The Renaissance of Industry
The Singularity Think Tank Gathers for a Reality Check on Innovation — Part 2
- The winds of change in Swiss traditional companies Hochdorf and Ricola: Innovation with reason and growth with values
- Reindustrialization: Robotics and automation enable the return of Western supply chains and solve efficiency problems
- Promise and perils of Artificial Intelligence: darknet trained models pose new challenges for cybersecurity and the lines between fiction and reality are getting blurred.
The Singularity Think Tank (STT) is an international community of entrepreneurs, industry insiders, and scientists dedicated to applied innovation. It is hosted by Zurich-based investment advisory boutique The Singularity Group (TSG) which incorporates insights from the STT directly into its strategies. The STT is the only think tank in the world of its kind and size committed to feasible, applied innovation. On March 8, 2024, the STT met for an annual meeting and the subsequent semi-public “TSG Applied Innovation Day” at Zurich’s FIVE Hotel to discuss the latest developments in applied innovation. This is part two on the main discussion points and findings. (For part one, click here.)
Standing out from an industry perspective is a new-found focus on innovation for and around customer needs. Lukas Hartmann, Chief Innovation Officer at Hochdorf Nutrition AG, shared his company’s journey to switch from traditional milk processing to innovative protein extraction. In addition, the company has taken first steps towards circularity by e.g. turning former by-products such as whey into quality products. Hochdorf achieves the best added value with the production of modern infant formula like its Bimbosan brand. In addition, CEO Ralph Siegl announced his company’s new focus on innovations including vegan milk powder for chocolate production, an endeavor for which it seeks new investors: “We want to join forces with like-minded people who support the new path — and this path is customer-oriented and innovative.”
Thomas P. Meier, CEO of what is arguably one of Switzerland’s best known brands, Ricola, also placed the customer at the center in his presentation. He was arguing that attempts to innovate, whether with external or internal parties, are doomed to fail at point of sale if they do not closely align with customer needs and the core of the brand. Ricola chewing gum, for example, did not have a long shelf life. Ricola learned its lesson and is about to release a new — at this point secret — extension of the product range. In the area of sustainability, Ricola focuses on where it can have the greatest impact, and prioritizes accordingly: agriculture leads, followed by packaging and waste products. “We are small yet mighty and want to assume our responsibility,” said Meier.
A Renaissance of Quality Seals
The accelerating reindustrialization of Western countries was another pressing topic on STT’s experts’ agenda. Reindustrialization stands for the revival of Western manufacturing and industry, with a new focus on sustainability and productivity using automation technologies. The return of value chains to native, nearby, and friendly countries, or “reshoring,” has been in TSG’s sight since its launch of the Singularity Reshoring Strategy. “The COVID pandemic made the complex dependence of Western countries on global supply chains apparent to a broader public,” said Shiko Ben-Menahem, PhD, Research Director at TSG. “Western governments and companies are now reasserting control and sovereignty over supply chains, boosting demand for innovations that enable companies to reenter the manufacturing space with efficient production methods.”
Both industry participants highlighted their commitment to local production pointing to challenges when it comes to talent and costs. To counteract higher costs of production in Western countries, companies are increasingly relying on robotics and automation enhanced with artificial Intelligence. Whether it’s for optimizing logistics, improving quality, or maintenance, “countries are once again placing more emphasis on their own quality seals,” said Philipp Schmid, Head Research & Business Development, Industry 4.0 & Machine Learning at CSEM. Close to home, “made in Switzerland’ is experiencing a renaissance as the gold standard for quality, responsibility, and traceability.”
In industry, robots are increasingly equipped with sensors that give them an “awareness” of their surroundings and also allow them finer movements. “Robots are already being used on a large scale for inspections or product localisation,” explained Yulia Sandamirskaya, PhD, Head of Cognitive Computing in Life Sciences, Institute of Computational Life Sciences at ZHAW. “Currently, these are not particularly intelligent. That’s why there is a lot of focus on developing collaborative robots with AI-enhanced capabilities and an improved awareness for their environment.”
Artificial Intelligence: Triumph with Downsides
Of course, the rapid developments around AI could not be overlooked. Experts agreed that AI found its way deep into business models and applications. However, the adoption seems to have been particularly fast for large companies, which gained considerably in their competitive advantage. Both, Ricola and Hochdorf, confirm interest and likely applicability of AI into their processes and business models with the caveat that for SMEs again costs and scale represent significant bottlenecks. “Most companies are not ready to implement Generative Artificial Intelligence,” said Alexander Stumpfegger, Head of Consulting at CID. “They first have to do their groundwork in terms of digitization and data hygiene.” Consulting firms and cloud providers play a significant role in getting smaller companies started.
Access to large language models and the computing power required to train and run such models is another challenge for smaller companies. According to Simone Lionetti, PhD, Senior Research Associate at the Algorithmic Business Lab at HSLU Lucerne, these large investment requirements complicate the implementation of AI outside of the big data centers of companies such as OpenAI, Microsoft, Meta, and Google. At the moment, not many can afford to develop AI at the same level as the Tech giants, but research in open initiatives has lately picked up. He sees promising application areas in the medical field, for example, both in diagnostics and in managing the workload in hospitals.
While the promise of AI seems endless, challenges and risks loom large with the advent of new development in generative AI, such as the recent introduction of OpenAI’s Sora text-to-video model. “In the future, it will become increasingly difficult to distinguish between reality and fiction, genuine news and propaganda — in short — human-made from computer-generated content,” stated Yash Shrestha, PhD, Assistant Professor and Group Leader of the Applied AI Lab at HEC Lausanne. “This poses immense challenges to us as a society — challenges that we must solve with new monitoring technologies.” Philipp Schmid agrees there are downsides: “Today, there are already models like DarkBert or FraudGPT trained on darknet-data [the illicit part of the internet]. Where this might lead is rather unsettling to imagine.”
About The Singularity Group
The Singularity Group (TSG) quantifies applied innovation for investors in listed equities. TSG is the initiator of the Singularity Index™ (Bloomberg ticker: NQ2045), a global, all-sector benchmark and gold standard for applied innovation. The Singularity Strategies include The Singularity Fund (UCITS Lux), Singularity Reshoring(UBS AMC), and the Singularity Small&Mid (UBS AMC). The Swiss investment advisory boutique works closely with the Singularity Think Tank, a network of entrepreneurs and academics with deep insights into innovation value chains. Their input forms the foundation of TSG’s proprietary innovation scoring system that quantifies the engagement of companies within a set of curated Singularity Sectors worldwide across all market capitalizations and industries. The Singularity Innovation Score (SI-Score; see below) defines how much value listed companies are generating through applied innovation.
More: www.singularity-group.com
The Singularity Innovation Score (SI-Score): A company’s SI-Score represents the percentage of its revenues associated with innovation. It reflects a company’s ability to create innovation- versus commoditized -business and -cash flows, and its ability to participate in technological evolution. Changes in the SI-Score are just as important as the absolute value. A company’s SI-Score relative to its overall GICS sector can say a lot about the competitive standing and ability to gain and maintain market share. Regional SI-Scores can be used to evaluate the innovation power of markets as well as to gauge companies’ standing in different regions.
Innovation Revenues: 4% of a 74 trillion USD global market: In 2022, the total revenues generated by the World’s listed equities amounted to USD 74 Trillion. TSG’s unique expert-led innovation screening and scoring methodology allows us to divide that amount into innovation revenues and non-innovation revenues. In 2022, roughly 4% (USD 3 Trillion) of global revenues qualified as innovation revenues.
