85% of GCC companies rank innovation as a top priority says study

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A whopping 85 per cent of senior executives in the GCC rank innovation among their organisations’ top priorities, slightly above the global average, a new study found.

Highlighting this positive trend while noting opportunities for GCC firms to enhance their innovation readiness, a new report by Boston Consulting Group (BCG) said this strong commitment to innovation reflects the region’s ambition to lead the global knowledge economy.

For its annual innovation study, ‘Innovation Systems Need a Reboot’, BCG assessed companies’ innovation maturity and surveyed senior innovation executives worldwide, including those in the GCC region.

While innovation continues to demonstrate value, the study shows that innovation systems globally need a reboot.

Innovation priority remains at an all-time high, with 83pc of global companies ranking it as a top-three priority. However, innovation readiness has sharply declined worldwide, from 20pc two years ago to 9pc last year and just 3pc this year globally.

This global trend is even more pronounced in the GCC, where firms exhibit even lower innovation readiness than the global average.

The study reveals that while GCC organisations prioritise innovation at a higher level than their global counterparts, they face greater challenges in translating that ambition into readiness.

This aligns with global patterns where companies across various regions are struggling to match their innovation priorities with practical readiness, though the gap appears more significant in the GCC.

“We are seeing GCC organisations prioritise innovation, with 85pc of executives ranking it highly. However, converting this ambition into readiness remains a challenge,” said Faisal Hamady, managing director and partner at BCG.

“To close this gap, it is crucial to strengthen the link between innovation and business strategy. Organisations must benchmark processes, align them with strategic goals, and leverage Generative AI while addressing talent constraints and rising capital costs.”

When GCC business leaders were asked to rank the challenges facing their innovation teams, talent pool constraints emerged as one of the top concerns, alongside the rising cost of capital.

“The GCC is in flux when it comes to attracting top talent,” noted Thibault Werle, who is also a managing director and partner and BCG. “The region is still in the nascent stages of building its talent pool. However, as we’ve seen with many initiatives in the GCC, if you build it, they will come. The rapid development of innovation ecosystems will likely accelerate talent attraction in the coming years.”

The study also highlighted the need for a broader ecosystem approach to innovation in the GCC, recognising the crucial role of public sector leaders and national strategies in driving innovation alongside corporate efforts.

It found that 84pc of GCC firms are starting to use Generative AI (GenAI) to drive innovation, reflecting the region’s embrace of cutting-edge technologies. However, as with global trends, most organisations are still in the early stages of GenAI adoption.

“GenAI presents a significant opportunity for GCC innovators to boost efficiency and bring fresh perspectives to their organisations,” said Mr Hamady. “As the region continues to invest in digital transformation and AI capabilities, we expect to see more widespread and sophisticated use of GenAI in innovation processes.”

BCG recommends six key areas for GCC companies to link innovation with business strategy: strong leadership commitment, a clear innovation vision aligned with company goals, focus on competitive advantages, defining specific innovation areas, optimising resource allocation, and measuring innovation’s impact on financial performance. This approach is essential for GCC companies to thrive in a dynamic market.

Looking ahead, the report concludes that as GCC economies diversify towards knowledge-based sectors, strategic innovation will become crucial. By addressing current challenges and aligning innovation with business strategy, GCC companies can compete globally and drive regional economic growth.