Deloitte Innovation Summit 2018

Deloitte Innovation Summit 2018 Innovation and Italian Excellences – Oﬃcine Food, Boating, Manufacturing Innovazione Brochure / report title goes here | Section title goes here

Innovation as growth engine for the country’s economic development: where to start and how to create value?

The value of our national Assets is impressive and the potential of investing in innovation is so high that our Entrepreneurial Ecosystem has the opportunity to move as soon as possible, as long as a structured, practical and creative approach will be adopted.

02 Deloitte Innovation Summit 2018 | Innovation and Italian Excellences – Food, Boating, Manufacturing

Innovation is confirmed to be a complex phenomenon as well as an absolute priority, as it leads to new perspectives for the economic and social growth of a 1country Given the changes that have been affecting We are not always capable of our social and economic environments, understanding the utility of new innovation is becoming such a complex technological advancements. Nouriel phenomenon that it often leaves behind Roubini has recently expressed his doubts many uncertainties we do not fully about the contribution of blockchain understand. technologies, defining them as the fraud of our century3. Furthermore, there For instance, we are not sure of where we are doubts about the validity of genetic are going: according to a recent study by manipulation, especially when it is about Dell, “Emerging technologies’ impact on humans4. society & work in 2030”, 50% of business Lately, during the “Data Protection and decision makers declares not to know Privacy Commissioners” conference in how their sector will evolve in the next 3 Brussels, Tim Cook has stated that the years and about 45% of them declared diffusion of personal data has become a to be worried of lagging behind with the weapon against the population. progress. However, we are all aware of the relevant We have continuous uncertainties about changes that innovation has generated in the information we receive and we read: the last decade. the phenomenon of fake news has become viral and it is estimated that one out of Innovation led to new solutions that two Italians has already fallen into the trap make the world smaller and smaller. In of fake news. Furthermore, fake news1 China, the I-Plane is being developed: can spread up to 6 times faster than “real this is a hypersonic plane that will allow news”2. In Germany, the Ministry of Justice passengers to move from Beijing to New has dedicated 50 employees to monitoring York in about 2 hours. In the United Arab and sanctioning the phenomenon of fake Emirates, another speed-related record news. will be achieved thanks to the Hyperloop technology. This is a train running in low- pressure pipes that will connect Dubai and Abu Dhabi in 12 minutes, travelling at about 1200 km/h.

1 Doxa – “Fake news un italiano su due ci casca”, 8th February 2018 2 MIT – “False news spreads faster than the truth” 3 Forbes – “Economist Nouriel Roubini Says 'Blockchain Is Useless, All ICOs Are Scams'”, 31st August 2018 4 The Economist – The safety of CRISPR-Cas9 gene editing is being debated, 19th July 2018 03 Deloitte Innovation Summit 2018 | Innovation and Italian Excellences – Food, Boating, Manufacturing

Innovation is a topic of absolute priority

Planetary Valorization of Human Intelligence Solutions for sharing knowledge / human skills to integrate technology / Artificial Intelligence

A smaller world A smarter society An healthier life • Hyperloop will connect Dubai and Abu • Artificial moonin Chengdu will provide • Nano-bots teams injected in the human Dhabi in 12 min (1200 km/h) light at night by 2020 body to apply drugs locally • I-Plane will allow to move from Bejing to • Home deliveries with autonomous • "Cultured" hamburgers in vitro, instead New York in 2 hours vehicles in Arizona of in intensive farms

Our society is becoming “smarter and These all are changes that have the smarter”. The Chengdu Aerospace potential of improving the economic and Research Institute, in China, designed an social conditions of a country, by offering artificial moon that will provide the streets new perspectives of progress. with light at night and that is able to cover an area of about 5.000 squared kilometers. In this context, Deloitte continues its research on innovation in order Future technological perspectives let us to understand which of its dynamics think about a healthier life. Nano-bots5 are useful for the development of the teams will be directly injected in the human country. In this edition of the Innovation body to apply drugs locally. Moreover, Summit, Deloitte aims at investigating how the development of technologies to innovation can create value for the growth ensure quality on Food is now affordable of the country by enhancing the available for everyone: the price of an in vitro Assets: Italian innovations and Excellence hamburger, that was $320,000 in 2013, has (Food, Nautical and Manufacturing). decreased by 99%6.

Finally, innovation seems to offer us an overall enhancement of Human Intelligence through mechanisms that allow us to share our knowledge and our capabilities and to integrate them with technology and with the emerging Artificial Intelligence.

5 Nature – Ultra-extensible ribbon-like magnetic microswarm, 21st August 2018 6 Fortune – Silicon Valley and the Search for Meatless Meat, 19th December 2017

2 MIT – “False news spreads faster than the truth” Deloitte Innovation Summit 2018 | Innovation and Italian Excellences – Food, Boating, Manufacturing

Innovation is fundamental for countries’ growth. For Italy, it can represent an opportunity weighting more than two times the GDP forecasted growth for the 2next 4 years As we know from OECD researches, by Potential Innovation observing the economic trends of some growth Added value countries for the last 20 years, it is possible +8,5% +6,8% to identify a clear relationship between (+149€Mld) (+119€Mld) growth and innovation: the countries that invested more massively on research and development are the ones that registered the highest growth rates. Innovation +4,2% (+73€Mld) Still according to OECD, 50% of a country’s +2x growth GDP growth rate is caused by innovation. up to Applying this to Italy and considering the forecasted 3,4% GDP growth rate for the +4,3% country for the next 4 years7, that means +0,9% €30 billion. (+16€Mld) +3,4% +1,7% (+60€Mld) However, if we would manage to align (+30€Mld) our results to the ones obtained by the countries with the highest innovation rate (e.g. US, China, Israel, New Zealand, South 30 €Mld Korea...), the contribution we could obtain

from innovation would be much higher. In Potential Italy Innovation the next 4 years, it might lead Italy to obtain GDP growth Growth 2018-22 Added value up to a double annual growth rate than the one forecasted today. Value calculated on Italy GDP 2017, source FMI

7 Data analysis on International Monetary Fund, 9th October 2018

05 Deloitte Innovation Summit 2018 | Innovation and Italian Excellences – Food, Boating, Manufacturing

The analysis of the most virtuous countries for innovation shows that the value generated by innovation is based on three key elements: Assets, industrial Policies and the Entrepreneurial Ecosystem

The Assets of a country (natural The study of the countries that can be Moreover, South Korea is the second 3resources, human capital, traditions) are considered champions for innovation largest country in the world in terms of a key for its innovative development. (USA, China...) at a global level shows research and development expenditure Their value can be enhanced to the point a full exploitation of the formula, with over GDP. Samsung Electronics alone of boosting the country's competitive particular focus on Industrial Measures has invested more than $13 billion advantage. and to the Entrepreneurial Ecosystem. (about 16% of the total private R&D).

This happens even more if tailored Indeed, these two components allow On the other hand, the countries industrial/institutional interventions countries such as Israel and South with the best natural resources aimed at adding value to the Assets are Korea to position themselves among the have registered important Industrial adopted (i.e. public investments, norms innovation champions, even if the value Measures initiatives, for example: and regulations, incentives…). of their Assets is not comparable to the • The United States are the first country one of countries like the United States in the world in terms of value of The value of these natural resources, and China. public expenditure on R&D, whose together with valid industrial policies, In the recent years, Israel has been amount was 143 billion dollars in 2017. can create a potentially exponential implementing a policy of investments on This value is 3 times higher than the virtuous mechanism of growth if it is innovation and technology that, in 2017, investment expenditures of 40 years inserted in an ecosystem of private has allowed the country to collect more ago than 420 million dollars to finance start- actors ready to believe in Innovation • China has largely reached the targets ups focused on artificial intelligence (this (private capitals, enterprises, culture of that had been set for the five-year value has grown more than 750% in the innovation). government plan '11-'15. Nowadays, last year). it aims at moving from being a "world In other words, the value generated by factory" country to being "global innovation can be described as: technology leader"

Public investments Regulations In conclusion, with Incentives .. Private capitals respect to the Culture Innovation Innovation formula, it is Natural resources Companies Tradition clear that our country Human capital has something special in its Assets and that it is in a position of natural advantage over other Ecosytem of private actors V(Innovation)= (Asset*industrial Policies) countries.

06 Deloitte Innovation Summit 2018 | Innovation and Italian Excellences – Food, Boating, Manufacturing

The opinion of European citizens confirms how innovation, together with every individual’s efforts, is fundamental to boost the4 value of our country’s Assets

This year’s opinion poll continues the What is more, we see Italy as one of the journey that was started during the last top countries in the world for all the edition of the Summit by investigating Excellences here analyzed. Italians are over the opinion of about 6000 European aware of the fact that in ten years’ time we citizens (Italy, Greece, France, Germany, will see China and other eastern countries and UK) and 300 Italian sectors employees appearing among the most competitive on the three Italian Excellences: Food, countries. At the same time, according Boating and Manufacturing. to the European citizens, Italy is a major player: it is considered to be one of the Compared to the other European leaders for the Food sector (second place) countries, we seem to be more enthusiasts and for the Manufacturing one (third place). of our Excellences. Also, it is placed among the top 10 in the Regarding the Food sector, 70% of Italian Boating industry. respondents consider themselves as good cooks. In addition to that, we are 3 times more careful about the quality of what we The demoscopic survey by Deloitte: the sample eat than the French respondents and the British ones. 65% of the Italians spent or +1.500 would be willing to pay for a dinner in a Italian citiziens luxury restaurant.

Moreover, talking about Boating, 63% of the Italians declared to be interested in the 300 Sector employees* sector, although only 1 citizen out of 10 owns a boat. Finally, in the Manufacturing sector, 71% +4.500 of the sample declared themselves to be European citiziens passionate about craftsmanship (in Europe it is 57%) and half of the individuals is * Entrepreneurs, employed in specific interested in the technological trends that sector influence the sector. managerial and technical functions Demoscopic survey conducted with Nextplora.

07 Deloitte Innovation Summit 2018 | Innovation and Italian Excellences – Food, Boating, Manufacturing

Especially for the next 10 years, (6 Italians out of 10), animal spirit (5 Referring to the impact that innovation Europeans confirm an increase in the Italians out of 10) and entrepreneurship has on the sectors, the interviewed complexity of the competitive scenario (4 Italians out of 10), followed by the sample shows a strong belief that, in (e.g. China and other Eastern countries) Government (3 Italians out of 10). the recent years, it has been positive and they confirm that our country will (showed by 7 out of 10 individuals). retain a significant position. From universities, Italians expect a In particular, innovation has mainly review of the educational system (1 had an impact on the consumer Culture and tradition, raw materials Italian out of 3), from individuals they culture/its approach to the sector (4 and quality of human capital are the expect a cultural change and a greater out of 10 Italians in Food) and on the ingredients that have made our natural openness towards innovation (2 production process (1 out of 2 Italians in resources excellent. Italians out of 5), while from companies Manufacturing). 1 out of 3 Italians declares that culture the expectation regards a greater and tradition are the basis of our collaboration between firms (1 Italian Moreover, in the last ten years, Excellence in Food, while 1 out of 4 out of 3). Finally, what is expected from the number of people gathering believes that for the Boating sector. institutions is a simpler bureaucracy (1 information on the Internet has Raw materials are the second pillar Italian out of 2). doubled (up to date, it rose to 9 out of characterizing our Excellences: in Italy, The results of the opinion poll, and 10 citizens). This led to the emergence this is confirmed by 1 citizen out of 4 for therefore the opinions of the citizens, of a consumer behavior that can be the Food sector. seem to confirm the validity of the considered hybrid, as 75% buy both Finally, human capital is the third main formula: its base is composed by online and off-line. It is curious to notice factor contributing to our Excellences: natural resources and Industrial that we have become “selective” in the in the Manufacturing sector, it has been Measures. These are enhanced by a use of innovation, although we know fundamental according to 1 Italian out capable Entrepreneurial Ecosystem. the main technologies that are affecting of 5. Moreover, still according to the the analyzed sectors (only 25% of Italian However, according to the individuals, perception of the sample, Italy citizens say they use or want to use the there are some aspects we need owns unique Assets and needs an "Food delivery"). to improve if we want to be more Entrepreneurial Ecosystem capable competitive. of enhancing them, together with appropriate industrial policies. First, we need to be more capable of innovating (in the Manufacturing sector We are aware of innovation, selective about their use this is true according to 1 Italian out of

5). % of respondents % of respondents who use o that they know Innovation they would use Innovation Secondly, we would need it to be easier to do business (this is true for all the Food 25% sectors, according to 1 Italian out of 5). delivery 75% 35% Last but not least, according to the Italians we need to develop a greater entrepreneurial spirit (cross-sector, Autonomous 17% according to 1 Italian out of 5). drive 53% 13% Citizens and operators have a clear idea about what actors are more suitable for innovating within our country. Autonomous 34%* The survey shows that the challenge Robot 79% 40% of innovation can be won primarily thanks to: research centers/universities * Citizens who would like to be used in the production process

08 Deloitte Innovation Summit 2018 | Innovation and Italian Excellences – Food, Boating, Manufacturing

Physical channel vs digital one

For citizens For operators

almost out of less than out of Food 9 10 2 10 delivery they believe the would use only physical physical store is a store necessity

8 out of 10 only 15% Autonomous believe that the will have drive relationship with the as a reference only sites is still necessary the construction sites

the physical relationship is only out of Autonomous important for more than 5 100 Robot consumers will buy 7out of 10 of individuals only online

Moreover, physical channels will still have out of 5), from companies we expect a an important role in the future, but citizens greater collaboration between them (1 and operators have different perspectives Italian out of 3) and from the institutions a about this. simpler bureaucracy (1 Italian in 2).

According to the citizens, physical stores The results of the public opinion survey will remain a bedrock (9 out of 10 in Food seem to confirm, also in the citizens' sector, 8 out of 10 in Nautical sector, 7 perception, the validity of the innovation out of 10 in Manufacturing), while sectors’ value formula: at the base, there are operators think that we will see a sharp natural resources and industrial initiatives, reduction of its importance (2 out of 10 in enhanced by a capable entrepreneurial Food and Nautical sector, 5 out of 100 in ecosystem Manufacturing).

Who should innovate? Citizens and operators have a clear idea of who has the responsibility to innovate; University Companies the survey shows how the challenge of innovation could be won mainly thanks almost 6 out of 10 ~ 40% of citizens to: research / university (6 Italians out of Italians put it as priority identify them as 10), animal spirit (5 out of 10 Italians) and first actor of innovation entrepreneurship (4 out of 10 Italians), followed by tailored incentive and simplification policies (3 out of 10) Individuals Government

1 italian out of 2 ~ 32% of citizens From the universities, we expect a revision trust inventiveness attribute to of the educational system (1 Italian out of and their capabilities government the task 3), from individuals a cultural change and a of innovate greater openness to innovation (2 Italians

09 Deloitte Innovation Summit 2018 | Innovation and Italian Excellences – Food, Boating, Manufacturing

Innovation and the country’s growth: it is necessary to understand innovation and to adopt a structured and creative approach in order to generate value out of innovation

5The value of our country’s Assets is so This is a critical step, as it allows to relevant that we can start gaining value out understand whether and how innovation is of them independently from the industrial actually capable of adding value to a sector Measures. This means working on the along its value chain. Entrepreneurial Ecosystem with the aim As for the second issue, it is necessary to of starting a virtuous exponential growth structure a dedicated methodology to work trend. on the Entrepreneurial Ecosystem by: In order to achieve this result, it is mainly • Planning an innovation journey (defining necessary to consider two elements. the ambitions of a company, innovation The first element is understanding the related action plans…) nature of the ongoing technological • Idea generation activities (idea selection, trends in order to manage the equilibrium cross-competences contamination…) between what the consumer wants and • Incubation (“test&learn” validation what he does not know to desire. approach, prototype development in an The second one is adopting a creative and open innovation logic…) structured approach to innovation that • Acceleration (development co-realized allows to combine the indiscipline of the between corporate and startups, The value of our ideas with the rigor of the methodologies. definition of go-to-market strategy…) national Assets is Starting from the first topic, it is necessary • Funding (funding strategies according to to think about how and where innovation the evolution step of the idea/start-up, impressive and the creates value in the analyzed industries. support in the scaling phase…) potential of investing in innovation is

A model to support the entrepreneurial ecosystem so high that our Entrepreneurial

Scaling, capitals, attraction Ecosystem has Funding the opportunity to Scouting, co-realization, improvement, go-to-market Acceleration move as soon as

Growth, validation, open possible, as long innovation, prototype Incubation as a structured, Selection, excellence, contamination, criteria Idea Generation practical and creative

Trasformation, approach will be ambition, priority, Innovation Journey organizational culture adopted.

10 Brochure / report title goes here | Section title goes here

Contacts

Andrea Poggi Partner Innovation Leader [email protected]

Cristiano Camponeschi Francesco Iervolino Luigi Onorato Partner Partner Partner Officine Innovazione Officine Innovazione Monitor Deloitte [email protected] [email protected] [email protected]

11 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.