What are the most innovative industries?

But which industries are pushing boundaries the fastest? Below, we explore some of the most innovation-driven sectors shaping progress today.

Technological developments continue to accelerate innovation across almost every industry. From automation and AI to advanced materials and clean energy systems, businesses are using new tools and ideas to drive efficiency, strengthen supply chains and respond to rapidly changing customer expectations.

Some industries naturally evolve faster than others, typically because they depend on new knowledge, scientific advances, or technological breakthroughs to stay competitive. Below are some of the sectors where innovation is having the biggest impact.

Manufacturing

Whether it be clothes, cosmetics, or hardware, manufacturing businesses have seen a gradual boom in recent years due to ever-increasing demand. With the likes of new agricultural equipment improving the efficiency of farming and automation decreasing the time and cost of new technology developments, manufacturing has seen an exponential change throughout both the 20th and 21st centuries.

Innovation has broken through into the manufacturing industry via:

• 3D printing/additive manufacturing for rapid prototyping and low-waste production
• AI-powered virtual manufacturing tools that optimise processes and predict maintenance needs
• Automated sensors, robotics and smart factory systems to reduce errors and improve safet
• Advanced materials and composites improving durability and sustainability

The most innovative manufacturing companies have seen a 38% growth rate across a three-year period.

In the UK, the manufacturing industry has seen an average increase of 1.4% per annum since 1948. It has also seen some of the most rapid technological developments of any industry, leading it to grow to meet the demands of consumers and shareholders — placing emphasis on the significance of industry innovation.

It has been found that the most innovative manufacturing companies have seen a 38% growth rate across a three-year period, in comparison to their peers settling with outdated processes, only achieving an average of 12% growth in the same period.

With such a startling difference between the two demographics of the manufacturing industry, the need for development becomes apparent in the battle to ensure longevity, profitability, and sustainability. With these goals in sight, the manufacturing industry is likely to continue striving towards industry innovation to further its efficiency and continue meeting consumer demand.

Information and communication (ICT)

Information and communication-based businesses are the foundations of modern technology and provide a systematic infrastructure to almost every business. Yet, without consistent industry innovation, the ICT industry would fail to meet the progressive need for up-to-date and innovative technology.

With a majority of industries now relying on technological data transfers and information gathering, the revolution within the ICT industry is both unsurprising and a necessary asset to the working world. The ICT industry has revolutionised itself by actively keeping up with new technology and ensuring that adaptation is prioritised in a consistent effort to support the relevant technology and business systems.

Examples of innovation in ICT include:

• cloud computing and virtualised environments
• AI and automation tools that streamline workflows and decision making
• cyber security technologies that protect data and infrastructure
• high-performance networks enabling the expansion of the digital economy

As 59.5% of the world now has access to the internet, with 70% of young people relying on connectivity, the digital ‘economy’ has now amassed an estimated value of $11.5 trillion across the globe, growing two and a half times faster than the global GDP across the past 15 years.

This rapid shift in value is due to the relevance of technology in our daily lives. As developers, technicians, and similar roles consistently create new contributions to industry innovations, the ICT industry will continue to grow at unprecedented levels.

Retail and e-commerce

Perhaps one of the biggest industries globally, retail trade has seen enormous growth across the past few decades, seeing a 100% increase in sales per annum in the UK since 1989. As technology has pushed the boundaries of retail as a concept, consumers are buying at an unparalleled level to what they were in previous years.

The retail industry has massively developed and benefitted from:

• Innovative retailers have embraced:
• same-day delivery and advanced logistics
• automated checkouts and seamless payment technology
• AI-driven customer service and personalised recommendations
• sophisticated supply chain management systems

In fact, online retail has grown at an astronomical rate, dwarfing in-store sales percentages, rising from a humble 3.4% of all retail spending in 2007 to a substantial 27.9% as of 2020. The growth in retail trade is not just limited entirely to the integration of technology. Retail trade has also seen an increase in relevance due to the average household income increase of 7% since 2011, thus increasing disposable income.

As disposable income increases and the rapidly growing accessibility to e-commerce is present in a majority of households, the retail trade industry is able to take advantage of these new economic changes.

However, the COVID-19 pandemic has inhibited the growth of in-person retail globally across the past year. Yet e-commerce has been an integral industry innovation that has led to the UK dominating online purchasing throughout the pandemic — securing the value of the industry.

With these industry innovations and economic changes likely to continue in the coming years, the retail trade is set to continue along its growth trajectory, with e-commerce continuing to dominate.

Industry innovation isn’t limited to just technological advances, but through the implementation of new systems, processes, services, or products; or the development of existing ones.

Advanced manufacturing and engineering

Advanced manufacturing combines engineering expertise with cutting-edge technologies such as robotics, automation, digital twins, material science and modern methods of construction.

Areas of rapid innovation include:

• autonomous and robotic assembly systems
• low-carbon manufacturing processes
• sensor-driven monitoring for predictive maintenance
• simulation and digital modelling to reduce waste and improve safety
  

These sectors are central to the UK’s growth ambitions, especially in aerospace, automotive, defence and industrial engineering.

Clean energy and environmental technologies

The transition to net zero is driving innovation across clean energy. As the UK works toward long-term climate goals, businesses across the sector are developing new ways to produce, store and use energy more sustainably.

Examples include:

• hydrogen production and distribution technologies
• battery innovation and grid storcarbon capture and resource recovery systems
• renewable energy devices and efficiency enhancements
  

Clean energy innovation is becoming essential for companies seeking to reduce carbon emissions, lower operating costs and develop sustainable products and services.

Agritech and food innovation

Agriculture is transforming rapidly through technology, data and sustainable practices. Agritech companies are developing tools and systems that enhance productivity, resilience and environmental performance.

Innovations include:

• precision farming and real-time data monitoring
• robotics for harvesting and crop management
• controlled-environment agriculture and vertical farming
• advanced breeding technologies and sustainable inputs
  

Agritech plays a critical role in food security, biodiversity, resource management and rural economic growth.

Professional, Scientific and Technical Services

This broad category includes scientific R&D, engineering design, architectural services, consultancy and technical advisory work. These businesses are often central to innovation across other industries, helping organisations test, validate, commercialise and scale new ideas.

Innovation is driven by:

• scientific discovery and experimentation
• advanced modelling and simulation
• digitalisation of complex knowledge work

• bespoke problem-solving for clients across multiple sectors

With strong links to universities, research institutes and commercial partners, this sector continues to be one of the UK’s biggest contributors to formal R&D activity.

Why is innovation beneficial for every industry?

Whilst these industries have massively benefited from industry innovation — these are not the only businesses thriving due to the same factor. Innovation can be seen in any industry.

Businesses across every sector regularly strive towards creating a more innovative workplace due to the ever-growing demands of consumers and the rapid technological developments that remap the way industries need to operate.

Business innovation may take time and additional funds to support the respective business’ aspirations, however, there are innovation incentives available for the businesses who take the plunge.

Whether technology plays a greater role in the workplace, higher education training increases, products develop to optimal levels, or systems throughout the business change — industry innovation is rewarded and vital for progressive change.

Also explore our tips on the four types of innovation and the problems they can help your business solve.

What qualifies as innovation?

Now that you know the most innovative industries, you may be wondering how your business can innovate in line with industrial development and change.

Industry innovation isn’t limited to just technological advances, but through the implementation of new systems, processes, services, or products; or the development of existing ones. In doing so, businesses are able to pioneer in industry innovation and demonstrate their capability against competing firms.

Whilst innovation may seem to be a complex task, there are UK government incentives to help relieve the financial burden of company-wide innovation. Through R&D tax credits, businesses that are consistently demonstrating signs of innovation may qualify for innovation tax relief and similar innovation incentives. These can help reduce the volume of tax a business pays to the government, whilst also receiving additional tax relief to compensate for their efforts.

Three core sectors: Manufacturing, Professional, Scientific and Technical, and Information and Communication, current make up the vast majority of claims, totalling 66% in 2018-19, whilst all other sectors continue to rise as awareness of the scheme grows.

Find out if you qualify for innovation incentives

Here at Kene, we can introduce you to the world of innovation tax relief. Limited companies of all sizes and all industries can massively benefit from R&D tax credits, which can be provided to a business through direct cash deposits or a corporate tax reduction.

In doing so, the UK government is actively acknowledging the industry innovation of businesses and rewarding them for pioneering change. If you want to determine your eligibility, here is our quick and easy test to see if your business qualifies for R&D tax credits or other innovation incentives.