idea generation and portfolio management - 2012 r&d innovation and production development...

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The contents of these pages are copyright © 2012 Frost & Sullivan. All rights reserved.

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2012 r&d/innovation and product development priorities survey results

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2012 survey resultsgrowth team m e m b e r s h i p™

CONTENTS

INTRO

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Survey Purpose and Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

What is the Growth Team Membership™ . . . . . . . . . . . . . . . . . . . . . . . . 5

R&D/Innovation and Product Development Overarching Challenges . . . . . . . . . . 6

Key R&D/Innovation and Product Development Challenges . . . . . . . . . . . . . . . 7SECTION

1

Respondent Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23SECTION

4

R&D/Innovation and Product Development Resource Trends . . . . . . . . . . . . . . 11SECTION

2

Special Interest Topic: Open Innovation . . . . . . . . . . . . . . . . . . . . . . . . . 17SECTION

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Growth Team Membership™ research.

Introduction

R&D/Innovation and Product Development Executive Summary

SECTION 1: Key R&D/Innovation and Product Development Challenges

Key Internal Challenge Key Internal Challenge Root CauseGenerating an accurate and relevant technology roadmap Insufficient personnel

SECTION 2: R&D/Innovation and Product Development Resource Trends

Budgets Resources Resource AllocationR&D typically has an annual budget of $20 million or more

Budgets and staffing levels will increase moderately

More resources are being allocated to short‑term, incremental innovation projects

SECTION 3: Open Innovation (OI)

OI Team Key OI Challenge External OI Sources Majority of companies have some form of OI team

Creating an effective open innovation collaboration framework

Customers are the primary source of OI ideas

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Introduction

Survey Purpose and Respondents

Co-SponsorSurvey PopulationMethodologyResearch Objective

To understand the most pressing challenges shaping R&D/innovation and product development executives’ 2012 planning

Web‑based survey platform Manager‑level and above R&D/innovation and product development executives from companies globally

353survey

respondents

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Introduction

What is the Growth Team Membership™?

GTM is a subscription program that supports executives within the functions that report to the CEO

GTM provides best practices, events, and services that enable executives to address challenges within their companies

CorporateStrategy

Corporate Development

Marketing

CompetitiveIntelligence

MarketResearch

SalesLeadership

R&D/Innovation

Investors/Finance

CEO

R&D/Innovation

CEO’s Growth Team™ GTM: Creating Client Value

GTM’s case‑based best practices help executives:

Speed the design and implementation of initiatives by not reinventing the wheel

Save money and reduce risk by avoiding mistakes made by other companies

Accelerate problem‑solving with a cross‑industry perspective

Improve their functions’ and companies’ performance and productivity

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Introduction

R&D/Innovation and Product Development Overarching Challenges Sample Solutions from GTM

Portfolio ManagementR&D/innovation executives need to develop a methodology that allows them to prioritize innovation projects based on their economic value and role in the portfolio .

Learn how ConvaTec developed a portfolio management process that makes efficient use of cross-functional governing teams and phase reviews .

Collaborative InnovationAs open innovation continues to gain momentum, R&D executives need to identify methods for collaborating with customers, adjacent businesses, and suppliers .

Learn how IBM’s executive briefing centres bring together customers, business partners, and IBM industry experts and researchers to explore how leading‑edge technologies can solve pressing business challenges .

Open Innovation and Partnerships

As R&D executives apply open innovation to their product development processes they often struggle to evaluate and establish trust with strategic partners .

Learn how our Strategic Partnerships toolkit helps you screen and evaluate potential partners based on their degree of strategic alignment and willingness to collaborate .

What’s Keeping R&D/Innovation and Product Development Executives Up at Night in 2012?

Contact us at GTMResearch@frost .com .

http://www.frost.com/prod/servlet/cpo/248798731



mailto:[email protected]

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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3

SECTION

1 Key R&D/Innovation and Product Development Challenges

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Section 1

Challenge 1 Generating an accurate and relevant technology roadmap (16%)

Challenge 2 Prioritizing innovation ideas and projects (14%)

Challenge 3 Identifying breakthrough new product ideas (13%)

Challenge 4 Allocating portfolio spend across short‑, medium‑, and long‑ term projects (9%)

Challenge 5 Measuring the success rate of your innovation projects and portfolio (10%)

Top Five R&D/Innovation and Product Development Challenges

SURVEY QUESTION: What are the top five functional challenges shaping your R&D/innovation and product development strategy?

Note: The respondents were asked to rank their top five challenges. The percentage values indicate how many respondents listed that particular challenge as their first through fifth challenge.

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Section 1

R&D’s top challenges are largely the same across business models

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

Note: The respondents were asked to rank their top five challenges. The percentage values indicate how many respondents listed that particular challenge as their first through fifth challenge.

B-to-B B-to-C

Challenge 1 Generating an accurate and relevant technology roadmap (17%)

Generating an accurate and relevant technology roadmap (16%)

Challenge 2 Prioritizing innovation ideas and projects (15%) Prioritizing innovation ideas and projects (14%)

Challenge 3 Identifying breakthrough new product ideas (14%)

Maximizing portfolio value while mitigating portfolio risk (11%)

Challenge 4 Allocating portfolio spend across short‑, medium‑, and long‑ term projects (11%)

Embedding the voice of the customer into the innovation process (11%)

Challenge 5 Measuring the success rate of your innovation projects and portfolio (9%)

Measuring the success rate of your innovation projects and portfolio (10%)

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Section 1

R&D’s challenges are attributed to understaffing and ineffective or nonexistent processes

SURVEY QUESTION: Please indicate the root cause—staff, process, technology/systems, or strategic alignment—of your top five R&D/innovation and product development challenges .

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

Top Five R&D/Innovation and Product Development Challenges

Challenge 1 Generating an accurate and relevant technology roadmap Staff: Limited resources (29%)

Challenge 2 Prioritizing innovation ideas and projects Staff: Limited resources (45%)

Challenge 3 Identifying breakthrough new product ideas Staff: Limited resources (23%)

Challenge 4 Allocating portfolio spend across short‑, medium‑, and long‑ term projects

Strategic Alignment: Lack of common objectives (26%)

Challenge 5 Measuring the success rate of your innovation projects and portfolio

Process: Lack of process (42%)

Process: Ineffective process (42%)

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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3

SECTION

2 R&D/Innovation and Product Development Resource Trends

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Section 2

Most R&D/innovation budgets are over $20 million

2012 R&D/Innovation and Product Development Budgets (By Business Model)

SURVEY QUESTION: Which of the above ranges (in $USD) best describes your 2012 total R&D/innovation and product development budget (all expenditures on R&D/innovation and product development activities and general & administrative—including staff)?

All Companies B‑to‑B Companies B‑to‑C Companies

F

F

F

F

F F

F

0%

10%

20%

30%

40%

25%

16%

7%

13%15%

13%

5% 5%

11%9%

7%

11%

29%

33%

21%

10%

13%

5%

10% 10%

31%

The red percentages are for all respondents .

$500,000 to $999,999

Below $500,000 $1 Million to $2.99 Million

$3 Million to $4.99 Million



$20 Million or more

percentage of company revenue allocated to r&d

Companies dedicated approximately 5% of their 2011 revenue to their 2012 R&D/innovation and product development budgets.

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Section 2

All Companies

B-to-B Companies

B-to-C Companies

R&D executives are increasing budget allocations to short- and medium-term innovation projects in 2012

Change in Portfolio Allocations (By Business Model)

SURVEY QUESTION: In comparison to 2011, your 2012 R&D/innovation and product development budget for each of the above project categories will…

57%

30%

13%

INCREASE

STAY THE SAME

DECREASE

INCREASE

STAY THE SAME

DECREASE

INCREASE

STAY THE SAME

DECREASE

45%

40%

15%

25%

46%

29%

28%

48%

24%

56%

31%

13%

44%

45%

11%

22%

55%

23%

28%

54%

18%

58%

29%

13%

48%

32%

20%

31%

36%

33%

28%

41%

31%

Short-Term, Incremental Innovation

(adoption within 2 years)

Medium-Term Innovation (adoption in 2 to 4 years)

Long-Term Innovation(adoption in 4 to 10+ years)

Disruptive Technologies

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Section 2

R&D executives foresee additional staff in 2012

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

SURVEY QUESTION: In comparison to 2011, your 2012 R&D/innovation and product development staffing will…

13%

3%

4%

38%

40%

Stay the Same

Decrease Moderately

Decrease Substantially Increase Substantially

Increase Moderately

All Companies

B-to-C Companies

B-to-B Companies

18%

1%

31%44%

Stay the Same

Decrease Moderately


Increase Substantially

Increase Moderately

6% 6%

6%

41%

40%

9%

Stay the Same

Decrease Moderately

Decrease Substantially

Increase Moderately

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Section 2

R&D/innovation budgets are expected to increase in 2012

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

SURVEY QUESTION: In comparison to 2011, your 2012 R&D/innovation and product development budget will…

11%

2%3%

32%47%Stay the Same

Decrease Moderately

Decrease Substantially Increase Substantially Increase Substantially

Increase Moderately

All Companies

B-to-C Companies

B-to-B Companies

16%

2%

32% 39%

Stay the Same

Decrease Moderately


Increase Moderately

5%7%

11%

29%

55%

9%

Stay the Same

Decrease Moderately Decrease Substantially

Increase Moderately

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Section 2

Most respondents rate their R&D functions as “Above Average”

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

SURVEY QUESTION: How would you rate the performance or effectiveness of your function compared to others within your industry?

All Companies B-to-B Companies

B-to-C Companies

3% 2%

2%

4%

1%

45% 42%

51%

38% 43%

33%

12% 11%

13%

Above AverageAbove Average

Above Average

Exceptional Exceptional

Exceptional

Below Average

Poor

Poor

Below Average

Below Average

Average Average

Average

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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3SECTION

3 Special Interest Topic: Open Innovation

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Section 3

Respondents in B-to-B companies are more likely to have a dedicated OI team within R&D than their B-to-C peers

OI Teams Within R&D (By Business Model)

SURVEY QUESTION: Do you have staff dedicated to open innovation? If so, which of the above best describes your open innovation team structure?

Yes YesYes

B-to-C CompaniesAll Companies B-to-B Companies

OI Team StructureSub‑group within R&D/product development (34%)

OI Team StructureSub‑group within R&D/product development (37%)

OI Team StructurePart‑time technology scout(s) within R&D/product development (35%)

60%53%56%

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Section 3

Companies tend to have a small number of staff assigned to open innovation (OI)

Number of OI Staff (By Business Model)

SURVEY QUESTION: Approximately how many people in your company are assigned to open innovation?

All Companies B-to-B Companies B-to-C Companies0

3

6

4

3 3

This graph represents the median value for the number of OI staff .

Number of OI Staff

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Section 3

R&D executives struggle to secure buy-in and develop a framework for open innovation

Top Five Open Innovation Challenges (By Business Model)

SURVEY QUESTION: Rank the above open innovation challenges in order of importance .

Overcoming the fear of lost IP and competitive advantage (12%)

Assessing the viability of a potential partner (13%)

Overcoming the fear of lost IP and competitive advantage (14%)

Creating a shared understanding of the challenge(s) to be addressed through open innovation (16%)

Creating a shared understanding of the challenge(s) to be addressed through open innovation (15%)

Creating mutually agreed‑upon key performance indicators (15%)

Developing a process to assess innovation concepts’ feasibility (20%)

Garnering the internal resources needed to test innovation concepts’ feasibility (17%)

Developing a process to assess innovation concepts’ feasibility (15%)

Garnering the internal resources needed to test innovation concepts’ feasibility (26%)

Assessing the viability of a potential partner (12%)

Establishing buy‑in internally for open innovation (12%)

Fostering trust between your employees and strategic partners (13%)

Establishing buy‑in internally for open innovation (12%)

Creating an effective open innovation collaboration framework (20%)




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Section 3

Open innovation is primarily used to generate new ideas

Use OI in the Product Development Cycle (By Business Model)

SURVEY QUESTION: During which stage(s) of the product development process does your company use open innovation (check all that apply)?

All Companies

33% 24% 25% 5%

B-to-B Companies

35% 25% 23% 6%

B-to-C Companies

37% 28% 34% 6%

Idea generation Idea screening Concept testing and development Product launch

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Section 3

Customers are the primary source of open innovation submissions

Top Three OI Sources (By Business Model)

SURVEY QUESTION: Please rank your top three sources of open innovation ideas .

Academia (25%)

Customers (34%)Customers (47%)

Adjacent businesses (24%)

Adjacent businesses (16%)

Customers (40%)

Adjacent businesses (27%) Academia (24%)

Suppliers (16%)


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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3

SECTION

4 Respondent Demographics

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Section 4

Respondent Demographics

SURVEY QUESTION: Please indicate the type of enterprise, business model, and revenue that best represents your company .

N = 303

N = 308N = 316

Enterprise Type Business Model

Company Revenue

42%

3% 6%6%

3%

40%25%

14% 61%

Public

Private

Hybrid

B-to-B Company

Venture Capital

Government/Public Sector

Not for Profit

0%

25%

50%

32%

20%

7%

25%

16%

Below $100 Million



$1 Billion to $11 Billion

More than $11 Billion

B-to-C Company (Indirect)

B-to-C Company (Direct)

The majority of the respondents come from B‑to‑B companies .

Most of the respondents work in privately held companies .

25




Section 4

Chemicals, Materials, and Food

SURVEY QUESTION: Please indicate which region you are located in and which industry categories best describe your company (check all that apply) .

Respondent Demographics: Region and Top Five Participating Industries

N = 313

N = 313

0% 15% 30%

26%

24%

20%

19%

18%

IndustriesRegion

Americas

Middle East Africa

Asia Pacific

Europe

Energy and Power Systems

Healthcare and Life Sciences

Aerospace and Defence

Information and Communication Technologies

46%

21%

3% 3%

27%

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