Mockup in a small sized branding studio, framing by author

Automotive Industry 2016 — who is an Innovator?

I will start with a saying: “It is not the quantity of data but the quality of the data that matters”. Yep.

If you are a follower, by now you should know I like (at least) these subjects: Innovation and Automotive Industry. In a world of fast paced read&forget news, it is somewhat deceiving to occasionally read articles about innovation and innovative companies - using an evaluation scheme that no one really knows about. I’ve just read one this week with the title “The Most Innovative Companies of 2017” (yes, in February 2017) from a top digital magazine (2.2M followers on Twitter and 1M followers on Facebook; I will not disclose the name though). Full description is met in the following statement: “impact is among our key criteria”. And that’s the most you will know about the criteria: Impact. No kidding.

On the other end of the spectrum you can find serious journalism investigation and studies, like the one we will explore in these lines. I just got my eyes on Clarivates2016 Top 100 Global Innovators Report (links below), and I would like to share some thoughts. In particular I will look for correlations with self driving cars (or autonomous vehicles), IoT and society as a whole.

Starting of with David Brown (Clarivate Executive VP) intro we are immediately clarified about the criteria: “The Top 100 Global Innovators methodology centers on patent volume, application-to-grant success, globalization and citation influence. It’s an objective formula that identifies the companies around the world that are active in innovation through research and development (R&D), IP protection and commercialisation”. And it goes on, if you are interested you can check. Good. Now lets get down to business.

It is very clear that the study focused on the industrial and commercial achievements of the companies, which is always a plus: (i) Patent application is the first criteria, but it is immediately followed by a patent validation grant ratio, and (ii) how much the market players themselves will leverage on these patents, which in turn reflects how much of that intelectual property is being used on the value chain of other products and services. This is the result of the study, geographically wise.

39%USA|34%Japan|10%France|4%Germany|3%Korea|3%Switzer.|2%Nether.|1%China|1%Fin.|1%Taiwan|1%Sweden 1%Ire. Just two countries account for 73 percent of the list — Japan and the US — making them the major innovation hubs of the world. []

Numbers from this image are very clear. There is a clear domination of the (i) most industrialised countries mixed with (ii) countries with a large domination of product design and corporation decision centres.

A closer look at wiki 2014 accumulated patent offices numbers detail a similar trend and unveils partially this 2016 study output. China is by far the country with most patent applications reaching almost 1M, followed by the USA (roughly half of PRC). But… patent grants put the USA in first place with roughly 300k grants and PRC with 233k. You take your own conclusions.

Furthermore, these numbers represent local, regional and international offices. But for world significance we should look closer at PCT applications. A PCT patent application signifies most surely the company will want to protect products and services supported on that knowledge and most certainly to be traded internationally. It is not just a patent. It is a strong commitment to whatever comes ahead.

Ranking of the 10 countries who filed the most international patent applications in 2015 []

And here we have a match. Although not exactly in the same order but really identical lists (yes, I’m comparing 2015 data with 2016, but bear with me). Not only that but the countries are somewhat identical on the list of the top GDP countries. It comes to mind: “investing in innovation pays off” or “only wealthy countries can cope with the economic demands of innovation”. I’ll let you be the judge of that.

Lets go back to Clarivates’ study. Its been going for some years now. As usual some companies are entrants and some are regular. Next, the most consistent of the listed companies. They made the top 100 global innovators list for the 6th consecutive year. These are the companies that year after year push the boundaries either by opting to reinvest, by motivating their personnel or just by being more focused.

Top 100 global innovators list for the 6th consecutive year []

A quick look at these 39 companies names will let you know that less than a hand full are automotive related — Toyota and Honda. On the complete top 100 list Delphi makes a re-appearance for the first time in 2016 since 2013. Yazaki and Valeo are also included. Toyota holds the largest portfolio by far with more than 36,000 inventions published in 2011–2015 followed by Honda (15,200) and Nissan (8,000).

The full spectrum: in fact only 9 are from the automotive sector. What about the others, are they or are they not automotive related? The fact is the automotive vehicle leaped considerably in terms of a wider technology dependancy in the last few years: vehicle sensorial automation, increased connectivity, the Internet of Things (IoT) and user experience (UX) are now much more relevant for the overall performance and service delivery of a vehicle and the OEM counterparts. If we now add the increasing market share for full electrical vehicles, “level 5” self driving cars capabilities and car sharing in its several perspectives, it is foreseeable that the “hardware and electronics” and the “telecommunications” and “software” enterprises will also have to be present for the deployment and full development of these integrated features. And wait, there is more. These companies, they want to be there! That’s what they aim at: new markets and technology cross selling.

But wait. So, maybe 9% is not just 9% after all. Maybe automotive related, or let us say “mobility related” will get bigger, hen? I believe we will see a growing bond with other sectors. Maybe a couple of buyouts from the big dogs. Maybe.

After all in the near future we expect a vehicle to provide us much more than just a ride: it will act as an extension of our home, and it will also be an extension of our workplace. Driving will be performed by machines. Face it. Don’t be a cry-baby - sometimes I already wish around me there would be nothing but machine driven cars. Less traffic jams, less accidents, and more time for all-the-rest-we-love-so-much.

Summing-up. As always, corporate strategy is the playground for (almost) all long term results:

  1. In the realm of intelectual property — as in other areas — quantity and quality achieve different results. Intelectual property stands at the core of product and service development, and whereas a good product or service captures market share and will monetise, a weak starting point will get you nowhere even if you have the financial strength to market it and put it in every store shelf around the world.
  2. One of the major theory pillars plays a handfull in these innovation ranks: Consistent, clear goals are the basis for keeping up the pace during hard technology disruptions. Vision is everything.
  3. Needless to say, these group of innovative companies are also the ones that carry the best shareholder value, and have protected ROI’s on their portfolio. They are not just hanging in there looking to poach an opportunity, they are the builders of the opportunities!

Thanks for reading! Like, share and comments as always. Enjoy!

Info: Clarivate is formerly the Intellectual Property and Science business of Thomson Reuters.

References that are not pinned:

Pedro Faria

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