By David Born and Christian Krys

In Trend 5 of our Trend Compendium 2050 we investigate technology and innovation. Here, we look at the value of innovation, frontier technologies, and the relationship of humans and machines.

Value of Innovation: Innovation is the key to sustainable growth

Technology and innovation are deeply intertwined with economic growth and societal development. Enabling factors range from a country's level of investment in education to private and public R&D expenditure.

Best-in-class innovating countries predominantly stem from advanced economies: their levels of investment in R&D signal trust in future capabilities of leading-edge technologies. This places technology firmly at the heart of economic growth.

In advanced economies, the business sector is responsible for nearly three quarters of the total R&D expenditures. The sectors spending the most compared to their revenues are pharma & biotech, ICT software & services, and ICT hardware & electrical equipment.

Frontier technologies: A wide array of leading-edge technologies will shape our future to 2050

The spectrum of frontier technologies is broad and ranges from new transport technologies to nanotechnology and gene editing. Many frontier technologies are interconnected, acting as enablers to other new technologies or helping to boost their potential. Quantum computing, for example, can be an enabler for the application of new technologies in various sectors by providing almost unlimited computing power.

Artificial intelligence (AI), Blockchain and other digital technologies will continue to greatly change processes and business models. Such frontier technologies will also make the handling of data a key competence and the use of data a key market of the future.

Humans and machines: As machines become increasingly more intelligent, the relationship between humans and machines needs to be re-examined

Given that the capabilities of artificial intelligence will continue to develop immensely, this will vastly affect our relationship with "smart" machines, such as robots, but also other devices. Our interactions will become more multi-faceted, but as the influence of machines on humans will also increase, enthusiasm is mixed with concerns – ranging from the impact on jobs to the transfer of decision-making to machines.

Labor markets are faced with significant structural changes: jobs that can be automated are being phased out, while other areas of work are benefitting from automation. In terms of decision-making by intelligent machines, fears can be alleviated if we understand how AI arrives at its decisions: the "black box" must become transparent in order to build trust in AI. Regulation can also play an important part in this evolving process.

How companies can take advantage of megatrends

Fostering innovation provides companies with a sustainable competitive edge. Therefore, companies must strengthen their innovation capabilities through specific training for their employees. The focus of knowledge transfer should include both innovation development methods and future technologies. Furthermore, companies should promote a firm-wide culture of innovation – thinking about innovations should not be limited to the R&D department. A diverse workforce can enhance the potential to generate a wide range of ideas that serve as the foundation for innovations.

The successful fostering of innovation in products, services, and processes requires a committed, long-term strategy including investment and the allocation of financial resources through active portfolio management. Building a wider innovation ecosystem is just as essential, encompassing a network of partnerships with suppliers, distributors, customers, start-ups, academia and - where appropriate – competitors.

It is clear that artificial intelligence, robotics, and many other emerging technologies will transform the economy. Companies must understand and leverage the opportunities presented by technological advancement in order to enhance efficiency and productivity and ensure future competitiveness. Analytical tools, such as the Roland Berger AI Readiness Radar, provide support by enabling benchmarking against competitors.