy is here

New technologies emerge that strongly impact our daily life and the
way we do business
Overview of technology trends

Intelligent
Smart automation
home Machine
Quantum learning
computing

Virtual &
Blockchain augmented reality
Distributed cloud storage, Virtual dressing rooms, virtual
Smart digital identity verification, smart education, surgery training,
contracts, digital voting, … sports spectating, cognitive
Data training, … Deep
learning

Voice
interaction
Big Data Artificial Intelligence
Internet of 3D-Printing Autonomous
Financial trading, marketing vehicles
Things personalization, natural
language processing, ….

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 26
3. Digital Transformation – The digital economy is here

The Internet of Things is an important enabler of Digital

Transformation and its growth is accelerating
Forecast of connected devices1) by Ericsson 2015 vs. 2021 [bn]
+83.1%
> The Internet of Things (IoT) is a network of physical
28.2 objects (machines, cars, household devices etc.) that
contains embedded technology (electronics, software,
sensors and connectivity) enabled to communicate and
10.7 sense or interact with their internal states or the external
environment such as humans and (other) physical
15.4 1.5 objects/devices
2.6 3.1 > The speed of innovation is difficult to predict – overall
1.6 0.4 numbers are fluid but the direction and device category
2.8
2.4 developments are clear
8.7 > In 2013, Cisco predicted 50 bn things to be connected to
7.1 the internet in 2020, however now halved this number to
1.3 1.4
around 25 bn devices in 2020 in their latest report
(06/2016). Gartner estimates 20.8 bn connected devices
2015 2021 by 2020

M2M; non celullar M2M and consumer electronics; celullar Consumer electronics; non celular PC, labtop, tablet Mobile phones Fixed phones

Notes: CE = Consumer Electronics 1) a connected device is a physical object that has an IP stack, enabling two-way communication over a network interface (traditional landline phones
are included for legacy reasons)
Source: Ericsson, Cisco, Gartner Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 27
3. Digital Transformation – The digital economy is here

A world of sensors envelopes our business and private lives –

Changing habits and products
> By 2020/21, approximatively 20-30 bn devices1) will be online/connected worldwide, with a further increase by
2030. Virtual (VR) and augmented reality (AR) have the potential to become the next big computing platform (after the
PC, the web and smartphones/tablets) and reshape existing ways of doing things. IDC predicts that worldwide revenues
for the AR/VR market will grow from USD 5.2 billion in 2016 to more than USD 162 billion in 2020 (+136 % p.a.). Mobile
AR is likely to become the primary driver of the VR/AR market. New mobile devices incorporating smart glasses set the
trend, leading from networking devices to networked humans. Smart cities designed and built from scratch are a new
reality (e.g. Songdo in South Korea), where physical objects are connected to interact or follow human supervision.
Established through public-private partnerships, these cities will become more and more ubiquitous in countries facing
pressure from high urbanization rates
> Sensors in all major objects create a network of interfaces between real and digital life. Improvements in
biometrics with facial recognition play a key role in connecting humans with their virtual realm in real-time, with
everyday objects recognizing authorized users on streets, public transport or in shops. Personalized advertisement will
be the norm. EEG2)/brain wave/mind-controlled devices, such as headsets, tablets or screens, will allow new ways of
interaction between humans and products, in private and public places.
> New hardware and sensors incorporated into clothes, glasses, cars etc. will be integral to this new cyber reality by
2030. Virtual retinal and/or other hardware displays allow content to be displayed floating in front of users; spatial
augmented reality solutions project virtual information onto physical objects. New possibilities arise also with
commercialized virtual holidays, e-therapy in healthcare as well as virtual counseling by doctors, and electronic
health records, decentralized but accessible to medical staff and patients, and (anonymously aggregated and analyzed)
to help provide smart insurance products and predict epidemics or disease hotspots

1) Excluding smartphones, tablets, and computers 2) Electroencephalography: Detection/recording of electrical brain activity along the scalp

Roland Berger
Source: BBC, ABI, WEF, WirtschaftsWoche, InnovationExcellence, SRI, Futuresearch, IDC, Goldman Sachs, Digi-Capital, Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx
Gartner 28
3. Digital Transformation – The digital economy is here

Roland Berger and others are forecasting vast market dynamics:

Digital Transformation/IoT boost global economy over next decades
Economic value creation in Europe and globally with Digital Transformation/IoT

Europe Global

8.0

1.25 > 1.0

3.0

Roland Berger estimates an The European Cisco predicts that IoT will Machina Research esti-
increase in value added Commission predicts that generate USD 8 trillion mates the total IoT revenue
through Digital Transformation the EU market value of the worldwide in Value at Stake1) opportunity at USD 3 trillion
of 20-30% or EUR 1.25 trillion IoT is expected to exceed over the next decade in 2025 (up from
for European industry by 2025 EUR 1 trillion in 2020 (2015-2024) USD 750 billion in 2015)

1) The potential bottom-line value (higher revenue and lower costs) that can be created or that will migrate among the private and public sector

Source: Roland Berger, European Commission, Cisco, Machina Research Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 29
3. Digital Transformation – The digital economy is here

Processing myriad data points demands new hard- and software –

But this pays off in higher value added and productivity
> A world of sensors and connected devices offers great opportunities for individualizing services and products,
but processing a nearly infinite data stream is a core challenge. Advances in high-tech computing (e.g. cloud
computing, GPUs1) and quantum computers in the future) provide solutions for structuring and processing this
amount of big data. With progress in semantic and linguistic contextual analysis, vast volumes of qualitative, not just
quantitative data bring further insights regarding markets, competitors, product data and customer behavior
> The Digital Transformation will affect the global economy to a far stronger extent than the internet revolution of
1995-2005. Projections in value added with regard to Digital Transformation opportunities in business and industry, as
well as inter- and cross-disciplinary synergies, reflect tremendous expectations. Due to Digital Transformation, the
increase in data continues with high speed: having increased tenfold from 2006 to 2012, data generated will be 8.3
times larger (exabytes per month) by 2020 compared to 2015
> A study from the MIT Centre for Digital Business found that already today, companies that were one standard deviation
higher in being data-driven had 4% higher productivity and 6% higher profits than the average. Retailers reduce
inventory by 20% with self-learning algorithms, due to refined sales predictions. Overall productivity gains can rise
by up to 20-30% to 2025, depending on the rate of technology adoption within economies and companies. Salesforce
(one of the largest customer relationship management (CRM) companies) will be using IBM Watson to optimize its AI
CRM service (Einstein AI). Einstein AI is designed to analyze and understand information and data collected. Its
customer value proposition encompasses sales, service, marketing, commerce and other corporate functions
> Regarding digitalization processes in companies, the role of digital directors is gaining traction. About half of
today's 300 largest companies2) appointed a digital director in the last couple of years, indicative of an accelerating trend

1) A Graphics Processing Unit (GPU) is is a specialized electronic circuit designed to rapidly manipulate and alter memory to accelerate the creation of images 1) Fortune 100 USA;
Fortune 100 Europe; Fortune 100 Asia/Pacific

Source: GE, NIC, Gartner, Fraunhofer, MIT, BITKOM, HBR, WirstchaftsWoche, SZ, SRI, Russel Reynolds Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 30
3. Digital Transformation – The digital economy is here

Artificial Intelligence (AI) will change our future – AI comprises

intelligent systems that can sense, think, interact and learn
Definition of Artificial Intelligence
COGNITIVE: Ability to learn,
> Today, AI refers to systems that employ reason, predict and respond
machine learning and can
– Sense: Collect and process signals
via sensors or other methods VISUAL: AUDITORY/
Ability to see LINGUISTIC:
– Think: Classify, reason, and predict and process the Ability to listen
possible outcomes physical and and communicate
– Interact: Interact with people or digital world using written or
other machines spoken language

> The cognitive ability is the key

distinction between machines and rule-
based systems. Without it, machines
simply respond to pre-defined inputs;
with it, they can self-program based
on new data
MOTOR: Ability to move around and
manipulate physical or virtual environ-
ments, or communicate using gestures

Source: Altimeter Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 31
3. Digital Transformation – The digital economy is here

AI affects a wide range of products, technologies and industries …

Examples of Artificial Intelligence in consumer and business applications

Products & Driverless Augmented & Chatbots & Machine Imaging Robots &
Technologies Cars Virtual Intelligent Learning (Computer Robotics
& Drones Reality Agents Algorithms Vision)

Potential > Transportation > Cross-channel > Customer > Forecasting > Virtual > Automating
Value > Delivery insights service & > Knowledge diagnostics manual
> Language experience management > Brand processes
> Quality
assurance translation > Personal > Price/purchase management
> 3-D maps productivity prediction > Quality
> Security
> Virtual > Knowledge > Virtual sales assurance
shopping management assistants

Relevant > Transportation > Hospitality > Consumer > City planning > Medicine > Security
Industries & logistics > Travel Electronics > Financial serv. > Manufacturing > Smart homes
> Oil and gas > Retail > Travel > Retail > Architecture > Precision
> Manufacturing > Gaming > Retail > Healthcare > Retail medicine
> Security & > Media > Beauty > Food safety > Food & > Manufacturing
defense > B2B sales beverage > Transportation
> Entertainment > Security
> Medicine > Legal services > Transportation > Security
> Manufacturing

Source: Altimeter Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 32
3. Digital Transformation – The digital economy is here

… and has the potential to raise efficiency to the next level across
industries
Major efficiency levers over time
Today artificial intelligence is
where the internet was in 1996
Business process
AI Research Lab Merantix
automation
Automation of business What can these things do?
processes using software
robots
We don’t really know the limits.
It has incredible possibilities.
Business process I think it’s impossible to forecast
outsourcing/offshoring accurately
Outsourcing of operations and responsibilities to Sergey Brin – Google co-founder
service providers in countries with lower labor costs
Every aspect of our lives will be
Business process
transformed. In short, success in
reengineering/management creating AI could be the biggest
Analysis and design of business processes within an event in the history of our
organization to reduce non-value-adding work civilization
Stephen Hawking – theoretical

1995 2005 2015 physicist and cosmologist

Source: Press research, WEF, Merantix Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 33
3. Digital Transformation – The digital economy is here

Predictions show a huge market growth potential for AI with

corporate investment increasing threefold in the near term
AI hardware market1) worldwide 2016 vs. 2022 [bn]
+62.9 p.a. > The AI hardware market is expected to be worth
USD 16.1 billion by 2022, growing at a CAGR of 62.9%
16.1
from 2016 to 2022 according to MarketsandMarkets
> Forrester predicts that across all businesses
investment in AI will be three times greater in 2017
compared with 2016
> The field of AI is shifting toward building intelligent
systems that can collaborate effectively with people,
including creative ways to develop interactive and
scalable ways for people to teach robots
> Gartner predicts that by 2020, 100 million consumers
0.9 will shop in augmented reality to enhance the
shopping process, resulting in dramatically higher
2016 2022 levels of customer engagement

1) Artificial intelligence is a consolidation of state-of-the-art technologies which are used to develop products which work similar to human intelligence. It considers revenues generated
from the hardware devices which go into making of following AI technologies such as Deep Learning (DL), Robotics, Digital Personal Assistant, Querying Method, Natural Language
Processing (NLP), Context Aware Processing. Third party software/platform and service providers in the AI ecosystem are not included

Source: MarketsandMarkets, Stanford University, Gartner Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 34
3. Digital Transformation – The digital economy is here

Industry is fundamentally influenced by Digital Transformation –

Industry 4.0 and the Industrial Internet address different aspects

Industry 4.0 Industrial Internet

Key authors > German Government, acatech (National > Large Multinationals such as GE, AT&T
Academy of Science and Engineering) Intel, IBM, Cisco

Taxonomy of > Four (mechanization, mass production, > Three (industrial revolution, internet
revolutions automation, robotization) revolution, industrial internet revolution)

Strategic focus > Industrial policy: "the German strategic > Interoperability: "establishing
initiative to take up a pioneering role in interoperability in various industrial
industrial IT" environments"

Sectoral focus > Manufacturing > Manufacturing, energy, transportation,

healthcare, utilities, cities, agriculture

Technological > Supply chain coordination, embedded > Device communication, controls and
focus systems, automation, robotics integration, data flows, predictive
analytics, automation
Optimization focus > Production > Asset

Source: MAPI Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 35
3. Digital Transformation – The digital economy is here

Industry 4.0 focuses on manufacturing while the Industrial Internet

takes a broader view – Approaches cooperate, not compete
> Industry 4.0, first coined in Germany in 2011, focuses on the manufacturing industry and the optimization of the
production process by bringing together intelligent machines, advanced analytics, and people at work. It embodies a
network of numerous devices connected by communications technologies that results in systems that can monitor,
collect, exchange, analyze, and deliver valuable new insights. These insights help to drive smarter, faster business
decisions for industrial companies. Industry 4.0 dominates in the EU due to a strong German manufacturing base,
corporate and academic thought leadership and government programs
> The Industrial Internet also known as the Industrial Internet of Things (IIoT), is an American approach that
describes similar phenomena to those summarized under Industry 4.0. The main difference between the two systems
is that the Industrial Internet goes beyond manufacturing to cover the wider adoption of the web into other forms of
economic activity. It applies to several sectors, such as manufacturing, energy, transportation, healthcare, utilities,
agriculture and cities. The focus of the Industrial Internet is the optimization of assets and not limited to the production
process, as seen in Industry 4.0
> The term "Industrial Internet" was coined by General Electric, and joined by AT&T, Cisco, Intel, and IBM to set up the
Industrial Internet Consortium (IIC) in 2014. The IIC is a non-profit, open membership organization with over 250
members that was formed to accelerate the development, adoption and widespread use of interconnected machines and
devices, and intelligent analytics. The IIC catalyzes and coordinates the priorities and enabling technologies of
industry, academia and the government around the Industrial Internet
> Industry 4.0 and the Industrial Internet do not compete with one another – they are complementary. Representatives of
the platform Industry 4.0 and the IIC have agreed to cooperate to ensure future interoperability of the systems,
standardization and the use common test environments. A common roadmap has been developed for this purpose

Source: MAPI, Siemens, Industrial Internet Consortium Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 36
3. Digital Transformation – The digital economy is here

Industry 4.0 exemplifies this complex industrial ecosystem –

New technologies will interconnect and disrupt business
Industry 4.0 ecosystem
> Give sense ARTIFICIAL > Intelligent machines
CYBER SECURITY BIG DATA to complexity > Sensing collecting and analyzing data
INTELLIGENCE
> Stronger protection for CLOUD > Creativity
> Collaborative manufacturing > Customer & marketing
internet based COMPUTING intimacy
manufacturing
> Flexibility
> Technology products > Cyber Physical Systems (CPS)
with longer life cycle SENSORS ADVANCED > Perfect match with
> Numerical command customer's needs with
> Zero default/deviation MANUFACTURING – Full automation production mass efficiency
CLUSTER > Reactivity SYSTEMS – Totally interconnected systems > On demand manufacturing
SUPPLIERS > Traceability
– Machine to machine communication
> Predictability
– Machine learning MASS
CUSTOMIZATION

CLIENTS

ADDITIVE NANOTECHNOLOGY/ AUTONOMOUS

ROBOT
MANUFACTURING ADVANCED MATERIALS VEHICLE INTERNET OF
LOGISTICS 4.0 > Scrap elimination > Smart value added products > Real time - Autonomy - > Flow optimization THINGS
> Fully integrated > Mass customization > Technical differentiation Productivity > Incr. security
supply chain > Rapid prototyping > Connectivity > Full transparency on data > Lower costs > Object tagging
> Interconnected reporting > Internet-object
systems
PLANT OF THE FUTURE A communication via low
> Perfect coordination PLANT OF THE FUTURE B power radio
CLUSTER OF PLANTS > Real time data capture
> Optimized stocks
> Reduced waste
RESOURCES OF THE FUTURE > Clean and renewable energies
> Energy Storage
WIND ALTERNATIVE / NON CONVENTIONAL SOLAR GEOTHERMIC > Alternative raw materials

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 37
3. Digital Transformation – The digital economy is here

Industry 4.0/Industrial Internet offer great variety and potential in

new technologies and business model improvements
> Enabling an Industry 4.0/Industrial Internet infrastructure within a business is challenging. The vast range of new
technologies makes it necessary to scrutinize a company's capabilities and its readiness to implement technologies. Not
only technological innovations, but also business model innovations are being created. A stronger demand-side focus
instead of supply-side is required, with individual product services and faster response rates to customer needs;
this requires looking beyond horizontal integration and strengthening the vertical integration of production
> Smart Robotics continue to change business processes. New machine to machine (M2M) interfaces enable robots to
communicate, coordinate and repair themselves. The total M2M revenue opportunity will grow by 12% annually from
USD 500 billion in 2014 to USD 1.6 trillion in 2024. China and the US will be competing neck and neck for dominance of
the global M2M market by 2024. China which will account for 21% of global M2M connections, ahead of the US on 20%.
However, the US wins in terms of cellular connections (20% vs 15%) and M2M revenue (23% vs 19%). Third largest
market is Japan with 8% of all connections, 6% of cellular and 7% of global revenue. With current growth rates for
industrial and private sector robots, robots could outnumber humans as early as 2040
> Improvements of microcontrollers and sensors embedded in systems enable streamlining of processes, such as
monitoring machine performance, tracking production completion, inventory management and rising resource
efficiency. All in all, a holistic approach to Industry 4.0/Industrial Internet implementation makes it possible to act
proactively, anticipating problems in production, logistics and customer services, instead of acting on historical data
> To capture the value potential of Industry 4.0/Industrial Internet, physical product sales need to be understood with
an IoT mindset based on corresponding control points in products regarding the connection of products and their
performance analysis. Pure manufacturing of physical assets will gradually vanish in favor of additional value added
services, subscriptions or product apps. Today, about one quarter of industrial companies' production is digitized in terms
of processes. The industrial sectors are planning to commit approx. 5% of revenues per annum to Industry 4.0

Source: IFR, Gartner, Fraunhofer, Harvard Business Review, SAP, Statista, Cisco, Machina Research, PWC Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 38
 3. Digital Transformation – The digital economy is here

Global run for leading positions in Industry 4.0/Industrial Internet –

Competition, co-opetition or collaboration?
The race to Industry 4.0/Industrial Internet
Starting point The race Industry 4.0/
Industrial Internet

Chances & Risks

IT/Internet

> New processes, new

products, new markets,
new competitors
or
> New requirements for
workforce and infra-

or
structure
> Cross-sectoral M&A,
Industry

friendly/hostile
acquisitions
> Technology transfer/
integration

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 39
3. Digital Transformation – The digital economy is here

Winning with Industry 4.0/Industrial Internet – Guidance on

technology and governance is needed
> At company level, technology firms compete with traditional industrial companies for the rewards of Industry
4.0/Industrial Internet. Increasingly, the two are repositioning themselves in terms of competition, co-opetition or
collaboration. With the rising share of digitalization in manufacturing and the production of IT-intensive goods,
industry's dependency on IT/Internet companies increases collaboration and co-opetition. Also, IT/Internet
companies are likely to alter traditional business portfolios through disruptive and sustaining innovations, competing
with existing products/services of industry. In turn, these developments cause higher levels of joint ventures and M&A
activity between the two sectors
> With the ability of gaining and processing Big Data, technology companies can become crucial partners of industry
companies. Engaging with Industry 4.0/Industrial Internet means investing near-term to widen technological
perspective, opening new production and service related pathways while avoiding to fall behind in the "technology
arms race". However, data integrity and security on a corporate level is crucial in order to maintain clients' trust in
Industry 4.0/Industrial Internet. The importance of machinery data, its sensitive nature in terms of competition and
therefore data safety, will increase with Industry 4.0/Industrial Internet implementation due to new M2M connections
and sensors in products and equipment
> With Industry 4.0/Industrial Internet being a field of vast growth opportunity, governments and companies strongly
advocate their interests. Standardization (and its management) is seen as a key issue of supremacy. Germany, UK,
France and the USA favor public-private governance concerning standardization: The biggest interest groups are
found within the American "Industrial Internet Consortium" (IIC) and the "Industrie 4.0 Plattform" in Germany
> Overall outcome of the race for Industry 4.0/Industrial Internet dominance is as yet undecided; the US leads in
software and digital solutions and follows a pragmatic, trial and error approach in handling innovations, while
Europe thrives on its industrial competence

Source: VDE, DIN, China Times, Computerworld, Computerwoche Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 40
T5 Corporate actions (1)

To capture the potential of innovation, companies need to use

innovation roadmaps, research networks and think creatively

> After identifying new, marketable technologies within its business, companies should set up an innovation roadmap
in order to implement new business models and technologies in a progressive manner, leading to achieving a
clearly defined, future target. Not only does this innovation roadmap include new technologies but also the strategic
management of the wider innovation portfolio
> A way to extend R&D activities without considerable investment is to establish or seek out and join cooperative
research partnerships and networks. Financial benefits aside, advantages often lie in synergies between and across
different fields. Partnerships can be formed with business partners, universities or research institutes.
On a political level, networking with e.g. foreign chambers of commerce or NGOs will
facilitate market entrance especially in developing countries
> The creation of innovation demands the mastery of two opposing skills –
convergent (deriving at the single best answer) and divergent (exploring many 3
possible solutions) thinking in equal measure. Before bringing together different
ideas and aggregating them into a new best one, it is essential to first think
creatively considering multiple new perspectives and possibilities 2
> Foster beneficial exchanges outside and across the corporation, between
cultural and technological sectors; sensitize and/or reward relevant employees
for honing an innovation mindset; keep awareness of new trends high on the
agenda. The question needs to be answered whether digital innovation should be
positioned within the company (either as "stand-alone" solution or integrated in certain 1
departments) or outside as an "external vehicle" or unit, and how this could be linked back
to the core business

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 41
T5 Corporate actions (2)

To exploit the high potential of Life Sciences companies need to

adjust their product and innovation portfolio

> Corporations active in Life Sciences face great opportunities, due to global societal and environmental changes.
Societies and economies are adapting their inputs of biotechnological solutions; food supply challenges can be
resolved with new resilient crops and animal food containing more protein. Demand for biotech-based instead of
chemical-based pharmaceuticals is rising, and the importance of innovative medical technology becomes paramount
in aging societies
> Every market and every product needs a tailored strategy to become successful. Managing the vast differences
between certain markets and their products is challenging and demands a sophisticated product management from
the earliest stages of product development onward. Sensible innovation portfolio management is able to exploit
opportunities of many different markets. With generics substituting blockbuster products,
product portfolios adapt from quantity to value-based offerings, reflecting changing
market demands
> Different markets offer different policy frameworks regarding sales and research
for new products. A decentralized organization dependent on fulfilling policy obli- 15:00
gations is best positioned closer to sales markets while avoiding dead-end research
> The long term research for new products is challenging for research itself but
also in financial terms. Product pipelines require monitoring, internal targets
need to be set and achieved
> Product financing has to be re-evaluated, finding new ways to fund or support
cost-intensive research. Here, e.g. licensing of products can help finance new
research projects and optimize cash management

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 42
T5 Corporate actions (3)

Unlocking new growth pathways with Digital Transformation requires

rethinking along a user-centric approach, an agile culture ...

> Companies must change from a product-centric to a user-centric approach to design customer-centric products
and services. They should focus on identifying and fulfilling key customer needs and aspirations to create the best
solution for customer requirements rather than developing new offerings 'for novelty's sake'
> Companies should rethink their traditional corporate cultures to detect and realize customer needs and innovation
potential in time. They must create an agile culture that emphasizes transparency, flexibility, trust and
collaboration to enable the transformation to a digitally mature and dynamic organization. Therefore they must change
from a traditional mindset to a digital one that is data driven, self organized, purpose oriented, customer centric,
transparent and incorporates a risk culture that allows to fail fast
> Digital Transformation should be built into the core strategy, processes and systems
of an organization – with the right people being in the lead. Digitalization should
be addressed at CEO or board level with the clear designation of a digital director.
The biggest challenge for companies isn’t technology itself – it is the mindset,
the people and the organization's digital IQ
> Cooperation, networking and forming alliances is central to capturing the
potential of Digital Transformation and Industry 4.0/Industrial Internet with
its enhanced technological abilities. Serving as a model of an open
ecosystem for technology collaboration, the global "Open Automotive
Alliance" exemplifies one pathway in which car manufacturer and technology
companies create and optimize new products together

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 43
T5 Corporate actions (4)

… embedded in a holistic digital platform strategy which analyzes

potential disruptions and addresses technological shifts early

> Many companies have introduced a variety of digitalization initiatives that focus on isolated parts of the value chain.
Instead they should implement and follow a holistic digital platform strategy that synchronizes their requirements.
Through the creation of two-sided networks companies can achieve a co-creation of value while harvesting resources
and capacity of an ecosystem they do not need to own and where content is added exponentially. The ownership of
customer data and the direct ownership of the customer relation will decide on future success
> As digitalization potentially disrupts competitive positions and leads to radical shifts of profit pools, there is a need for
strategic analysis of disruptive market scenarios. Companies must be ready to change and enable their
organizational processes and provide the necessary framework conditions, e.g. in IT or security
> Companies have to address technological shifts early, since catching up on missed
market trends is capital-intensive and hard to manage. Forrester predicts that firms
that use AI, Big Data and IoT technologies to uncover new business insights
will take over USD 1.2 trillion in revenue per annum from their less informed
peers by 2020. A network to widen exchanges between industry and IT
players brings the possibility of identifying and incorporating crucial
technology trends, allowing new efficiency gains within vertical process
integration
> Building up a tailored, sophisticated data infrastructure is crucial, since it
transforms reactive management into proactive decision making regarding
market trends, production performance and customer needs. Questions which
need to be addressed concern data generating points and opportunities, data
transparency and validity/validation of data in terms of decision processes

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 44
T5 Sources & further reading

Key sources and further reading (1/3)

Most important data sources

> World Intellectual Property Organization (Wipo). PCT Yearly Review: The International Patent System 2016
http://www.wipo.int/publications/en/details.jsp?id=4052
> OECD. Science, Technology and Innovation Outlook 2016
http://www.oecd.org/industry/oecd-science-technology-and-innovation-outlook-25186167.htm
> Ericsson. Ericsson Mobility Report – On the Pulse of the Networked Society
https://www.ericsson.com/res/docs/2016/ericsson-mobility-report-2016.pdf
> Altimeter. The age of AI – How Artificial Intelligence is Transforming Organizations
http://www.altimetergroup.com/pdf/reports/The-Age-of-Artificial-Intelligence-Altimeter.pdf
> Roland Berger. The Digital Transformation of Industry
https://www.rolandberger.com/publications/publication_pdf/roland_berger_digital_transformation_of_industr
y_20150315.pdf
> Roland Berger. Industry 4.0 – The Industry 4.0 Transition Quantified
https://www.rolandberger.com/publications/publication_pdf/roland_berger_industry_40_20160609.pdf

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 45
T5 Sources & further reading

Key sources and further reading (2/3)

Further reading
> National Intelligence Council (NIC). Global Trends. Paradox of Progress
https://info.publicintelligence.net/ODNI-NIC-ParadoxProgress.pdf
> Cisco. Visual Networking Index
http://www.cisco.com/web/solutions/sp/vni/vni_forecast_highlights/index.html
> OECD. Internet Economy Database
http://www.oecd.org/sti/ieconomy
> World Economic Forum. Top 10 Emerging Technologies 2016
http://www3.weforum.org/docs/GAC16_Top10_Emerging_Technologies_2016_report.pdf
> OECD. The Bioeconomy to 2030
http://www.oecd.org/futures/long-termtechnologicalsocietalchallenges/42837897.pdf
> Deloitte. 2017 Global Life Sciences Outlook: Thriving in Today's Uncertain Market
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/gx-lshc-
2017-life-sciences-outlook.pdf
> European Commission. Definition of a Research and Innovation Policy Leveraging Cloud Computing and
IoT Combination
https://ec.europa.eu/digital-single-market/en/news/definition-research-and-innovation-policy-leveraging-
cloud-computing-and-iot-combination

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 46
T5 Sources & further reading

Key sources and further reading (3/3)

Further reading
> Stanford University. Artificial Intelligence and Life in 2030
https://ai100.stanford.edu/sites/default/files/ai_100_report_0831fnl.pdf
> Accenture. Why Artificial Intelligence is the Future of Growth https://www.accenture.com/lv-
en/_acnmedia/PDF-33/Accenture-Why-AI-is-the-Future-of-Growth.pdf
> National Science and Technology Council (NSTC). Preparing for the Future of Artificial Intelligence
https://obamawhitehouse.archives.gov/sites/default/files/whitehouse_files/microsites/ostp/NSTC/preparing_
for_the_future_of_ai.pdf
> PWC. 2016 Global Industry 4.0 Survey. Industry 4.0: Building the Digital Enterprise
https://www.pwc.com/gx/en/industries/industries-4.0/landing-page/industry-4.0-building-your-digital-
enterprise-april-2016.pdf
> Internet Society. Paths to Our Digital Future
https://future.internetsociety.org/wp-content/uploads/2017/09/2017-Internet-Society-Global-Internet-Report-
Paths-to-Our-Digital-Future.pdf
> Roland Berger. COO Insights 2016: Industrie 4.0
https://www.rolandberger.com/de/Publications/pub_coo_insights_2016_industrie_4_0.html

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 47
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The bigger picture for a better strategy

Roland Berger Trend Compendium 2030 - Trend 5 Dynamic technology and innovation.pptx 48