Innovator rate declining

But how? Innovation indicators suggest that we are struggling with change, especially in Germany. At first glance, the situation looks quite good. Although Germany is not one of the innovation leaders in Europe - that would be Switzerland, Sweden and Denmark - it is one of the strong innovators in seventh place. If you take a closer look, the picture becomes more differentiated.

Germany's good ranking is mainly due to the research and development activities of large companies and large SMEs, with small and medium-sized enterprises lagging far behind. While large companies are increasing their innovation expenditure from 90 billion euros in 2006 to an expected 149 billion euros this year, expenditure by SMEs is stagnating and is even expected to fall slightly this year to 26.8 billion euros.

The innovator rate - i.e. the proportion of companies that have introduced product or process innovations - has been declining in Germany for years - both for SMEs and large companies. The message of this finding is that many companies in Germany, especially small and medium-sized enterprises, are probably not innovative enough to cope with the accelerated pace of change. This is explosive. After all, it is repeatedly emphasized that SMEs are the backbone of the German economy's success.

Cooperation for the next big thing

The positive news is that the digital transformation is helping companies to overcome the challenges. Digitalization is not the problem, it is part of the solution. It helps to streamline and accelerate processes and develop completely new business models. The way in which companies innovate will also have to change. "The Next Big Thing will not be developed in an isolated research and development department of a single company or even in a garage," assures Prof. Wilhelm Bauer, Director of the Fraunhofer Institute for Industrial Engineering IAO. The ability to open up, cooperate and share knowledge promises more success than previous strategies with which companies reduced complexity by specializing in a narrow product segment. "The design of value creation partnerships and the integration of the company into a digital ecosystem will determine the success of the company in the future," says Bauer.

Lego as a role model

Companies such as Lego and Pringles could certainly learn from them. The Danish toy manufacturer operates Lego Ideas, an online platform where fans can present their own ideas or take part in competitions. The best ideas are sold in toy stores and the inventors receive a share of the proceeds. And Pringles has developed potato potato chips with a bakery in Bologna, Italy, which can be printed with individual advertising messages.

The examples show: Those who cooperate have better ideas and can develop new business models before others come up with them - "Not invented here" is out. The family business Lapp is well positioned in this respect, praises Wilhelm Bauer, who, as a member of Lapp's Technology Advisory Board, has a good insight into the company's innovation activities.

In the Technology Advisory Board, the company's top management team discusses technology trends with leading scientists from various disciplines four times a year. The members visit companies or research institutes and work together to develop Lapp's technology strategy. The specialist for integrated connection systems also works together with innovation experts such as Launchlabs - and of course with customers to develop new products or services for new applications.

Success story: intelligent cable reel

For the innovation expert, a successful example of cooperation across company boundaries is the intelligent cable drum that Lapp has developed together with Schildknecht. A mechatronic module counts the revolutions when the cable is unwound and software uses this to calculate how much cable is left on the drum. The data is transmitted to the cloud and to Lapp or the customer's company network using a wireless module from Schildknecht. The software can automatically order a new reel if the stock on the old one falls below a certain limit. This allows the customer to reduce stock levels, and theft protection using GPS tracking is also possible. Lapp is also considering completely new business models such as pay per use, i.e. ongoing billing based on actual cable consumption.

Lapp wants to promote such innovations with its new agile strategy of transformative innovation. It focuses on innovating in small, iterative steps. Failure is not a downside, but provides valuable insights for the next innovation step. "Trial makes perfect," says Wilhelm Bauer. The Fraunhofer researcher calls on German companies to have more courage to experiment. The conditions for this are better than ever: crowdfunding provides the necessary funds, open innovation platforms bring ideas and companies together.

Seize opportunities. Now

The IAO director names four prerequisites for a successful transformation:

• Transformation of the industrial core on the basis of existing strengths
  
  
• Addressing social challenges in research and development
  
  
• Open and agile innovation management that does justice to the increasing dynamics of innovation
  
  
• A policy that takes up the challenge, integrates stakeholders and actively shapes change.

Bauer is convinced that "Germany can seize the opportunities presented by technological change". Lapp is one of the encouraging role models that are facing up to the challenges and have already taken big steps into the future.

Bernd Müller, freelance journalist for Lapp