How strong is the capability for innovation in German companies today, and what is needed to strengthen this? The German Innovation Spotlight 2026 survey is based on an online questionnaire jointly designed and conducted by the Fraunhofer Group for Innovation Research and the German Design Council. The study examines the key levers of innovation capability—from strategy and innovation culture to digitalization and artificial intelligence, and on to sustainability, skilled labor and location conditions. The results show that the willingness to innovate is strong among companies surveyed, yet there is considerable room for improvement in the underlying structures.
The Innovation Ambition-Execution Gap: Ad hoc processes hinder innovation
Innovation is highly valued in German companies. Nearly 85 percent of the companies surveyed describe innovation as important or even essential to survival. Almost three-quarters have embedded innovation in their corporate strategy. However, the willingness to innovate is often stronger than the systems that support it. Slightly more than half of the participating companies manage innovation through clearly defined processes, and only just under a third use key performance indicators. What is often missing is not only established processes and meaningful metrics, but also a solid data foundation and systematic methods to make innovation effective in the long term. This is particularly evident in the use of AI in the innovation process.
The AI Trap: Can digitalization and AI make companies more innovative?
Digitalization, along with machine learning and artificial intelligence, is among the technological trends shaping companies’ innovation capability more strongly than ever today. By their own accounts, 94 percent of the companies surveyed have already implemented digitalization processes, at least in part. While nearly 70 percent already use AI in idea generation and concept development, data quality, standards and accessibility still fall short. Only around a third of respondents consider their data foundation to be adequate. This underlying data is the base for building and leveraging AI-based competitive advantages. “Many companies know very precisely where the potential lies. What will be crucial is whether individual innovation initiatives can be turned into robust systems that permanently bring together speed, technology, data, and user focus,” explains Sven Schimpf, Managing Director of the Fraunhofer Group for Innovation Research.
Better conditions strengthen innovation capability
The clearest potential for development lies in the areas of sustainability, skills development and decision-making speed. Only 28 percent of the companies surveyed reported that sustainability is firmly embedded in their innovation strategy. Innovation requires structures that provide clear direction and enable fast decision-making, as well as leadership that actively supports them. Many organizations still lack these prerequisites. Innovation does not come from ideas alone, but from integrated systems that effectively connect strategy, data, processes, competencies and design.
Innovation research at five Fraunhofer Institutes
The Fraunhofer Group for Innovation Research brings together the expertise of five Fraunhofer Institutes with more than 1,200 employees. As a research partner offering a unique combination of socioeconomic and sociotechnical research, it guides companies through process and transformation initiatives and offers a wide range of innovation methods. The study was conducted in cooperation with the German Innovation Award of the German Design Council. Sven Schimpf, Managing Director of the Fraunhofer Group for Innovation Research, first presented the study on May 5, 2026, at the German Design Council’s German Innovation Awards ’26.
Fraunhofer Group for Innovation Research