Global companies have increased their prioritisation of innovation and investment in artificial intelligence (AI), while more innovation-ready companies have additionally increased their focus on climate and sustainability, a recent report from BCG has stated.

BCG’s “2023 Most Innovative Companies” report found that innovation rose as a top corporate priority in 2023, with 79% of companies ranking it among their top three goals, above the 75% recorded in 2022 but still below the 82% high of 2019.

“The top areas of innovation emphasis are new products and exploring adjacent business models. Cost is a key driver for 62% of respondents and a top reason for innovation,” the report stated.

The report noted that 61% of surveyed companies reported having invested in artificial intelligence (AI), more than any other technology, but only 45% of those companies translated their use of AI into business impact. Detailing what types of AI use cases have the most impact, the report noted portfolio prioritization decisions (40% of companies implementing AI for that use case achieve impact), identifying players with external innovation potential (38%), and revealing market trends and competitor activities (37%). The sectors that were most effectively leveraging AI were medtech (51%), materials (48%), and chemicals (47%) industries.

“To enable AI, companies must have established digital and data capabilities. Leaders make data and technology accessible across the organization, avoiding siloed and incompatible tech stacks and standalone databases that impede scaling. Our research into AI scaling has shown that companies that make more than 75% of technology and data widely available have a 40% greater likelihood of realizing AI use cases at scale than those that make 25% or less widely available,” the report stated.

Digging deeper into a sub-category of innovation-ready companies, the report noted that two-thirds of such companies ranked innovation as their number one priority, of which 90% expect to increase spending on innovation. BCG defined innovation-ready companies as those that make innovation a priority, commit investment and talent to innovation, and are ready to transform investment into results, making them ready to develop product, process, and business model innovations that can deliver sustainable impact.

Reflecting the growing importance of the global push toward decarbonisation and increasing recognition of the potential for growth and risk climate change presents to companies, 89% of innovation-ready companies also said they prioritise climate and sustainability, compared with 58% of all companies.

The report noted that innovation-ready companies emphasise breakthrough or disruptive innovations, while less sophisticated innovators allocate resources more heavily to “near-in” or sustaining innovation.

To read the complete BCG report and its main findings, visit: https://www.bcg.com/publications/2023/advantages-through-innovation-in-uncertain-times