Keep up to speed with innovation to prosper

In today’s world, success is not a given. Companies that have been profitable for decades are fighting to remain relevant as the business environment changes dynamically around them.

If we look around, we will notice that innovation management systems have fundamentally changed the way we work. Globalisation and the integration of technologies like cloud, mobile and social are encouraging more rapid innovation cycles and product innovations.

In fact, Tesla was voted one of the most innovative companies by Forbes this year for its product innovations.

Cloud and mobile will continue to be major forces of tech change for at least the next three years.

Mobile is also predicted to have the strongest influence on consumer markets, while cloud is regarded as the most effective force for enterprise ­markets.

The convergence of these two powerhouses is driving even more tech disruptions.

Social media has not yet played out its full potential as several geographic markets highlight its coming impact for the consumer and business sectors. Here in the UAE, new technologies, new sales channels and new business models are presenting opportunities for entrepreneurial companies.

To grow and be sustainable, companies need to recognise the complexities of doing business and alter their strategies and thinking accordingly.

With lower oil prices ­persist- ing, the business environment has changed ­significantly.

Organisations also face a market of constant instability and disruption because of significant changes in customer behaviours, technology, regulation and demographics.

This actually presents an opportunity to find new ways to grow and also demands an innovative response from organisations, or they risk losing market position and revenue to more forward-thinking and agile competitors.

Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, launched Innovation Week to encourage inventors and businesses to generate ideas.

This is an apt time to encourage innovation and get organisations to cultivate and sustain a business transformation – if they have not already done so. Innovation is not a new concept for the UAE. However, successful innovation lies not just in generating ideas but in understanding the disruptions.

It requires building an innovative culture with effective execution. This needs to be supported by a well-designed process to ensure the right ideas are uncovered and successfully brought to the table.

In a recently published study by KPMG International and Oxford Economics, the UAE emerged No 5 in the KPMG 2015 Change Readiness Index behind Singapore, Switzerland, Hong Kong and Norway in terms of its enterprise capability, government capability and people and civil society capability, fiscal, regulatory and security aspects and people and civil society capability, including civil society institutions, education, health and technology access.

The index ranked 127 countries for their capacity to prepare for and respond to accelerating change brought about by natural disasters, economic and political shocks, demographics and new technologies.

These are relevant metrics to evaluate a country’s performance.

Increasingly, we are seeing that IoT [internet of things] is also playing a transformative role in business, and we expect that as small and medium companies begin to rely on automated products and solutions, their profits will grow.

In Dubai, the opportunity to capitalise on IoT is huge, especially with the move to become a “smart city”.

Globally, while all businesses tend to be affected by technological advances, we expect that the effects will be visible in business-to-consumer organisations first.

Consumers tend to adopt new technologies quickly, so businesses that serve them will have to keep up.

Tech companies, of course, will be at the forefront, but other business-to-consumer (B2C) sectors like retail will need to quickly catch up. In the UAE, IoT will offer retailers a wider platform to successfully use captured customer data.

CEOs today are trying to understand how these trends can affect their businesses and what they need to do to mitigate any impact on their organisation, from more traditional risks (regulatory environment, geopolitical risks) to emerging risks (disruptive technologies).

Businesses that innovate effectively will have a greater opportunity to increase their profitability, productivity and develop a sustainable competitive advantage.

Very simply put – they are more likely to employ, export and generate new products and services.

Vikas Papriwal is the head of markets at KPMG Lower Gulf.

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