{"id":14752,"date":"2025-05-29T04:55:43","date_gmt":"2025-05-29T08:55:43","guid":{"rendered":"https:\/\/www.servsig.org\/wordpress\/?p=14752"},"modified":"2025-05-30T01:50:28","modified_gmt":"2025-05-30T05:50:28","slug":"company-innovativeness-in-the-ai-era","status":"publish","type":"post","link":"https:\/\/www.servsig.org\/wordpress\/2025\/05\/company-innovativeness-in-the-ai-era\/","title":{"rendered":"Company Innovativeness in the AI Era"},"content":{"rendered":"\n

By Werner Kunz, University of Massachusetts\u00a0Boston<\/em><\/p>\n\n\n\n

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The article is based on a talk at the 3rd Spanish Innovation Index Conference and an upcoming publication in the JOSM (see reference list). If you are also interested in the field of company innovativeness, please consider submitting to the upcoming special issue in the Journal of Service Management (JOSM)<\/a>. <\/em><\/p>\n\n\n\n

The Innovation Paradox in the AI Era<\/strong><\/p>\n\n\n\n

Innovation has long been hailed as the “holy grail” of business success, driving market share, growth, and profitability. For instance, top quartile innovators grow revenues at more than twice the rate of their industry average and are significantly more profitable according to a McKinsey study (2017). Thus, innovation has become a crucial component of corporate strategy globally.<\/p>\n\n\n\n

However, a striking Innovation paradox exists: Interestingly, even though 83% of companies view innovation as a top priority (BCG, 2024), their readiness to innovate has surprisingly declined since 2022, highlighting a growing gap in this exciting AI era. Moreover, while 330,000 patents were granted in 2022 (USPTO 2022), only a handful turned into market successes. This paradox raises a fundamental question: Why doesn’t innovation work for so many companies? The answer lies partly in the turbulent times we are experiencing.<\/p>\n\n\n\n

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We live in a \u201cdigital service revolution\u201d reshaping technology, business models, and society (Wirtz et al. 2021). Technological capabilities are rapidly advancing, business models are being reimagined, and societal expectations are shifting. At the core is artificial intelligence, transforming industries in unprecedented ways. AI development is accelerating, achieving human-like capabilities in shorter timeframes. What took decades is now accomplished in years or months, profoundly impacting how businesses operate, generate revenue, and innovate.<\/p>\n\n\n\n

AI as a Facilitator, Not a Differentiator<\/strong><\/p>\n\n\n\n

AI development presents opportunities and challenges for innovation. It offers powerful tools for creativity, streamlining processes, and generating solutions. However, rapid AI advancements quickly render cutting-edge technologies common. For example, large language models evolve so swiftly that what was revolutionary last summer already feels outdated. ChatGPT-4.0 exemplifies this acceleration, as competitors matched its capabilities in just two months, reducing the competitive edge of new applications. This rapid innovation cycle pressures companies to continuously reinvent themselves.<\/p>\n\n\n\n

This rapid development and widespread access present challenges for companies trying to differentiate through AI. With similar AI capabilities available to all, technology alone cannot ensure a sustainable competitive edge. Thus, companies must rethink AI’s role in innovation strategies. Instead of seeing AI as a differentiator, forward-thinking organizations view it as a facilitator\u2013a powerful tool enabling innovation but not innovation itself.<\/p>\n\n\n\n

Creating meaningful innovation in an era of universally accessible AI highlights the difference between innovation and innovativeness. Innovation refers to specific new products, services, or processes that can be easily copied. Innovativeness encompasses a broader organizational capability \u2013 the ability to consistently produce meaningful innovations that transform markets and deliver lasting value (Kunz et al., 2011). As noted, company innovativeness is not equal to innovation; it’s a question of mindset, not technology (Kunz 2024). This distinction is vital in the AI age, where tech innovations can be replicated quickly. The disconnect highlights a critical gap: companies chase technological novelty without embedding innovativeness into their culture, leadership, and processes.<\/p>\n\n\n\n

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For AI, companies must look beyond simply adopting technologies to discover how they can generate new value. Instead of asking, “How can we use AI?” they should ask, “What meaningful problems can we solve or opportunities can we create with AI?” Implementing AI without a broader innovation strategy risks a cycle of technological catch-up, whereas companies that utilize AI for genuine innovation will gain sustainable competitive advantages. The key is vision, creativity, and organizational capabilities that make AI a catalyst for true innovativeness. Our research identifies four key factors for fostering innovativeness in the AI era (Kunz et al. 2025): commitment to new ideas, pioneering leadership, hiring aligned talent, and cultivating an innovative culture.<\/p>\n\n\n\n

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Relentless Commitment to New Ideas<\/strong><\/p>\n\n\n\n

Companies that consistently demonstrate innovativeness share a common trait: they exhibit a relentless commitment to pursuing new ideas, regardless of market conditions or competitive pressures. This commitment goes beyond occasional innovation initiatives to become a core aspect of organizational identity.<\/p>\n\n\n\n

Samsung exemplifies this, investing $18 billion annually in R&D to lead in technological innovation, from advanced camera systems and foldable phones to using AI as a “secret sauce” in its products and smart home ecosystems. Despite criticism for aggressively pursuing new technologies, Samsung’s persistence has yielded significant results. Their success stems not from chasing competitors, but from a culture that rewards experimentation, even in the face of early criticism. Similarly, IKEA demonstrates its commitment to innovation through its focus on affordable design. The “Democratic Design” philosophy, emphasizing form, function, quality, sustainability, and affordability, guides continuous innovation in its products. They utilize AI in the IKEA Place App for room planning and AI-enabled lighting, always striving to enhance their core promise.<\/p>\n\n\n\n

The relentless commitment to new ideas demonstrated by companies like Samsung and IKEA illustrates that innovativeness is not a sporadic activity but a continuous process of exploration, experimentation, and refinement. In the AI era, this commitment becomes even more crucial as the pace of technological change accelerates, requiring organizations to constantly reevaluate and reinvent their offerings to maintain relevance and competitive advantage.<\/p>\n\n\n\n

Leadership That Dares to Pioneer<\/strong><\/p>\n\n\n\n

The second critical factor for company innovativeness is leadership that dares to pioneer\u2013executives with the vision, courage, and determination to venture into uncharted territory and create new markets rather than simply competing in existing ones.<\/p>\n\n\n\n

Apple is a prime example of a company whose innovativeness has been driven by pioneering leadership. Under Steve Jobs and subsequently Tim Cook, Apple has consistently demonstrated the ability to envision and create entirely new markets, from personal computers to smartphones to VR\/AR glasses.<\/p>\n\n\n\n

This leadership philosophy acknowledges that true innovation involves moving beyond incremental improvements to find transformative opportunities that can reshape industries. In the AI era, this implies not just applying AI to existing products and processes but reimagining possibilities when human creativity is enhanced by artificial intelligence. As noted in McKinsey’s 2025 report, “The risk for business leaders is not thinking too big, but rather too small.” Pioneering leaders recognize that AI is not just a tool for optimization but a catalyst for reimagining their organizations’ potential.<\/p>\n\n\n\n

Hiring the Right People for Your Vision<\/strong><\/p>\n\n\n\n

The third factor driving company innovativeness is a focus on hiring individuals whose skills, mindsets, and values align with the organization’s innovation vision. This is crucial in the AI era, where human capabilities\u2014creativity, critical thinking, emotional intelligence, and ethical judgment\u2014are increasingly valuable.<\/p>\n\n\n\n

Google exemplifies this approach with its hiring process, prioritizing employees who fit its innovative culture. Despite being a digital company, Google understands that its future products will be shaped by the right employees, not AI, as these individuals offer what computers cannot. Google’s commitment to diverse perspectives enhances its innovativeness, with 34% of its 2023 hires from underrepresented groups in tech. The company also acquires startups, like DeepMind in 2014, to bring specialized expertise into its ecosystem.<\/p>\n\n\n\n

In the AI era, hiring the right people is critical as work evolves. Organizations must attract individuals who can effectively collaborate with AI, leveraging technologies to enhance their creativity and productivity instead of being replaced.<\/p>\n\n\n\n

Creating a Culture for Innovation<\/strong><\/p>\n\n\n

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The fourth factor essential for company innovativeness is creating an organizational culture that systematically fosters and supports innovation. Culture encompasses the shared values, beliefs, and behaviors that shape how people work together and make decisions, and it can either enable or inhibit innovation, regardless of the technologies available.<\/p>\n\n\n\n

Zara exemplifies how culture drives innovation. The company revolutionized fashion with its fast fashion approach, fostering a “speed-first” mindset throughout. Zara’s design cycle is notably short, taking just 2-5 weeks from concept to store shelves, unlike the industry’s several months. This quick turnaround encourages collaboration across design, production, and distribution. In the AI era, Zara integrates AI to enhance its innovative culture, using AI-powered trend forecasting and generative AI to help designers rapidly conceptualize new products, significantly reducing time-to-market.<\/p>\n\n\n\n

Creating a culture for innovation in the AI era requires balancing technological capabilities with human creativity and collaboration. Organizations must foster environments where AI is viewed as a partner in the innovation process rather than a replacement for human ingenuity.<\/p>\n\n\n\n

Conclusion<\/strong><\/p>\n\n\n\n

These four factors\u2014commitment to new ideas, pioneering leadership, hiring the right talent, and fostering an innovative culture\u2014create a system that drives company innovativeness. In the AI era, these human and organizational aspects are increasingly vital as technology becomes more accessible. Companies that thrive understand that innovativeness is a mindset issue, not a technological one, and that AI facilitates innovation rather than replaces the human capabilities behind it.<\/p>\n\n\n\n

If you are also interested in the field of company innovativeness, we would like you to consider submitting to the upcoming special issue in the Journal of Service Management (JOSM). More information here<\/a>.<\/em><\/p>\n\n\n\n

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Werner Kunz<\/strong>
Professor of Marketing \u2013 University of Massachusetts Boston
Director of the digital media lab

Reference:<\/strong><\/p>\n\n\n\n