2011 Global R&D Innovation and Product Development Priorities Survey Results

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2011 R&D/Innovation and Product Development Priorities Survey Results

Global

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . 2What is the Growth Team Membership™ . . . . . . 3Survey Purpose and Respondents . . . . . . . . . . . . . 4

External Factors Shaping R&D/Innovation and Product Development Strategies . . . . . . . . . . 5

Key R&D/Innovation and Product Development Challenges . . . . . . . . . . . . . . . . . . . . 9

R&D/Innovation and Product Development Effectiveness and Expenditures . . . . . . . . . . . . . . 14

Open Innovation and Crowdsourcing . . . . . . . . . 20R&D/Innovation and Product Development Overarching Challenges . . . . . . . . 26

Respondent Demographics . . . . . . . . . . . . . . . . . 27

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2011 survey resultsgrowth team m e m b e rs h i p™

Source: Growth Team Membership™ research.

Key Internal Challenge Internal Challenge Root CauseThe challenge is prioritizing innovation ideas and projects The challenge’s root cause is limited staff

R&D Budget ResourcesOn average companies allocate 6% of their revenue to R&D/Innovation budgets

R&D/Innovation budgets are expected to increase moderately, yet staffing will remain static in 2011

Open Innovation Challenge Crowdsourcing and InnovationThe challenge is creating an effective Open Innovation collaboration framework

Respondents primarily use Crowdsourcing for ideation

Main External FactorThe primary factor influencing R&D planning is the need for new products and services

Executive Summary

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Survey Purpose and Respondents

In Cooperation withSurvey PopulationMethodologyResearch Objective

To understand the most pressing external and internal challenges shaping R&D/Innovation and product development executives’ 2011 planning .

Web-based survey platform Target respondents were Manager level and above R&D/Innovation and product development executives from companies globally .

185survey

respondents

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External Factors Shaping R&D/Innovation and Product Development Strategies

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Strategic planning for R&D is heavily influenced by demands for new products and renewed access to capital

Top Three External Factors

Survey Question: Please specify the Top Three external factors shaping your R&D/Innovation and product development strategy in 2011 .

External Factor 1 Need for product and services innovation (33%)

External Factor 2 Access to capital/capital markets (12%)

External Factor 3 Demand for “green/sustainable” products and services (12%)

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B-to-B B-to-C Hybrid

External Factor 1 Need for product and services innovation (32%)

Need for product and services innovation (47%)


External Factor 2 Access to capital/capital markets (14%)

Increasing number of competitors (15%)

Government regulation and policy (14%)

External Factor 3Demand for “green/sustainable” products and services (14%)

Decreasing customer willingness to pay [downward price pressure] (20%)

Access to capital/capital markets (16%)

R&D executives across the board are under pressure to deliver new products and services

Top Three External Factors (By Business Model)

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External Factors Impact on R&D/Innovation and Product Development

Survey Question: Please indicate if the following factors present a challenge or an opportunity for your 2011 R&D/Innovation and product development strategy .

Opportunities for R&D/Innovation and

Product Development


Access to capital/capital markets (58%)

Demand for “green/sustainable” products and services (79%)

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Key R&D/Innovation and Product Development Challenges

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Key R&D/Innovation and Product Development Challenges Snapshot

Prioritizing innovation ideas and projects

Challenge 1

Identifying breakthrough new product ideas

Challenge 1

Prioritizing innovation ideas and projects

Challenge 1


Challenge 3

Monitoring regulations, government policies, and industry standards

Challenge 3

Managing without a formal process for ideation and idea execution

Challenge 3

Matching innovation projects to unmet customers needs

Challenge 2

Matching innovation projects to unmet customers needs

Challenge 2


Challenge 2

All Companies B-to-B Companies B-to-C Companies

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Respondents’ challenges concentrate on filling, evaluating, and prioritizing the new product pipeline

Top Five Key R&D/Innovation and Product Development Challenges

Survey Question: Please indicate the top five functional challenges shaping your R&D/Innovation and product development strategy in 2011 .

Challenge 1 Prioritizing innovation ideas and projects (18%)

Challenge 2 Matching innovation projects to unmet customers needs (11%)

Challenge 3 Identifying breakthrough new product ideas (13%)

Challenge 4 Generating an accurate and relevant technology roadmap (11%)

Challenge 5 Managing an open innovation process successfully (9%)

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Respondents’ challenges vary by business model

Top Five R&D/Innovation and Product Development Challenges (By Business Model)


Challenge 1 Identifying breakthrough new product ideas (19%)

Prioritizing innovation ideas and projects (44%)

Measuring the ROI of your innovation projects and portfolio (17%)

Challenge 2Matching innovation projects to unmet customers needs (11%)

Identifying breakthrough new product ideas (22%)

Streamlining research, design and development activities to create cost efficiencies (12%)

Challenge 3Monitoring regulations, government policies, and industry standards (9%)

Managing without a formal process for ideation and idea execution (25%)

Embedding the voice of the customer in innovation processes (15%)

Challenge 4Generating an accurate and relevant technology roadmap (13%)

Monitoring regulations, government policies, and industry standards (25%)

Matching innovation projects to unmet customers needs (13%)

Challenge 5Finding viable new applications for existing products/capabilities (8%)

Managing an open innovation process successfully (25%)

Managing an open innovation process successfully (15%)

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Challenge 1Prioritizing innovation ideas and projects

Staff: Limited resources (43%)

Challenge 2Matching innovation projects to unmet customers needs


Challenge 3Identifying breakthrough new product ideas


Challenge 4Generating an accurate and relevant technology roadmap

Process: Lack of process (31%)

Challenge 5Managing an open innovation process successfully


Survey Question: Please indicate if the root cause of your top five functional challenges are—staff, process, technology/systems, or strategic alignment .

R&D/Innovation challenges are predominately caused by insufficient staff

Root Cause of Top Five R&D/Innovation and Product Development Challenges

Top Five R&D/Innovation and Product Development Challenges

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R&D/Innovation and Product Development Effectiveness and Expenditures

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R&D/Innovation and Product Development Expenditures and Effectiveness Snapshot

Respondents rank their R&D/Innovation function’s effectiveness as “Average”

Allocate 6% of their revenue to the R&D budget

Respondents expect their staffing levels to stay the same in 2011

Respondents expect their R&D/Innovation budgets to increase moderately in 2011

Respondents rank their R&D/Innovation function’s

effectiveness as “Above Average”


Respondents expect their staffing levels to increase moderately or stay the same

in 2011


Respondents rank their R&D/Innovation function’s

effectiveness as “Above Average”


Respondents expect their staffing levels to stay the same in 2011



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8%

23%

11%

14%

43%

36%

22%

22%33%

12%

38%

44%

9%

33%

39%

Respondents from B-to-B companies are more likely to rate their function’s effectiveness as “Above Average”

R&D/Innovation and Product Development’s View of Its Effectiveness (By Business Model)

Survey Question: Please assess the overall effectiveness of your R&D/Innovation and product development function compared to those in other firms within your industry .

All Companies B-to-B Companies

Hybrid Companies B-to-C Companies

Above AverageAbove Average

Above AverageAbove Average

Exceptional Exceptional

Exceptional

Exceptional

Below Average

Below AverageBelow Average

Average

Average

Average

Average

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0%

5%

10%

15%

5%

6%

10%

Hybrid companies tend to allocate almost twice the average percentage of revenue assigned to R&D budgets

2010 R&D/Innovation and Product Development Budgets as a Percent of Revenue (By Business Model)

Survey Question: Please provide your 2010 total R&D/innovation and product development budget as a percentage of total company revenue:

B-to-B Companies

B-to-C Companies

Hybrid Companies

All Companies6%

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3%

9%

14%

8%

4%

36%

37%

39%39%

78%

11%

11%

10%

9%

10%

42%

40%

In general, respondents anticipate no additional staffing in 2011

R&D/Innovation and Product Development Staffing 2011(By Business Model)

Survey Question: In comparison to 2010, your 2011 R&D/Innovation and product development staffing will:



Stay the SameStay the Same

Stay the Same Stay the Same

Decrease Moderately

Decrease Substantially Decrease Substantially

Decrease Moderately

Decrease Moderately

Increase Substantially Increase Substantially

Increase SubstantiallyIncrease Substantially

Increase Moderately Increase Moderately

Increase Moderately

Increase Moderately

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Respondents indicate that budgets will increase moderately in 2011

R&D/Innovation and Product Development Budget 2011(By Business Model)

Survey Question: In comparison to 2010, your 2011 R&D/Innovation and product development budget will:

3%

7% 5%5%

11% 11%11% 11%

27% 22%

50%

51%

50%

56%

30%

11% 10%

29%



Stay the Same Stay the Same

Stay the SameStay the Same

Decrease Moderately

Decrease Substantially Decrease Substantially

Decrease Moderately

Decrease Moderately Decrease Moderately

Increase Substantially Increase Substantially

Increase SubstantiallyIncrease Substantially



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Open Innovation and Crowdsourcing

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Open Innovation and Crowdsourcing Snapshot

Primary Open Innovation challenge is creating an effective

collaboration framework

Challenge 1

Primary Open Innovation challenge is overcoming the fear of lost IP

and competitive advantage

Challenge 1

Primary Open Innovation challenge is establishing buy-in internally

Challenge 1

Formal networks (such a suppliers and partners) are the primary form

of crowdsourcing used

Challenge 2

Formal networks (such a suppliers and partners) are the primary form

of crowdsourcing used

Challenge 2

Specialized vendors created to foster open innovation are the

primary form of crowdsourcing used

Challenge 2


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Creating the initial framework for collaboration and establishing clear communications are the predominant challenges associated with Open Innovation

Top Four Challenges of Open Innovation

Survey Question: Please rank the following Open Innovation challenges in order of importance .

Challenge 1 Creating an effective Open Innovation collaboration framework (28%)

Challenge 2 Generating a sustainable level of trust among strategic partners (22%)

Challenge 3 Establishing buy-in internally for Open Innovation (20%)

Challenge 4 Creating a shared understanding of the problem to be addressed through Open Innovation (25%)

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The challenges of Open Innovation are consistent across business models but ranking varies

Top Four Challenges of Open Innovation (By Business Model)


Challenge 1Overcoming the fear of lost IP and competitive advantage (31%)

Establishing buy-in internally for Open Innovation (33%)

Creating an effective Open Innovation collaboration framework (26%)

Challenge 2Generating a sustainable level of trust among strategic partners (20%)

Creating an effective Open Innovation collaboration framework (13%)

Generating a sustainable level of trust among strategic partners (24%)

Challenge 3Creating an effective Open Innovation collaboration framework (22%)

Generating a sustainable level of trust among strategic partners (43%)

Establishing buy-in internally for Open Innovation (27%)

Challenge 4

Creating a shared understanding of the problem to be addressed through Open Innovation (26%)

Overcoming the fear of lost IP and competitive advantage (50%)

Creating a shared understanding of the problem to be addressed through Open Innovation (23%)

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0%

20%

40%

37%

18%

33%

21%

13%

9%

27%

6%

28%

10%

6%7%

33%

16%

24%

9%

Crowdsourcing is used primarily to develop initial ideas for innovation

Crowdsourcing in the Innovation Lifecycle (By Business Model)

Survey Question: Please indicate if your company uses crowdsourcing in the following product/service development activities (click all that apply) .

The red percentages are for all respondents .

Idea Generation Idea Screening Concept Testing and Development

Product Launch

All Companies B-to-B Companies B-to-C Companies Hybrid Companies

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0%

30%

60%

90%

43%

13%

33%

8%

88% 89%

38%

25%

32%

4%0%

7% 8%6%

20%

36%34%

4%

12%

5%

Respondents in B-to-C companies employ specialized vendors—such as Six Sigma—for crowdsourcing

Crowdsourcing Tactics (By Business Model)

Survey Question: Please indicate the types of Crowdsourcing your company uses in its product development process (click all that apply) .

The red percentages are for all respondents .

Formal Networks Open Networks (e.g. Six Sigma)

Customer/Consumer Surveys, Focus Groups,

or Workshops

Public Contests Social Media

All Companies B-to-B Companies B-to-C Companies Hybrid Companies

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Overarching Challenges Sample Solutions from the Growth Team Membership

Assessing New Product Ideas

Staffing limitations and increasing demand for new products and services require R&D/Innovation executives to develop a system to examine and prioritize ideas and projects based on their potential value .

Learn how our New Product Development toolkit enables strategic analysis of all factors that could influence demand for new products/services and examines operational and organizational potential to support the development and launch of an innovation concept .

Voice of the Customer

R&D/Innovation executives have to develop products that address unmet customer needs .

Learn how Tandberg used customer-segmentation to embed the voice of the customer in its innovation process .

Collaborative Innovation R&D/Innovation executives seek to use collaborative innovation with external parties—particularly for ideation and concept testing—yet struggle with implementing a collaborative innovation process .

Learn how IBM implemented a collaborative innovation program to test early stage innovations and speed the innovation commercialization process .

The Growth Team Membership™ (GTM) is an annual subscription program that supports executives in Marketing, Sales Leadership, Corporate Strategy, Corporate Development, R&D/Innovation, Market Research, and Competitive Intelligence . GTM offers best practices research, events, and services to address the internal challenges executives face . Contact us at GTMResearch@frost .com .

The Top Overarching Challenges Affecting R&D/Innovation and Product Development Executives

what’s keeping r&d/innovation and product development executives up at night in 2011?

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Respondent Demographics

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Respondent Demographics

Survey Question: Please indicate the type of enterprise best represents your company .

N = 178

N = 179N = 179

Enterprise Type Business Model

Company Revenue

43%

6%

51%

30%

61%

9%

Public

Hybrid Company

Private B-to-B Company

Venture Capital

0%

30%

60%

36%

12%

7%

28%

14%

Below $100 Million

$100 Million to $499.99 Million

$500 Million to $999.99 Million

$1 Billion to $11 Billion

More than $11 Billion

B-to-C Company

The majority of the respondents work in B-to-B companies .

The majority of the respondents work in a private company .

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Respondent Demographics: Region and Top Six Participating Industries

N = 179

N = 179

Automotive and Transportation

Energy and Power Systems

Environmental and Building Technologies

Information and Communication

Technologies

Chemicals, Materials, and Food

Healthcare and Life Sciences

0% 10% 20% 30%

26%

25%

22%

14%

14%

14%

Industries Region

1%

49%47%

1%2%

Americas

Europe

Middle East

Asia PacificOther

2011 Global R&D Innovation and Product Development Priorities Survey Results

Business

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