Those monitoring economic megatrends would do well to look at research and development (R&D). We live in an age of unprecedented innovation. Many of the world’s biggest companies and most ubiquitous technologies were unimaginable a decade or two ago. While commodities such as oil — the engine of the economy for the last century — remain important for now, the real driver of modern economies is research and innovation, and the key to successful R&D is the good use of data.

R&D Drives Today’s Most Successful Companies

Of the top ten companies by market capitalization, seven are digital innovators (Alphabet, Apple, Facebook, Amazon, Microsoft, Alibaba and Tencent). Ten years ago only Microsoft made this list, which was then dominated by oil and gas giants. The latest list also includes Johnson & Johnson, a big investor in healthcare R&D, and Berkshire Hathaway, which had built its fortune on long-term investments in innovators.

Most of today’s top global tech companies got where they are very quickly. Their products and services are in a constant cycle of innovation to avoid being outdone by their peers or by disruptive startups. Alphabet, Apple, Facebook, Amazon and Microsoft spent over $58 billion on R&D in 2017 according to PwC. It’s not just their deep pockets that have brought success — these are digital companies built on data — using data to drive their businesses forward is in their DNA.

Data has always been collected in R&D to understand and refine new innovations — the difference now is how much and how diverse this data has become. Everything from chemical pathways to physical properties to user interaction is carefully monitored and captured. Many different sensors, from highly sensitive measurement and analytical devices in labs and testing facilities to identifying tags on products to smartphones in users’ pockets all capture data which feeds back into R&D processes. Within this data lies huge insight into the best route to the optimal outcome. The world’s most successful companies are laser-focused on finding that insight in their R&D data. Others still need to get their house in order before they can start using their R&D data effectively.

Although the digital giants are masters at data-driven innovation, companies in more established industries realize they cannot rest on their laurels and are taking inspiration from these digital leaders. Automotive companies, partly driven by the threat of disruption from upstarts like Tesla and tech companies like Google, are becoming more innovative. Similarly, renewables and energy storage are challenging fossil fuel’s dominance, driving oil and gas companies to innovate furiously.