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Idea Generation and Portfolio Management 2012

r & d /innovation and product development priorities survey results

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#2012priorities Co-Sponsor

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

1


2012 survey results

CONTENTS Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 INTRO

Survey Purpose and Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 What is the Growth Team Membership™ . . . . . . . . . . . . . . . . . . . . . . . . .5 R&D/Innovation and Product Development Overarching Challenges . . . . . . . . . . .6

SECTION

1

SECTION

2

SECTION

3

SECTION

4

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

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

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

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


2


2012 survey results Introduction

3

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 Cause

Generating an accurate and relevant technology roadmap

Insufficient personnel

SECTION 2:

R&D/Innovation and Product Development Resource Trends

Budgets

Resources

Resource Allocation

R&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

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

SECTION 3:

Open Innovation (OI)


Growth Team Membership™ research.



4

Survey Purpose and Respondents

353

survey respondents

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

Methodology Web-based survey platform


Survey Population

Co-Sponsor

Manager-level and above R&D/innovation and product development executives from companies globally Growth Team Membership™ research.



5

What is the Growth Team Membership™? GTM is a subscription program that supports executives within the functions that report to the CEO CEO’s Growth Team™

GTM: Creating Client Value

R&D/ R&D/ Innovation Innovation

Marketing

GTM’s case-based best practices help executives: Sales Leadership

Corporate Strategy

CEO

Corporate Development

Market Research

Investors/ Finance

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

Competitive Intelligence

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

[email protected]

www.gtm.frost.com


twitter.com/Frost_GTM

slideshare.net/FrostandSullivan Growth Team Membership™ research.



6

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

Sample Solutions from GTM

Portfolio Management R&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 Innovation As 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.

Contact us at [email protected]. The contents of these pages are copyright © 2012 Frost & Sullivan. All rights reserved.



2012 survey results

7

INTRO

SECTION

1

Key R&D/Innovation and Product Development Challenges

SECTION

2

SECTION

3

SECTION

4




2012 survey results Section 1

8

Top Five R&D/Innovation and Product Development Challenges

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%)

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.

SURVEY QUESTION:

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





9

R&D’s top challenges are largely the same across business models Top Five R&D/Innovation and Product Development Challenges (By Business Model)

B-to-B

B-to-C

Challenge 1



Challenge 2



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



Challenge 3

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




10

R&D’s challenges are attributed to understaffing and ineffective or nonexistent processes Top Five R&D/Innovation and Product Development Challenges

Root Cause of 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


Challenge 3

Identifying breakthrough new product ideas


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%)

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

SURVEY QUESTION:




2012 survey results

11

INTRO

SECTION

1

SECTION

2

R&D/Innovation and Product Development Resource Trends

SECTION

3

SECTION

4





12

Most R&D/innovation budgets are over $20 million 2012 R&D/Innovation and Product Development Budgets (By Business Model)

percentage of company revenue allocated to r&d

40%

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

33%

31% 29%

30%

F

25%

The red percentages are for all respondents.

21%

F

20%

16% 10% 10% 7%

13%

15% 13% 13%

F

F

5% 5%

0%

Below $500,000

$500,000 to $999,999

$1 Million to $2.99 Million

All Companies

SURVEY QUESTION:

11% 10% F 9%

F

10% 11% 7%

F

5%


B-to-B Companies



$20 Million or more

B-to-C Companies

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





13

R&D executives are increasing budget allocations to short- and medium-term innovation projects in 2012 Change in Portfolio Allocations (By Business Model)

All Companies

B-to-B Companies

B-to-C Companies

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

INCREASE

57%

45%

25%

28%

STAY THE SAME

30%

40%

46%

48%

DECREASE

13%

15%

29%

24%

INCREASE

56%

44%

22%

28%

STAY THE SAME

31%

45%

55%

54%

DECREASE

13%

11%

23%

18%

INCREASE

58%

48%

31%

28%

STAY THE SAME

29%

32%

36%

41%

DECREASE

13%

20%

33%

31%

SURVEY QUESTION:

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





14

R&D executives foresee additional staff in 2012 R&D/Innovation and Product Development Staffing Changes (By Business Model)

All Companies Decrease Substantially 3% Decrease Moderately

B-to-B Companies Decrease Substantially

Increase Substantially

Decrease Moderately

6% 13%


4% 6% 9%

40%

Increase Moderately

40%

Increase Moderately

41%

38% Stay the Same

Stay the Same

B-to-C Companies Decrease Substantially 1% Decrease Moderately

Increase Substantially 6%

18%

31%

44%

Increase Moderately

Stay the Same

SURVEY QUESTION:

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





15

R&D/innovation budgets are expected to increase in 2012 R&D/Innovation and Product Development Budget Changes (By Business Model)

All Companies Decrease Substantially 3% Decrease Moderately 11%

Stay the Same

32%

B-to-B Companies Decrease Substantially 2% Increase Substantially Decrease Moderately 5% 9%

Increase Substantially 7%

Stay the Same 47%

29% 55%

Increase Moderately

Increase Moderately

B-to-C Companies Decrease Substantially 2%


Decrease Moderately 16%

32%

11%

39%

Increase Moderately

Stay the Same

SURVEY QUESTION:

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





16

Most respondents rate their R&D functions as “Above Average” R&D/Innovation and Product Development Effectiveness (By Business Model)

All Companies Exceptional 3%

Poor 2%

B-to-B Companies Exceptional 4%

Below Average

11%

12%

Above Average

Below Average

Above Average

45% 38%

42% 43%

Average

Average

B-to-C Companies Exceptional 1%

Poor 2% Below Average 13%

Above Average

51%

33% Average

SURVEY QUESTION:

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




2012 survey results

17

INTRO

SECTION

1

SECTION

2

SECTION

3

Special Interest Topic: Open Innovation

SECTION

4




18


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)

All Companies

B-to-B Companies

B-to-C Companies

56%

53%

60%

Yes

Yes Yes

OI Team Structure Sub-group within R&D/product development (34%)

SURVEY QUESTION:

OI Team Structure Sub-group within R&D/product development (37%)

OI Team Structure Part-time technology scout(s) within R&D/ product development (35%)

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





19

Companies tend to have a small number of staff assigned to open innovation (OI) Number of OI Staff (By Business Model)

6

This graph represents the median value for the number of OI staff. 4

Number of OI Staff

3

0

SURVEY QUESTION:

All Companies

3

3

B-to-B Companies

B-to-C Companies

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





20

R&D executives struggle to secure buy-in and develop a framework for open innovation Top Five Open Innovation Challenges (By Business Model)

All Companies Creating an effective open innovation collaboration framework (20%)

B-to-B Companies

B-to-C Companies

Creating an effective open innovation collaboration framework (17%)

Creating an effective open innovation collaboration framework (24%)

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

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

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%)

Assessing the viability of a potential partner (12%) Establishing buy-in internally for open innovation (12%)

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

SURVEY QUESTION:

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

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

Rank the above open innovation challenges in order of importance.





21

Open innovation is primarily used to generate new ideas Use OI in the Product Development Cycle (By Business Model)

Idea generation

Idea screening

Concept testing and development

Product launch

All Companies

33%

24%

25%

5%

B-to-B Companies

35%

25%

23%

6%

B-to-C Companies

37%

28%

34%

6%

SURVEY QUESTION:

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





22

Customers are the primary source of open innovation submissions Top Three OI Sources (By Business Model)

All Companies

B-to-B Companies

B-to-C Companies

Customers (40%)

Customers (47%)

Customers (34%)

Adjacent businesses (24%)


Academia (24%)

Academia (25%)

Suppliers (16%)


SURVEY QUESTION:

Please rank your top three sources of open innovation ideas.




2012 survey results

23

INTRO

SECTION

1

SECTION

2

SECTION

3

SECTION

4

Respondent Demographics




24


Respondent Demographics Enterprise Type

Business Model

Not for Profit 3% Government/Public Sector Venture Capital Hybrid 3%

6%

6%

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

B-to-C Company (Indirect) 25%

Public 40% B-to-C Company (Direct)

42%

61%

14%

B-to-B Company

Private

Most of the respondents work in privately held companies.

N = 316

N = 308

Company Revenue 50%

32% 25%

25%

20%

16% 7%

0%

SURVEY QUESTION:

Below $100 Million



$1 Billion to $11 Billion

More than $11 Billion

N = 303

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




25


Respondent Demographics: Region and Top Five Participating Industries Region Middle East 3%

Industries

3% Africa Information and Communication Technologies

Europe

18%

27% 46%

Americas

21%

Energy and Power Systems

19%

Aerospace and Defence

20%

Asia Pacific

N = 313

Chemicals, Materials, and Food

24%

Healthcare and Life Sciences

26%

0%

15%

30%

N = 313 SURVEY QUESTION:

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

