2011 Europe R&D Innovation and Product Development Priorities Survey Results

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2011 R&D/Innovation and Product Development Priorities Survey Results

Europe

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

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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 prioritising innovation ideas and projects The challenge’s root cause is limited staff

Open Innovation Challenge Crowdsourcing and InnovationThe challenge is creating a collaborative framework 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

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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 Europe .

84survey

respondents

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External Factors Shaping R&D/Innovation and Product Development Strategies

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Strategic planning for R&D is being shaped by demands for new products and renewed access to capital

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 (33%)

External Factor 2 Access to capital/capital markets (15%)

External Factor 3 Demand for “green/sustainable” products and services (19%)

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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 (69%)

Access to capital/capital markets (73%)

Demand for “green/sustainable” products and services (73%)

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Key R&D/Innovation and Product Development Challenges

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Key R&D/Innovation and Product Development Challenges Snapshot

Prioritising innovation ideas and projects

Challenge 1

Identifying breakthrough new product ideas

Challenge 3

Matching innovation projects to unmet customers needs

Challenge 2

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Respondents emphasise challenges with improving innovation projects and integrating inputs from internal and external sources

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 Prioritising innovation ideas and projects (20%)

Challenge 2 Matching innovation projects to unmet customers needs (9%)

Challenge 3 Identifying breakthrough new product ideas (19%)

Challenge 4 Integrating inputs from cross-functional partners [Sales, Manufacturing, Marketing, etc .] (13%)

Challenge 5 Managing an open innovation process successfully (13%)

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Challenge 1Prioritising innovation ideas and projects

Staff: Limited resources (54%)

Challenge 2Matching innovation projects to unmet customers needs

Process: Ineffective process (40%)

Challenge 3Identifying breakthrough new product ideas


Challenge 4Integrating inputs from cross-functional partners (Sales, Manufacturing, Marketing, etc .)

Strategic Alignment: Lack of team buy-in (43%)

Challenge 5Managing an open innovation process successfully


Survey Question: Please indicate if the root cause of your top five functional challenges are—staff, process, technology/systems, or strategic alignment .

Respondents cite understaffing as the predominant cause of their challenges

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

Top Five R&D/Innovation and Product Development Challenges

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R&D/Innovation and Product Development Effectiveness and Expenditures

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R&D/Innovation and Product Development Expenditures and Effectiveness Snapshot

Respondents rank their R&D/Innovation function’s effectiveness as “Average” or “Above Average”

In general, companies allocate 5% of their revenue to the 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

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Respondents are likely to rank their function’s effectiveness 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 .

10% 8%

41%41%Above Average

Exceptional Below Average

Average

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0%

30%

60%

50%

26%

14%

4%6%

Companies tend to allocate 5% of their revenue to 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 company revenue allocated to R&D budgets .

1 to 5% 6 to 10% 11 to 30% 31 to 50% 51% and Above

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Respondents expect budgets to increase moderately, yet staffing will remain static in 2011

R&D/Innovation and Product Development Staffing and Budgets 2011

Survey Question: In comparison to 2010, your 2011 R&D/Innovation and product development staffing and budgets will:

11%

36%

12%

41%

55%

11%

23%

10%

1%

Staffing

Budget

Stay the Same

Decrease Moderately

Increase Moderately

Stay the Same

Decrease Moderately Increase Substantially

Increase Substantially

Decrease Substantially

Increase Moderately

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Open Innovation and Crowdsourcing

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Open Innovation and Crowdsourcing Snapshot

Primary Open Innovation challenge is creating a collaborative framework

For crowdsourcing, companies usually employ specialised vendors such as Six Sigma

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Challenges with using Open Innovation are wide ranging from trust concerns to securing buy-in to initiate a programme

Top Four Challenges of Open Innovation

Survey Question: Please rank the following Open Innovation challenges in order of importance .

Challenge 1 Creating an effective Open Innovation collaboration framework (30%)

Challenge 2 Generating a sustainable level of trust among strategic partners (28%)

Challenge 3 Establishing buy-in internally for Open Innovation (18%)

Challenge 4 Creating a shared understanding of the problem to be addressed through Open Innovation (29%)

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Crowdsourcing tends to be mostly employed for initial idea development and concept testing

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%

45%

39%

21%

31%

8%

Idea Generation Idea Screening Concept Testing and Development

Product Launch

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0%

50%

100%

45%

89%

38%

4%

11%

Respondent tend to use specialised vendors for their crowdsourcing activities

Crowdsourcing Tactics

Survey Question: Please indicate the types of Crowdsourcing your company uses in its product development process (click all that apply) .

Formal Networks Open Networks (e.g. Six Sigma)

Customer/Consumer Surveys, Focus Groups,

or Workshops

Public Contests Social Media

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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 prioritise 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 organisational 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 commercialisation 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?

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Respondent Demographics

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Respondent Demographics

Survey Question: Please indicate the type of enterprise best represents your company .

N = 81

N = 82N = 82

Enterprise Type Business Model

Company Revenue

5%

33%

62%

30%

10%

60%

PublicHybrid

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

Over half of the respondents work in B-to-B companies .

The majority of the respondents work in a private company .

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Respondent Demographics: Top Six Participating Industries

N = 84

Energy and Power Systems

Aerospace and Defence

Information and Communication Technologies

Healthcare and Life Sciences

Electronics and Security

Chemicals, Materials, and Food

0% 20% 40%

32%

26%

18%

14%

14%

14%