Tech Manages Innovation Burnout

August 2017

In an industry with powerful behemoths and nimble startups all vying for market share, differentiation in the marketplace is a challenge.

The constant pursuit of innovation is tech’s holy grail, as the race for the next best thing never abates—and often, success boils down to who can bring innovation to market fastest. Thus, many tech companies are feeling the pressure when it comes to competition and innovation. Can even the biggest companies hang onto their startup mentality as they grow up?


Product Challenges Intensify

Perhaps unsurprisingly, all U.S. tech companies cite competition as a major challenge this year as emerging technologies open up the playing field for more tech players and market saturation threatens the reign of even the first and the brightest. To remain ahead of the competition, tech companies need to continue coming up with innovative ways to develop and market solutions to their target audiences—starting with diversifying their product offerings.

As a result, 95 percent of companies cite issues with new product management and development this year, a jump from last year’s 83 percent. Sixty-five percent of companies list concerns associated with entering emerging markets and product diversification, marking an increase from 50 percent last year. 

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Automation Nation

For the first time, the report tracked specific concerns around emerging technologies. Top of mind are challenges related to automation, with tech companies concerned about competing with companies with greater automation capabilities, integrating products into increasingly automated systems and the high cost of automation R&D. 

Despite development strains, automation and AI show incredible promise. Analysts see such great potential in AI because of its versatility—it can be applied to hardware development, software development, big data solutions and cybersecurity. MarketsandMarkets predicts the global AI market will be worth $16.06 billion by 2022, growing at a combined annual growth rate (CAGR) of 62.9 percent from 2016 to 2022. 

Nonetheless, while AI introduces ample opportunities, it poses a major threat as well: the replacement of jobs by automation. While robots have enabled goods and services to be produced at several times the speed of those produced by humans, they have already replaced—and are continuing to replace—millions of jobs in major industries, including manufacturing, trucking, consumer business and more. The White House, in a December 2016 report, estimated that between 2.2 to 3.1 million trucking jobs in the U.S. today are threatened by self-driving vehicles.


The Tech Talent Search

To create competitive products, there needs to be a strong corporate culture—a fact that many tech companies understand. Tech companies would be nothing without their talent, which helps explain why 92 percent of technology companies cite issues with maintaining their workforce. 

To start, many tech companies report that finding applicants with the right set of skills is a huge hiring hurdle. Code.org estimates that there will be one million more computing jobs than applicants who can fill them by the year 2020, based on job creation data from the U.S. Bureau of Labor Statistics and estimated college graduation rates from the National Science Foundation. 

After successfully recruiting skilled workers, keeping them is another issue. Startups and mature tech companies alike need to excel at both technology and people. To retain their employees, tech companies often turn to additional competitive benefits, ranging from pension plans to equity awards programs. While having a happy workforce is only one piece of the puzzle, it is undoubtedly an important factor that can keep companies competitive and innovative.

2017-Tech-RFR-graphic-Artboard-13.png“Automation has already started revolutionizing the way manufacturing and companies in other industries have been doing business for decades. As ‘smart’ factories become the norm and traditional services are increasingly run by robots and AI software, companies will need to prepare themselves for the risks involved—including cybersecurity threats, operational liabilities and new regulatory requirements.”     

2017-Oil-Gas-RFR-headshot_Karampelas.jpg  Eskander Yavar
  National leader of BDO’s Management Advisory Services