Companies need new ways to innovate faster, cheaper, and more productively. Naturally, many companies are wondering how adopting AI can help. To explore this, we surveyed how companies are using AI for innovation and found that tools are just tools, but how organizations leverage these new tools now available to them is key to success. To explore how AI has helped innovation, the authors conducted two studies. The first was a survey of 331 companies about their process improvement and new technology development practices, and the second was a broader archival analysis of patent data on new technology development for over 2,000 publicly traded companies. The results of these studies suggest that companies that have historically focused on specific types of innovation (process innovation and recombination innovation, where companies combine different technical elements in new ways) may benefit the most from using the advanced data capabilities of machine learning and AI. Companies that use AI analytics to generate a wide range of recombinations are 3-7% more productive than those that do not. Moreover, when a company's existing knowledge is spread across the enterprise, advanced AI capabilities drive further innovation in the enterprise by approximately three new patents per year. Conversely, the use of AI is less useful for incremental innovation, or small improvements to existing products, and almost never for radical innovation.
