2011 R&D/Innovation and Product Development Priorities Survey Results
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1 Americas growth team membership 0 R&D/Innovation and Product Development Priorities Survey Results Executive Summary... What is the Growth Team Membership... Survey Purpose and Respondents... External Factors Shaping R&D/Innovation and Product Development Strategies... Key R&D/Innovation and Product Development Challenges R&D/Innovation and Product Development Effectiveness and Expenditures... Open Innovation and Crowdsourcing R&D/Innovation and Product Development Overarching Challenges... Respondent Demographics... in cooperation with
2 Executive Summary Main External Challenge The primary factor influencing R&D planning is the need for new products and services Key Internal Challenge Internal Challenge Root Cause The challenge is identifying breakthrough new product ideas The challenge s root cause is limited staff R&D Budget Resources On average, companies allocate % of their revenue to R&D/Innovation budgets R&D/Innovation budgets are expected to increase moderately, yet staffing will remain static in 0 Open Innovation Challenge Crowdsourcing and Innovation The challenge is overcoming the fear of lost IP Respondents primarily use Crowdsourcing for ideation
3 What is the Growth Team Membership? The Growth Team Membership (GTM) is a subscription program that supports executives within the functions reporting to the CEO GTM provides best practices, events, and services to enable executives to address internal challenges within their companies CEO s Growth Team R&D/ R&D/ Innovation Innovation CEO Marketing GTM s case-based best practices help executives: Sales Leadership Corporate Strategy GTM: Creating Client Value Corporate Development Market Research Investors/ Finance Competitive Intelligence Save money and reduce risk by avoiding mistakes made by other companies Accelerate problem solving with a cross industry perspective Improve their function/company s performance and productivity Speed the design and implementation of initiatives by not reinventing the wheel If you have any questions or comments, please contact us us GTMresearch@frost.com Visit us online
4 Survey Purpose and Respondents Research Objective To understand the most pressing external and internal challenges shaping R&D/Innovation and product development executives 0 planning. Methodology Web-based survey platform Survey Population In Cooperation with Target respondents were Manager level and above R&D/Innovation and product development executives from companies throughout North and Latin America. 87 survey respondents
5 External Factors Shaping R&D/Innovation and Product Development Strategies
6 6 R&D strategies are influenced by the peril of product commoditization and the opportunity created by shifts in customer purchasing behavior Top Three External Factors External Factor Need for product and services innovation (%) External Factor Product commoditization pressures (%) External Factor Changes in customer buying behavior (%) Survey Question: Please specify the Top Three external factors shaping your R&D/Innovation and product development strategy in 0.
7 7 External Factors Impact on R&D/Innovation and Product Development Opportunities for R&D/Innovation and Product Development Challenges for R&D/Innovation and Product Development Need for product and services innovation (8%) Product commoditization pressures (78%) Changes in customer buying behavior (7%) Survey Question: Please indicate if the following factors present a challenge or an opportunity for your 0 R&D/Innovation and product development strategy.
8 8 Key R&D/Innovation and Product Development Challenges
9 9 Key R&D/Innovation and Product Development Challenges Snapshot Identifying breakthrough new product ideas Challenge Matching innovation projects to unmet customers needs Challenge Generating an accurate and relevant technology roadmap Challenge
10 0 Respondents challenges range across the innovation lifecycle from the need for a formal process for ideation to reinvigorating existing products through new applications Top Five Key R&D/Innovation and Product Development Challenges Challenge Identifying breakthrough new product ideas (6%) Challenge Matching innovation projects to unmet customers needs (%) Challenge Generating an accurate and relevant technology roadmap (%) Challenge Managing without a formal process for ideation and idea execution (%) Challenge Finding viable new applications for existing products/capabilities (9%) Survey Question: Please indicate the top five functional challenges shaping your R&D/Innovation and product development strategy in 0.
11 In general, R&D challenges are caused by staff: insufficient numbers or limited skills Top Five R&D/Innovation and Product Development Challenges Root Cause of Top Five R&D/Innovation and Product Development Challenges Challenge Identifying breakthrough new product ideas Staff: Limited resources (0%) Challenge Matching innovation projects to unmet customers needs Staff: Inadequate skills (0%) Challenge Generating an accurate and relevant technology roadmap Strategic Alignment: Lack of common objectives (0%) Challenge Managing without a formal process for ideation and idea execution Staff: Limited resources (%) Challenge Finding viable new applications for existing products/capabilities Process: Ineffective process (0%) Survey Question: Please indicate if the root cause of your top five functional challenges are staff, process, technology/systems, or strategic alignment.
12 R&D/Innovation and Product Development Effectiveness and Expenditures
13 R&D/Innovation and Product Development Expenditures and Effectiveness Snapshot Respondents rank their R&D/Innovation function s effectiveness as Average or Above Average On average, respondents companies allocate % of their revenue to their R&D budget Respondents expect their staffing levels to stay the same in 0 Respondents expect their R&D/Innovation budgets to increase moderately in 0
14 Respondents tend to rate the effectiveness of their function as Above Average or Average R&D/Innovation and Product Development s View of Its Effectiveness Exceptional Below Average % 7% Above Average 6% 6% Average 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.
15 The majority of companies invest % or less of their revenue in R&D budgets 00 R&D/Innovation and Product Development Budgets as a Percent of Revenue 60% 0% 0% % is the median percentage of revenue companies invest in their R&D budget. % % 0% % 0% to % 6 to 0% to 0% to 0% % and Above Survey Question: Please provide your 00 total R&D/innovation and product development budget as a percentage of total company revenue:
16 6 R&D executives expect an increase in budgets, but no additional staff in 0 R&D/Innovation and Product Development Staffing and Budget 0 Staffing Decrease Substantially Decrease Moderately 7% 6% Increase Substantially 6% % Increase Moderately 6% Stay the Same Budget Decrease Substantially Increase Substantially Decrease Moderately % 6% % Stay the Same 8% 6% Increase Moderately Survey Question: In comparison to 00, your 0 R&D/Innovation and product development staffing and budget will:
17 7 Open Innovation and Crowdsourcing
18 8 Open Innovation and Crowdsourcing Snapshot The primary Open Innovation challenge is overcoming the fear of lost IP Engaging customers is the primary form of crowdsourcing used
19 9 Using Open Innovation creates issues around ceding control to develop the necessary relationships Top Four Challenges of Open Innovation Challenge Overcoming the fear of lost IP and competitive advantage (%) Challenge Establishing buy-in internally for Open Innovation (6%) Challenge Generating a sustainable level of trust among strategic partners (0%) Challenge Creating a shared understanding of the problem to be addressed through Open Innovation (%) Survey Question: Please rank the following Open Innovation challenges in order of importance.
20 0 Respondents tend to use crowdsourcing for initial idea development Crowdsourcing in Innovation Lifecycle 0% 8% 8% % % 8% 0% Idea Generation Idea Screening Concept Testing and Development Product Launch Survey Question: Please indicate if your company uses crowdsourcing in the following product/service development activities (click all that apply).
21 Respondents rely on customers and formal networks, such as partners and suppliers, for crowdsourcing Crowdsourcing Tactics 0% 0% 9% 0% % 9% 6% 0% Formal Networks Open Networks (e.g. Six Sigma) Customer/Consumer Surveys, Focus Groups, or Workshops Public Contests Social Media Survey Question: Please indicate the types of Crowdsourcing your company uses in its product development process (click all that apply).
22 what s keeping r&d/innovation and product development executives up at night in 0? The Top Overarching Challenges Affecting R&D/Innovation and Product Development Executives 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.
23 Respondent Demographics
24 growth team membership Respondent Demographics Enterprise Type Business Model Venture Capital % The majority of the respondents work in a public company. Hybrid Company 0% The majority of the respondents work in B-to-B companies. Private 9% 6% Public B-to-C Company 7% 6% B-to-B Company N = 8 N = 8 0% Company Revenue % % 0% % 8% % 0% Below $00 Million $00 Million to $99.99 Million $00 Million to $ Million $ Billion to $ Billion More than $ Billion N = 8 Survey Question: Please indicate the type of enterprise best represents your company.
25 Respondent Demographics: Top Five Participating Industries Information and Communication Technologies % Chemicals, Materials, and Food 7% Healthcare and Life Sciences 0% % Automotive and Transportation % Environmental and Building Technologies 0% 0% 0% N = 87
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