The economic outlook for 2015 is, by most accounts, "slightly better than 2014." That, of course, depends on what industry you're in. For some, that outlook could be a lot better with an injection of good, old fashioned innovation. Here is my short list of five industries most ripe for innovation in 2015.
1. Commercial Aerospace: I may be biased because I've worked in this industry, but I've always considered the aerospace industry the most complicated and difficult of any. Think about the conditions that airlines, for example, work under. They're heavily regulated, union intensive, recession sensitive, fiercely competitive, fuel price sensitive, and operationally complex. Putting thousands of full airplanes safely in the sky everyday is no small feat. And it's not just the airlines that face challenges. The aircraft and engine manufacturers like Airbus and GE face enormous technology and business risk when building new equipment.
It's these challenges that make the aerospace industry ripe for innovation. Tight constraints are a necessary condition for creativity, and this industry has it more than any. We should expect a significant focus on innovation from this sector next year, especially in creating many small, incremental innovations rather than seeking the big disruptors.
2. Pharmaceutical: The pharma industry has many of the same attributes as aerospace in terms of the regulatory scrutiny and long lead time development risks. But this industry has been turned upside down by a series of independent events. Changes in how new drugs are discovered, the shift to generics, the move to personalized medicine, and the shrinking pipeline have conspired to create the "perfect storm" for this industry. Drug companies are moving past just hoping for a billion dollar, blockbuster drug to save them. They need to find relevance beyond the prescribers and pharmacies that dispense their products.
We should expect to see big pharma companies innovate across the entire value chain, from pill manufacturing all the way into the patient's home. Big brands what to become a household name, not just an clinical industry name.
3. Food: Pressure on this industry isn't just from the FDA and other regulators. Consumers are on high alert like never before about what they put in their mouths. It's not hard to see why. The obesity epidemic has tainted our image of sugar, once thought of as sweet, but now seen as deadly and addictive. Constant media reports about food poisoning and listeria outbreaks make consumers nervous and suspicious. Changing consumer trends in taste and ingredients create a moving target for ingredient makers and food processors. Even Bill Gates has weighed in on the need for innovation in this industry, noting that our approach to food hasn't changed much over the last 100 years. "It's ripe for innovation."
I expect to see the big food companies like Kraft and Cambell's step up their innovation efforts in everything from manufacturing lines, packaging, and retailing. Like the pharma companies, they need to bring more relevance to the consumer once the product reaches the home.
4. Higher Education: Like aerospace, this industry is a hot button for me because I'm in it. Universities are under constant scrutiny, from outside and from within, about the many challenges they face. Type into Google, "the problem with universities" and you'll get 200 million results. What's interesting about this industry is how long it's been around, how well understood the problems are, yet how difficult it is to make progress. The university model faces issues around the tenure system, the role of a university in terms research versus teaching, and most importantly, relevance - are universities producing the right product for our society, or have they become so insular and out of touch in preparing students?
We should expect to see more innovation outside of the university model that will put pressure to change inside. New educational models, social learning, corporate learning resources, and revised expectations of the consumer about college and its costs will isolate universities to the brink of change.
5. Consulting: Consultants can be their own worst enemy in forgetting to take care of their own business model while working to improve their client's. As with the other ripe industries, market forces are causing cracks in the seams of this one, too. The biggest change is transparency. Consulting firms used to live behind a shroud of brand reputation, where executive selected a consultant to reduce risk to their own stock. Now clients want to see more of what goes on inside, and it is changing the way they hire consultant, pay them, and use them. Customers don't want to pay too much for features they don’t value, especially when they have unprecedented access to the same information and Big Data as the consultants.
We should expect consulting firms to innovate new ways to deliver faster results, and to take more accountability for those results.
Bring on 2015!
Copyright 2014 Drew Boyd