Area Development
{{RELATEDLINKS}}Nations have long striven to advance to the next technology frontier and raise their economic well-being. In today’s highly dynamic environment, advanced technologies have become even more essential in improving economic competitiveness and national prosperity. As a result, many nations, including the United States, have invested heavily in establishing national innovation ecosystems that connect people, resources, policies, and organizations to collectively translate new ideas via advanced technologies into commercialized products and services. Tapping into these ecosystems enables companies to operate at the forefront of cutting-edge science and technology in order to translate superior products and services more rapidly into the market.

To understand and identify current and future trends in the United States and global scientific research and development, Deloitte Touche Tohmatsu Ltd. and the Council on Competitiveness conducted an Advanced Technology Initiative (ATI) study. To this end, Deloitte and the Council interviewed nearly three dozen C-level executives — including CEOs, chief technology officers, chief research officers, and company presidents from various manufacturing sectors — as well as nearly a dozen directors of U.S. national laboratories and research facilities. In addition to identifying and exploring challenges facing U.S. manufacturing and national labs, the initiative was designed to help identify the most promising advanced technologies in development within the United States. The interviewed executives and lab directors were also asked about technologies considered most critical to their company’s competitiveness as well as high-level recommendations for reinvigorating America’s industrial base. Their responses led to the following findings:
Expand Current U.S. Innovation Ecosystem
Close Current U.S. Innovation Ecosystem
An Illustration of the Current U.S. Innovation Ecosystem
A Valuable “Knock-Off” Effect
The U.S. manufacturing industry, increasingly propelled by advanced technologies, comprises a large portion of the economy. In order for companies to grow and succeed against aggressive global competition, manufacturers indicate advanced technologies are critical to company-level competitiveness by increasing differentiation through creating premium products, processes, and services that capture higher margins. The use of advanced technologies to produce complex products also enhances export competitiveness, leading to greater economic prosperity. This path becomes easier by building unique knowledge and capabilities, and economic complexity is directly related to acquiring and developing manufacturing capabilities.

Nations that have accumulated knowledge around production processes and developed manufacturing capabilities that other economies do not possess produce more sophisticated and exclusive products, boost their exports, and become more prosperous in the long term. Advanced manufacturing has the effect of strengthening the overall economy by creating higher-income jobs. This creates a knock-off effect where these industries are responsible for a greater proportion of jobs in the entire value chain, leading to a higher standards of living for the nation overall. To unlock this potential, nations need to continuously invest in R&D to develop strong manufacturing know-how, as advanced manufacturing capabilities depend on a nation’s support of cutting-edge R&D activities.

Advanced manufacturing has the effect of strengthening the overall economy by creating higher-income jobs. Ultimately, innovation and economic growth have a compounding and symbiotic effect. Indeed, a strong, innovative, and technology-savvy manufacturing base encouraged by an integrated support structure attracts more businesses which, in turn, creates more demand for high-paying jobs, thereby attracting more top-tier talent. These foundational elements build upon each other and become incrementally more valuable as the innovation ecosystem grows. This phenomenon presents both industry and government with a win-win situation that should encourage them to collaborate to build a strong and vibrant national innovation ecosystem.

Unlocking New Opportunities
Executives indicated predictive analytics, Internet of Things, and advanced materials are the most promising technologies for American manufacturers. Across dozens of interviews in Deloitte and the Council’s ATI study, as well as hundreds of survey responses from Deloitte and the Council’s 2016 Global Manufacturing Competitiveness Index (GMCI), U.S. executives consistently stressed as their highest priority the importance of digital technology, including the use of predictive analytics. They were also looking to place significant focus on innovative, smart, and connected products.

While interviewees were highly engaged in discussing the question of which technologies are the most attractive and/or promising, and as most of the interviewed executives discussed and debated nearly every technology they were asked about, there was a strong collective focus on and interest in advanced manufacturing technologies such as predictive computing and analytical modeling, connected technology/sensors (i.e., the Internet-of-Things or IoT), as well as advanced materials such as advanced ceramics and composites. Collectively, the ATI study interviewees felt many of these advanced technologies were promising — especially when used together in a synergistic manner — and such technologies would be vital to their companies’ future.
Advanced industries drive national prosperity and generate more jobs, output and earnings
Advanced industries drive national prosperity and generate more jobs, output and earnings
Sustaining National Competitiveness
According to the executives interviewed in the ATI study, the competitiveness of a nation ultimately depends upon the success of its national innovation ecosystem. An innovation ecosystem is composed of people, resources, policies, and institutions that promote the translation of new ideas into tangible products, technologies, and services. Hence, a successful innovation ecosystem efficiently links resources invested in the knowledge economy to increased profits by creating new products, processes, and services. These same executives also said the current U.S. innovation system possesses the critical attributes that positions it at the forefront of cutting-edge science, technology, and innovation, namely through an educational system that fosters creative thinking, superior talent, the world’s leading universities, an excellent research infrastructure, a solid venture capitalist presence, and strong support for regional innovation clusters. All of these are instrumental in keeping America at the forefront of cutting-edge science, technology, and innovation.

U.S. industries enjoy a competitive advantage over other nations as a significant amount of basic and applied research occurs within U.S. borders. U.S. businesses can help maintain this edge, and preempt competition, by bolstering mechanisms to translate these local research outputs into superior products and services before their competition does. This calls for efficient and effective collaborative mechanisms between industry, research labs, and other players in the ecosystem.

U.S. industries enjoy a competitive advantage over other nations as a significant amount of basic and applied research occurs within U.S. borders. Leveraging Key Strengths
Executives participating in the ATI study indicated the United States should leverage key strength areas such as:
Where To Play (Markets & Customers)
Where To Play (Markets & Customers)
Putting Ideas To Work
Clearly, a strong focus on innovation is essential to the health of not only individual companies, but also the overall U.S. economy. In order for advanced manufacturing companies to capitalize on emerging opportunities while mitigating potential risk, there are a number of key insights to guide solid business strategies and include in their “innovation playbook” going forward: