New research from Accenture finds that European companies could generate up to $3.2 trillion in additional revenue by 2024 if they were to close the technology deficit against their counterparts in North America (NA).

Closing the technology deficit would require European companies to take a different approach, by improving technology experience in their boardrooms, accelerating R&D investment to pursue new business models, while capitalizing on their skilling strengths.

According to Accenture’s “Innovate or Fade” report, the projected additional revenue for European corporates represents an increase of up to 12% of revenues in 2023 and of up to 13% of revenues in 2024.

The report, which includes an analysis of technology experience  in boardrooms of nearly 2,000 of the largest companies in the world, found that only 14.4 percent of board members of the European companies analysed have technology experience, compared to 21.6 percent for NA companies and 33 percent of European companies don’t have any board members with technology experience at all, compared to only 19 percent of NA companies.

In a challenging macroeconomic environment, when companies need to continuously reinvent themselves to achieve greater resilience and growth, having technology expertise at board level has never been more critical.

“Boards and CEOs used to think business strategy first, and how technology could support it second. Now it is vital they integrate technology from the very beginning when developing new products, services or business models, or companies risk losing out on billions of additional revenue.

Take the application of generative AI, for instance. The key question for leadership is how they integrate this technology to drive efficiency and growth, responsibly – having the right expertise at the very top level is critical. Improving the “technology quotient” in boardrooms and in the C-suite is key to help companies make informed decisions about how technology can propel the organization forward.

Mastering technologies such as AI, next-generation networks, edge computing and digital twins, will also be critical to the industrial reinvention, which many governments across Europe are fostering,” said Jean-Marc Ollagnier, CEO of Accenture for Europe.

Despite the tech experience gap at board level, the report found that European companies are more focused on upskilling their people in technology than their U.S. counterparts: 28% of respondents said they run a technology program across the business, while only 18% of U.S. companies do. This could help to explain why European companies seem less concerned by a tech skill shortage compared to U.S. firms.

Accelerate R&D to build future growth

According to the report, European companies allocate less of their revenues to R&D investments compared to NA and APAC companies.

What is more, this gap is widening: in 2017, the European companies analysed for the report trailed their NA counterparts by 70 basis points in terms of R&D investments as a percentage of revenue. By 2022, this gap had doubled to 140 basis points. This investment gap amounts to $147 billion in 2022.

European companies are also less likely to file AI-related patents compared to their NA and Asian peers. Accenture found that only 60% of European companies have filed patents relating to AI, compared to 77% of companies in NA and 89% of companies in Asia Pacific (APAC). Even less (34%) have filed patents in generative AI, compared to 60% in NA and 73% in APAC.

According to Jean-Marc Ollagnier, technology R&D investments are crucial to build future growth, through new products and services and new business models. For instance, to implement circular models, companies can look at how technologies such as blockchain can ensure the traceability of components and improving the transparency of the recycling process to help provide the trust that consumers expect to foster product reuse.

Technology can also play a critical role in accelerating R&D. Cloud, AI and Quantum can help accelerate drug discovery in pharmaceuticals and create more sustainable materials in chemicals. It is less the absolute amount that is invested in R&D that matters, but the portion of revenue allocated and most importantly how it is used.