R&D+I INTERNATIONAL BENCHMARK

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1 R&D+I INTERNATIONAL BENCHMARK A Research Study conducted for Inova-Ria by Digitalflow Project Team and Authors: Rui Patrício, Andrei Moraru, António Rocha, Catarina Garcia, José Cordeiro, Marcos Ribeiro, Miguel Soares and Ricardo Costa.

2 Table of Contents Table of Contents Executive Summary Introduction Innovation Management Study Objectives Research Method 9 3 Key Players Vendors Regulation, Governance and Supporting Organisations 14 4 Models and Frameworks Type of Models and Frameworks The Evolution of IM Frameworks The Interactive Channel Model Final Remarks 27 5 Software Applications Ideation Spigit Lithium Ideas Idea Management Software PIT - Innovation Factory Innovation Suite - BrightIdea IHS Goldfire - Invention Machine BrainBankinc Imaginatik s Software Hype Innovation IdeaScale Final Remarks

3 5.2 Crowdsourcing and Open Innovation Crowdicity Hypios IdeaConnection Ideaken InnoCentive Innoget NineSights Sophia Final Remarks Strategy & Assessment Innovator s DNA Impr3ove Innovation Scoring by Cotec Strategos ADL Health Check Final Remarks Intellectual Property Anaqua CPA Global Decipher DIAMS iq IPfolio IP Portfolio Lecorpio Patrawin Enterprise Thomson IP Manager Unycom IPMS Final Remarks Technology & Market Intelligence AMI Enterprise Intelligence Digimind Intelligence & Digimind Social IQ Intelligence Suite Knowledge.Works Enterprise

4 5.5.5 Final Remarks Knowledge & Collaboration Confluence Basecamp Centroy Final Remarks Best Practices and Capabilities Clusters Fundamentals Øresund Cluster 55 - Sweden and Denmark AEI Seguridad Leon Spain Silicon Valley San Francisco Bay US Innovation Management Survey About the Survey Results Final remarks Trends and Business Opportunities Top markets/regions Top Industries / Customers Top Spending by Industry Growth outlook for products and services 76 8 International Positioning Strategies Degree of Turbulence Entry Barriers for ICT companies 80 9 Main Conclusions Research Questions Vendor Selection Criteria Markets and Locations Industries and Customers 83 4

5 9.5 Products and Services State-of-the-art IM software applications State-of-the-art IM models and frameworks Clusters Experience The Voice of the Customer International positioning strategies for Portuguese ICT companies Innovation Management (IM) - Market Overview 85 Bibliography Index of Figures Index of Tables Contact

6 1 Executive Summary The R&D+I International Benchmark study was conducted for Inova-Ria - Associac aõ de Empresas para uma Rede de Inovac aõ em Aveiro (Inova-Ria) by Digitalflow (an expert firm with a strong focus on Strategic Innovation Management). It was supported by Projecto Alvos Estratégicos ( SIAC PAE) and co-funded by QREN-EU. In this study, R&D+I was defined as Innovation Management (IM) that is the discipline of managing processes to develop the product/service, process, marketing and organisational innovation. The overall purpose of the study was to generate critical knowledge on key IM players (vendors, products and services, markets/regions, industries/clients) that can support Portuguese ICT Companies in their decision-making concerning external market positioning strategy. The project team achieved its goals since all the researched questions were answered and important information was gathered and delivered. The key findings are: Products, services and frameworks: The core solutions for supporting the innovation process are to be found in the area of Strategy and Assessment, Idea Management (both generation and execution), Knowledge & Collaboration, Technology & Market Intelligence, Crowdsourcing and Open Innovation, and Intellectual Property Rights (IPR). The concepts that will acquire greater importance in the near future are Open Collaboration, Reverse Innovation, Gamification or Game Mechanics and Customer Insight. The Open Innovation model is currently the most popular amongst vendors. Vendors and markets: Industries: More than half of the vendors (from the selected sample of 150 for this study) have their head offices in the USA or Canada. Vendors with head offices in European countries account for 42%. Mapping the markets where these vendors also have international branches (moving from a national to a global distribution), only a third have their head offices and international branches in the USA and/or Canada. In this new setting, European countries account for nearly half whilst the rest of the world South America, Japan, Australia, Singapore, China account for almost 15%. The major vendors are mature and innovative firms that come from the most competitive and knowledge intensive world regions. Computing and Electronics, and Healthcare are the industries that draw the most interest in both R&D+I spending and industry distribution (customers of IM software and services). Of the USD 638bn that The Global Innovation 1000 companies (from the 2013 Booz & Company s study) spent on R&D+I, around USD 52bn (8%) was allocated to procuring, deploying, and supporting digital enablers (which represents the core IM software applications). 6

7 Voice of the customer: It is essential to define an innovation strategy amongst all stakeholders whilst at the same time ensuring that it is aligned with organisational goals and the medium and long-term vision. One of the most expected features in IM software is user friendliness, adaptability to the business context and the possibility to share knowledge throughout the company in an efficient manner. International IM Market Positioning: Portuguese ICT companies are well advised to secure stable means of financing, to have flexibility within their operating structures, and to consider diversification for risk reduction. Portuguese ICT companies need to have a clear understanding of their operating environment in order to respond to forces of change proactively according to the business and/or strategic plan or respond reactively if the situation has not been previously considered in the planning process. In terms of the structure of report, chapter 1 is dedicated to the presentation of the research questions and the approach followed to achieve the results. Chapter 2 defines vendor profiles and gives a brief description of other key players like supporting and funding organisations, as well as a comparison of the leading IM standards. Models, evolution of frameworks and trends are described in chapter 3. Chapter 4 provides a description and comparative analysis of the most relevant software applications in the IM market. The voice of the customer and the experience of three ICT clusters are presented in chapter 5 (best practices and capabilities). In chapter 6 is it possible to find a description of the main trends and business opportunities regarding markets, industries and new products and services. Chapter 7 gives important insights on market positioning strategies. The report ends with the main conclusions presented in chapter 8. After reading this report, it will be possible to have a better understanding of the emergent IM market with strong insights of its most important challenges and opportunities. 7

8 2 Introduction 2.1 Innovation Management According to Wikipedia, Innovation Management (IM) is the discipline of managing processes in innovation. It can be used to develop both product/service, process, marketing and organisational innovation. Innovation management includes a set of tools that allows managers and engineers to cooperate with a common understanding of goals and processes. The focus of IM is to allow the organization to respond to an external or internal opportunity, and use its creative efforts to introduce new ideas, processes or products (Kelly, P. and Kranzburg M., 1978). Importantly, IM is not relegated to R&D; it involves workers at every level in contributing creatively to a company's development, manufacturing, and marketing. By utilizing appropriate IM tools, management can trigger and deploy the creative juices of the whole work force towards the continuous development of a company (Clark, Charles H., 1980). The process can be viewed as an evolutionary integration of organisation, technology and market by iterating series of activities: search, select, implement and capture (Tidd, Joe and Bessant, John., 2009). Innovation processes can either be pushed or pulled through development. A pushed process is based on existing or newly invented technology, that the company/organisation has access to, and tries to find profitable applications to use this technology. A pulled process tries to find areas where customer needs are not met, and then focuses development efforts to find solutions to meet those needs (Trott, Paul, 2005). To succeed with either method, an understanding of both the market and the technical problems is needed. By creating multi-functional development teams, containing engineers and marketers, both dimensions can be solved (Boutellier, Roman; Gassmann, Oliver and von Zedtwitz, Maximilian, 2000). The lifetime (or product lifecycle) of new products is steadily getting shorter; increased competition therefore forces companies to reduce the time to market. Innovation managers must therefore shorten development time, without sacrificing quality or failure meeting market needs. Innovation Management (IM) is the discipline of managing processes in innovation. It can be used to develop both product/service, process, marketing and organizational innovation. 2.2 Study Objectives The goal of this benchmark study is to target the most representative R&D+I (Research, Development and Innovation), a synonym for Innovation Management (IM), key international market players. This study is intended to generate critical knowledge on IM players (vendors, products and services, markets / regions, industries / clients) that can support Portuguese ICT Companies in their decision-making concerning external market positioning strategy. 8

9 In order to successfully answer this main question, secondary questions were addressed. Therefore, the design of this research study focused on the following questions: Which are the most representative R&D+I models, frameworks, tools and software? Which regions/countries should be traced in more detail? What are the lessons learned and what practices can be adopted? 2.3 Research Method Different types of data were identified for this research study. Primary data sample research method (see figure 1) consisted of Customers/Users (Portuguese as well as International) of R&D+I frameworks and software survey respondents. 5. Create the final report 1. Determine the research sample Primary Data 2. Create the interview outline 4. Analyze the data 3. Gather the data Figure 1. Primary Data Secondary data (see figure 2) collection was done primarily from certified and official sources. a) Company/Organisation websites b) International directories / websites c) International institutions (e.g. OECD, EU, etc.) d) Credited articles and market & technology reports 9

10 5. Final Report / Conclusion 1. Determine the data need Secondary Data 2. Collect data 4. Analyze the data 3. Centralize collected data Figure 2. Secondary Data 10

11 3 Key Players This first chapter will provide an analysis of the most important players (Vendors, Regulation, Governance and Supporting Organisations) that influence the Innovation Management market (IM market). It will present an overview of the international IM market and will serve as the basis for this research study. 3.1 Vendors The research sample has been determined primarily by using web-based research methods (such as websites, group and discussion forums, amongst others - as explained in the research method). The term Vendor was adopted to describe organizations (companies, online platforms and other entities) that supply/provide services and products in the IM market. In order to qualify as a Vendor in the IM market, an organisation must satisfy at least one of the following two conditions: a) It offers IM Software-based applications software applications that are currently involved in IM processes (such as Ideation, IPR Management, Market Intelligence, Innovation Strategy, etc.) and online platforms (such as tech scouting and transfer, ideas marketplaces, etc.). These Vendors focus their efforts on software features and support services (such as configuration, customization, training and support for using the software). b) It offers IM Consultancy and Coaching training (face-to-face, blended or e-learning), coaching or other direct methods that help customers develop, implement and manage IM processes. The use of IM software applications is not mandatory for these services. The end result of the web-based research was a sample of over 150 vendors that fulfilled the above-mentioned criteria. These vendors were selected mainly because of their visibility on the web and on social networks (for example: whitepapers, discussion forums, webinars, specialized directories and rankings). Additional information collected from IM customers and other key players also influenced this selection. For the purpose of this study, this sample was considered to be illustrative of IM vendors worldwide. The sample of 150 vendors was divided into 3 distinct profiles: Software: Pure Software Vendors are companies that develop their own software applications and deliver support services. They are typically software houses with a network of commercial and implementation service partners. Services: Pure Services Vendors are companies that provide a wide range of services (such as consultancy, coaching and training services). They are typically consultancy companies that are independent of software houses (even if they are partners in some IM applications). 11

12 Software and Services: These vendors are companies that develop end-to-end solutions with both software applications and consultancy services. They typically come from the software industry but integrate consultancy services within their market offer. Vendor Profiles Software 45% Services 35% Both 20% 20% 45% 35% Figure 3. Vendor Profile Amongst the 150 IM Vendors selected, nearly half provide mainly Software Applications in the above-mentioned fields, more than a third provide IM Consultancy Services and 20% explicitly provide both Software Applications and Consultancy Services. 12

13 The following table lists examples of vendors for each profile: Profiles Vendors Services oriented Desai Group Cambridge Consultants Fahrenheit 212 Software oriented Bright Idea Innovation Factory (PIT) Eyeka Software + Services Hype Venture Spirit Kalypso Table 1. Examples of vendors The above selection of vendors does not reflect any ranking or performance evaluation. Since the main goal was to present a diverse perspective of vendors, these were chosen because of their different characteristics (innovation management approaches, geographic origin and industries served). Desai Group focused only on Consultancy Services. It was selected because it clearly advocates open innovation. Cambridge Consultants is primarily focused on Health and Medical Consultancy Services which make it stand out from the rest. Fahrenheit 212 s expert recognition and diverse customer portfolio that ranges from Food and Beverages to Electronics with a customer-base that includes the likes of Coca-Cola and Samsung makes it worthy of a mention. Bright Idea described in more detail in subsequent topics, was chosen because its recently released Most ambitious release yet consists in approaching their own software from a new angle adding cutting edge features like Idea Board, WebStorm Scheduler, etc. Innovation Factory (PIT) is a website that is easy to access and read, thereby making it a vendor worthy of being selected. Eyeka is an open innovation idea market website, the only one in the current list. Hype is a vendor that offers software applications and full-featured services. Its eleven years experience makes it a vendor to be taken into consideration. Venture Spirit and Kalypso offer both services and software solution to a number of industries, making them equally worthy of mention. 13

14 3.2 Regulation, Governance and Supporting Organisations Several entities, private, non-profit or public, promote the development of innovation management (IM) capabilities of organisations for sustainable development. The European Commission is one of the entities that, through capital grants or support initiatives, promote innovation practices and projects. The 2nd European Innovation Convention that will take place on March 2014 in the Square - Brussels Meeting Centre is an example. This convention is included in the "Innovation Union" which is one of seven initiatives strategies under "Europe 2020". The Europe 2020 strategy is another example, aimed at creating a sustainable economy with investments in education, research and innovation. It intends to become a competitive, ecological and streamline employment and poverty reduction industry. This strategy focuses on five ambitious objectives: employment, research, education, poverty reduction, and climate and energy. In general, all access initiatives to finance "Horizon 2020" aim to ensure that innovative ideas can be turned into products and services that create growth and jobs. Whatever the company strategy it should be directed at the creation of added value and the establishment of partnerships because only then can it begin to consider the possibility of obtaining financing at Europe - Horizon Inevitably, there will also be national programmes that will permit access to investment incentives more appropriate to local realities. The Programme for the Competitiveness of Enterprises and SMEs (COSME) is a tool to support SMEs during the period , targeting businesses, employees and citizens. COSME will improve SMEs access to finance through two separate programmes: credit guarantees and capital for growth. The following website can identify hypotheses to support financing with the participation of EU funds (http://europa.eu/youreurope/business/fundinggrants/access-to-finance/). Also under the European Commission directives, innovation vouchers have been detected in several European countries: Portugal, Netherlands, Czech Republic, UK and Ireland. However, not all countries offer the same access conditions or purposes. This programme is aimed at the creation and development of start-ups (up to EUR 5.000), and also programmes for the competitiveness and sustainability of companies (up to EUR ). Singapore is another country which uses innovation vouchers funding schemes. The sustainable development of organisations is also supported by entities that promote the implementation of best IM practices through the development of standards. The OECD (Organisation for Economic Cooperation and Development) promotes sustainable development through the promotion of economic and social policies to foster the growth of many countries, especially those which are members. The creation and dissemination of knowledge and the promotion of innovation practices are available on the OECD website, as well as many other research topics. The European Committee for Standardisation (CEN) was officially established as an international non-profit association based in Brussels. CEN is a major provider of European Standards and technical specifications. The Technical Committee (CEN / TC 389), which is responsible for drafting normative documents related to the Management of Innovation, developed several standards on innovation, some are still in draft form and others were posted, like CEN / TS , Innovation Management - Part 1: Innovation Management System. This Technical Committee (TC389) comprises several working groups on: Design Thinking, Intellectual Property Management, Strategic Intelligence Management, Collaboration and Creativity Management, Innovation Management System, Innovation Self Assessment Tools. 14

15 This European Technical Specification - CEN / TS , 2013, defines IM practices as a planning process, implementation, verification and improvement of the management of ideas as the main entrance to the innovation process, which includes development, knowledge management and sale or implementation of the result. This set of best practices begins upon confirmation of the organisation's strategy, is based on risk assessment and involves a demand cycle for improved performance obtained through innovation. In existence for a longer period, the Portuguese standard (NP4457:2007, Management system requirements of R&D+I) as well as the Spanish standard (UNE R&D+I: Requirements Management RD, 2006), presents a set of best practices based on research and development including the launch of the product in market and its follow-up. As a management system standard it includes the usual requirements related to management responsibility, resources and improvement. There are other normative documents: The British Standard :2008 is essentially a standard to simplify and manage a culture of innovation in a company. It presents a methodology which is divided into several sequential steps aimed at ensuring the organisation's development and dissemination of a culture of innovation. Brazilian ABNT NBR 16501: Guidelines for Management Systems R&D+I is included in a set of three standards (concepts, system management and R&D+I projects). They were not introduced to regulate contractual issues thus they have no requirements and are not intended for certification. NWA - 1: a guide to good practices in innovation and the development process, developed by NSAI (National Standards Authority of Ireland). It describes innovation activities from strategy creation to market launch. The Mexican Standard NMX GT 003:2008 follows a simple pattern for a management system focused on process management technology - the technology makes no reference to research, development and innovation. Many other countries are working on normative documents related to innovation. Germany and France have already published standards whilst others are still in the design stage: DIN 77100: Patent valuation - General principles for monetary patent valuation. FD X50-146: Management de l'innovation - Management de la propriété intellectuelle. PR FD X50-274: Innovation Management - Creativity management (August 2015). PR FD X50-273: Implementation of sustainable development in the innovation process (January 2015). PR FD X50-272: Guidelines for the implementation of open innovation (April 2014). Some associations or private sector organisations, particularly in the consultancy sector, have also contributed to the development of practices aimed at managing innovation, excellence and sustainable development. For instance, PDMA - Product Development and Management Association has developed initiatives, events and documents of best practices for conducting research, development and innovation. These documents highlighted the TIM-PD -STD - 001: 2013 Standard Innovation Management. 15

16 These suggestions are not limited to the issuing of documents but also at events that promote creativity, new product development, management, dissemination of knowledge and innovation. The International Organisation for Standardisation (ISO) is the world's largest developer of international standards. However, despite ISO s active participation in events promoting innovation (Committee ISO / TC 279 Innovation process: interaction, tools and methods), it was not possible to obtain formal confirmation concerning ISO s involvement in drafting new rules on innovation management. In general, the above-mentioned standards have different requirements for managing the innovation management system. The description of these implementation requirements is not identical in all the standards since they follow different methodologies and approaches. Comparisons at the requirement level are presented in the following table: Requirements for R&D+I activities that are referred to in the various Standards NP 4457:2007 CEN/TS :2013 UNE :2006 TIM-PD-001-STD:2013 NMX GT 003:2008 Leadership R&D+I Policy R&D+I Objectives Management Review Top Management Representative R&D+I Unit Interested Parties External and Internal Analysis Risks and Opportunities Interface Management Creativity 16

17 Idea Management Finances Resources Human Resources Infrastructures Communication Process Management Purchasing Planning of R&D+I Projects Requirements for R&D+I Project Research, Development and Innovation Management Activities Knowledge Management Control of Documents and Records Results Evaluation Internal Audits Improvement Table 2. Requirements for R&D+I This comparison between the requirements of the different standards for an IM system, developed by separate entities in a time period of about 6 years, allows us to highlight the existence of similar structures in terms of requirements related to Management Responsibility, Planning, Implementation, Analysis and Improvement. The differences reside in the fact that the requirements are developed separately. 17

18 In this regard, attention is drawn to the following features: the importance attributed to leadership in the most recent standards (CEN / TS :2013 and TIM- PD-STD-001: 2013). the relevance attributed by UNE :2006 to the creation of an IM structure. the risk management mentioned in CEN/TS :2013. the reference made by UNE :2006 to supplies. the importance of process management (CEN/TS :2013 and TIM-PD-STD-001: 2013) and the applicable requirements for R&D+I projects (CEN/TS :2013 and UNE :2006). 18

19 4 Models and Frameworks 4.1 Type of Models and Frameworks Before diving into the usage of Innovation Management frameworks (IM frameworks) and tools, it is necessary to briefly describe the latest evolution of IM frameworks The Evolution of IM Frameworks The importance of Innovation has been widely recognised by both Academic and Business circles for a long time now. However, in the more recent past, companies and universities have focused increasingly on innovation. Vendors have started to create IM products and services for other companies and organisations. Also, universities like Hamburg Univ. of Technology (Germany), Aalborg University (Denmark), Swimburne University (Australia), amongst others, now offer specialised IM Bachelor and Masters programs (Attended by a growing number of international students). It is increasingly easier to find literature and studies on IM and IM Processes. The main interest is the IM process, from idea creation to product commercialization (Niek D du Preez & Louis Louw, 2008). IM frameworks have evolved in 6 directions, creating distinct frameworks as presented in the following table. Generation Model Description #1 Technology Push The Plain Linear sequential process focuses on R&D. #2 Market Pull #3 Coupling Model #4 Interactive Model #5 Network Model #6 Open Innovation The Linear sequential process places emphasis on the market since it considers it the main source of R&D. The Looping model focuses on the interaction between different entities. Integration between R&D and the market is a primary objective here. The Interactive Model is a combination of the push and pull models. It focuses on the links between the company and its external environment. The Network Model concentrates on knowledge gathering, external links and accentuated networking. The Open Innovation Model focuses on the combination of internal and external environments, and how their interaction can create technological development. Table 3. Evolution of Innovation Management Frameworks 19

20 An in-depth description of each IM Generation and Model follows: Generation #1 The Technology Push Model4 The first generation of IM frameworks has a linear structure and is based on the idea that innovation is driven or pushed by technology development. Technology Push is a business strategy where innovation is pushed through R&D, production and sales without considering the existence of the initial need for that specific product and/or service. R&D Production Sales / Marketing Need? Figure 4. Technology Push Model The weakest link in this chain of activities is the last one. The fact that the need for a specific product or service is uncertain (there is no evidence that the need exists in the market) is considered to be the biggest flaw of this framework. In some cases it can work if the product itself creates a new need in the market, for example, the ipad in Generation #2 - The Market Pull Model Like the first generation of IM frameworks, the second generation is also a linear structure model. Whereas the first model does not take into account the initial need of the market, this second generation is mainly focused on this particular area. It is the market need that pulls innovation, as depicted in the following figure. Market Need Development Production Sales Figure 5. Market Pull Model However, the needs of the customer may change over time and get to the point where the needs, at the time you actually start the marketing and sales plan, no longer resemble the initial market need. Here, you end up with an obsolete product even before you are ready to sell it. 20

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