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The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
growth team m e m b e rs h i p™
in cooperation with
2011 R&D/Innovation and Product Development Priorities Survey Results
Americas
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 . . . . . . . . . . . . . . . . . . . . 8
R&D/Innovation and Product Development Effectiveness and Expenditures . . . . . . . . . . . . . . 12
Open Innovation and Crowdsourcing . . . . . . . . . .17R&D/Innovation and Product Development Overarching Challenges . . . . . . . . 22
Respondent Demographics . . . . . . . . . . . . . . . . . 23
www .aipmm .com
2
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
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 identifying breakthrough new product ideas The challenge’s root cause is limited staff
Open Innovation Challenge Crowdsourcing and InnovationThe challenge is overcoming the fear of lost IP Respondents primarily use Crowdsourcing for ideation
Main External ChallengeThe primary factor influencing R&D planning is the need for new products and services
Executive Summary
R&D Budget ResourcesOn average, companies allocate 5% of their revenue to R&D/Innovation budgets
R&D/Innovation budgets are expected to increase moderately, yet staffing will remain static in 2011
3
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
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
CorporateStrategy
Corporate Development
Marketing
CompetitiveIntelligence
MarketResearch
SalesLeadership
R&D/Innovation
Investors/Finance
CEO
R&D/Innovation
If you have any questions or comments, please contact us
Email us [email protected] Visit us online www.gtm.frost.com
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 function/company’s performance and productivity
4
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
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 throughout North and Latin America .
87survey
respondents
5
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
External Factors Shaping R&D/Innovation and Product Development Strategies
6
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
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
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 (32%)
External Factor 2 Product commoditization pressures (13%)
External Factor 3 Changes in customer buying behavior (11%)
7
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
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
Need for product and services innovation (83%)
Changes in customer buying behavior (57%)
Challenges for R&D/Innovation and
Product Development
Product commoditization pressures (78%)
8
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Key R&D/Innovation and Product Development Challenges
9
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Key R&D/Innovation and Product Development Challenges Snapshot
Identifying breakthrough new product ideas
Challenge 1
Generating an accurate and relevant technology roadmap
Challenge 3
Matching innovation projects to unmet customers needs
Challenge 2
10
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
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
Survey Question: Please indicate the top five functional challenges shaping your R&D/Innovation and product development strategy in 2011 .
Challenge 1 Identifying breakthrough new product ideas (26%)
Challenge 2 Matching innovation projects to unmet customers needs (12%)
Challenge 3 Generating an accurate and relevant technology roadmap (11%)
Challenge 4 Managing without a formal process for ideation and idea execution (11%)
Challenge 5 Finding viable new applications for existing products/capabilities (9%)
11
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Challenge 1Identifying breakthrough new product ideas
Staff: Limited resources (40%)
Challenge 2Matching innovation projects to unmet customers needs
Staff: Inadequate skills (20%)
Challenge 3Generating an accurate and relevant technology roadmap
Strategic Alignment: Lack of common objectives (40%)
Challenge 4Managing without a formal process for ideation and idea execution
Staff: Limited resources (33%)
Challenge 5Finding viable new applications for existing products/capabilities
Process: Ineffective process (40%)
Survey Question: Please indicate if the root cause of your top five functional challenges are—staff, process, technology/systems, or strategic alignment .
In general, R&D challenges are caused by staff: insufficient numbers or limited skills
Root Cause of Top Five R&D/Innovation and Product Development Challenges
Top Five R&D/Innovation and Product Development Challenges
12
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
R&D/Innovation and Product Development Effectiveness and Expenditures
13
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
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 5% of their revenue to their 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
14
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
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
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 .
11%17%
36%
36%Above Average
Exceptional
Below Average
Average
15
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
0%
30%
60%
50%
22%
13%
10%
5%
The majority of companies invest 5% or less of their revenue in R&D budgets
2010 R&D/Innovation and Product Development Budgets as a Percent of Revenue
Survey Question: Please provide your 2010 total R&D/innovation and product development budget as a percentage of total company revenue:
5% is the median percentage of revenue companies invest in their R&D budget .
1 to 5% 6 to 10% 11 to 30% 31 to 50% 51% and Above
16
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
R&D executives expect an increase in budgets, but no additional staff in 2011
R&D/Innovation and Product Development Staffing and Budget 2011
Survey Question: In comparison to 2010, your 2011 R&D/Innovation and product development staffing and budget will:
7%
35%
46%
6% 6%
5%
46%
5% 6%
38%
Staffing
Budget
Stay the Same
Decrease Moderately
Increase Moderately
Stay the Same
Decrease Moderately Increase Substantially
Increase SubstantiallyDecrease Substantially
Decrease Substantially
Increase Moderately
17
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Open Innovation and Crowdsourcing
18
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
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
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Using Open Innovation creates issues around ceding control to develop the necessary relationships
Top Four Challenges of Open Innovation
Survey Question: Please rank the following Open Innovation challenges in order of importance .
Challenge 1 Overcoming the fear of lost IP and competitive advantage (25%)
Challenge 2 Establishing buy-in internally for Open Innovation (26%)
Challenge 3 Generating a sustainable level of trust among strategic partners (20%)
Challenge 4 Creating a shared understanding of the problem to be addressed through Open Innovation (22%)
20
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Respondents tend to use crowdsourcing for initial idea development
Crowdsourcing in Innovation Lifecycle
Survey Question: Please indicate if your company uses crowdsourcing in the following product/service development activities (click all that apply) .
0%
15%
30%28%
14%
18%
8%
Idea Generation Idea Screening Concept Testing and Development
Product Launch
21
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Respondents rely on customers and formal networks, such as partners and suppliers, for crowdsourcing
Crowdsourcing Tactics
Survey Question: Please indicate the types of Crowdsourcing your company uses in its product development process (click all that apply) .
0%
20%
40%
29%
9%
30%
6%
14%
Formal Networks Open Networks (e.g. Six Sigma)
Customer/Consumer Surveys, Focus Groups,
or Workshops
Public Contests Social Media
22
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
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?
23
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Respondent Demographics
24
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Respondent Demographics
Survey Question: Please indicate the type of enterprise best represents your company .
N = 84
N = 84N = 84
Enterprise Type Business Model
Company Revenue
5%
56%39%
30%
63%
7%
Public
Hybrid Company
Private
B-to-B Company
Venture Capital
0%
20%
40%
33%
11%8%
32%
13%
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 public company .
25
The contents of these pages are copyright © 2011 Frost & Sullivan. All rights reserved.
2011 survey resultsgrowth team m e m b e rs h i p™
Source: Growth Team Membership™ research.
Respondent Demographics: Top Five Participating Industries
N = 87
Healthcare and Life Sciences
Information and Communication Technologies
Automotive and Transportation
Chemicals, Materials, and Food
Environmental and Building Technologies
0% 20% 40%
35%
21%
20%
17%
15%