Innovation engines that still need more investment fuel

Laura Pellicer, head of Innovation at Accenture in Spain, assures that if the Spanish company’s key strategy is to remain competitive and relevant in the market, “it must bet on innovation.” The European Innovation Scoreboard 2024, prepared by the European Commission, places Spain as a “moderate innovator.” It currently has an innovation performance of 98.9%, which has represented an increase of more than 9 points since 2017. «In addition, Spain stands out in sales of innovations new to the market and new to the company, as well as in general digital skills,” highlights Pellicer.

It also points out that many companies have increased their budgets for research and development (R&D), and more initiatives and programs have been created to promote innovation. «However, despite these advances, there is still significant room for improvement. It is crucial that more strategic incentives be implemented such as tax incentives, public-private collaboration, education, training or improving technological infrastructure to further enhance innovation and thus ensure our competitiveness in the global market,” reflects the head of Innovation at Accenture. in Spain.

In the Global Innovation Index report we see that Spain is ranked 30th worldwide. «It is not bad at all, as it reflects a significant commitment to innovation. Companies such as Inditex, Telefónica and Santander have invested substantially in emerging technologies and digital transformation, recognizing that innovation is essential to adapt to a constantly evolving global market,” explains Carlos Viera, director of EUDE Digital and Marketing programs. Digital and Big Data from EUDE Business School. It speaks of the upward trend that exists in terms of investment in innovation by large Spanish companies, especially in recent years. “In the post-pandemic, significant growth has been noted, this being a catalyst,” he highlights. Furthermore, if we look at the OECD Spain Innovation Report 2023, R&D spending by companies has increased 5% annually on average over the last decade. «Is it enough? No, there is still room to increase this investment,” says Viera. And he assures that institutional or government support “is crucial to facilitate investment in research and development projects. Fostering public-private partnerships can further enhance these efforts, creating a more favorable environment for sustained innovation.”

From Accenture they point out that companies in sectors such as banking, telecommunications, energy and technology “are the ones that are investing the most in innovation, adopting new technologies such as generative AI or collaborating with startups and research centers to reinvent their businesses” by creating new solutions. and services that can improve their operations and offer added value to their clients,” says Laura Pellicer.

Competitive advantages

There is consensus when talking about the benefits that a commitment to innovation has for companies, since with it they can obtain competitive advantages to remain relevant in the market and improve their efficiency. However, Pellicer highlights two aspects that he considers crucial in the context in which we currently operate, «adaptability and attraction / retention of talent. Key ingredients for long-term success.

Carlos Vieira points out that companies that invest in innovation achieve multiple competitive advantages, among them, “they manage to differentiate themselves in the market through unique products and services, which can translate into a greater market share and the consequent customer loyalty.” It is also known that innovation drives operational efficiency, “reducing costs and optimizing internal processes,” he adds. And another key benefit is “the ability to anticipate market trends, an important point that helps to quickly adapt to changes. This last move allows them to stay relevant and resilient in the face of competition,” reflects the teacher. Also remember that studies by McKinsey & Company detail that innovative companies register revenue growth 2-3% higher than the sector average.

At Afidi, the Spanish Association for the Promotion of R&D&I Financing, there is no doubt that innovation is an indisputable part of the medium-term strategy of any company, regardless of its size. However, “large companies have greater resources and capacity to execute projects, which means that large companies present more projects and a greater amount,” says Víctor Cruz, president of Afidi.

Regarding the financing of these investments, AFIDI indicates the use of its own funds, investment rounds (depending on the size and situation of the company) but there are also various tools that can cover all phases of an R&D&i project, from the conceptualization of the idea, its development, its arrival on the market and its subsequent exploitation. «Here we would highlight public financing in lost fund format or subsidized loan (in all its scope, from European, national, regional and even local financing), tax incentives for R&D&I activities, bonuses on social security contributions linked to R&D&i activities, innovative public procurement, or tax base bonuses related to the exploitation of intangible assets,” explains the president of AFIDI.

Open innovation

We hear more and more talk about open innovation, which involves collaboration with external entities, such as other companies, startups, universities, research centers and clients, “to share knowledge and resources in order to accelerate the development of new ideas.” (products or services) and technologies,” explains the head of Innovation at Accenture in Spain. The benefits are multiple, “such as accessing knowledge and technologies, reducing costs and risks, accelerating time to market, and fostering creativity. In our country there are several well-known and successful examples led by Ibex companies in the telco, energy or banking sectors,” he clarifies. The director of EUDE Digital also said that open innovation “facilitates the creation of collaborative networks that can generate synergies and additional business opportunities.” He gives as a notable example the collaboration between Telefónica and various startups through its open innovation platform, “which has allowed the development of advanced solutions in areas such as the Internet of Things (IoT) and the so-called Artificial Intelligence.”

From Afidi they have presented the report «New Innovation Policies in Spain 2024-2027» where they present 26 proposals divided into five blocks: regulation, governance, cooperation, taxation and instruments.

Among these proposals is the need to “coordinate and lead innovation policies, with an instrument such as the National Innovation Council,” says Víctor Cruz. On the other hand, innovation must play a fundamental role in the new industry law, “where it must go hand in hand with technological development. All this must be accompanied by a correct system of indicators and measurement, which makes it possible to analyze the impacts of innovation policies and adapt or improve them.

Cotec has just published its analysis on investment in intangible assets, assets related to the knowledge economy (R&D, software, patents, databases, training of workers, etc.) that offers an international comparison (selection of countries developed). «Spain is lagging behind in investment in intangibles, but it is the only country among those that are behind the average in investment that grows above the average. That is to say, it is the only country in the convergence phase,” says the director.

Room for improvement

According to the European Innovation Scoreboard 2024Spain shares a position as a moderate innovator with countries such as Italy, Portugal, Greece or Hungary and is behind France, Germany or Ireland, classified as strong innovators and very far from Denmark or Sweden, which are considered leaders in innovation. “In this context it seems clear that companies in Spain still have room to improve compared to other European countries,” says Laura Pellicer. Globally, it is behind global innovation leaders such as the United States, Japan, and South Korea, which have a very robust and stable innovation ecosystem.

Carlos Viera believes it is important to take advantage of the situation in Spain since “we have demonstrated constant progress and are closing the gap thanks to supportive policies and a growing ecosystem of technological startups that drive innovation from the base.” For his part, the director of Economics at Cotec indicates that Spain is lagging behind in investment in intangibles, but “it is the only country among those that are behind the average in investment that grows above the average. “It is the only country in the convergence phase.”