2011 americas r&d / innovation and product development priorities survey results

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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

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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 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

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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 North and Latin America .

87survey

respondents

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

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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%)

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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 (83%)

Changes in customer buying behavior (57%)

Challenges for R&D/Innovation and

Product Development

Product commoditization pressures (78%)

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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

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

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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%)

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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

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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”

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

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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

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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

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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

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Open Innovation and Crowdsourcing

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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

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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%)

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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

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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

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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 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?

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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 = 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 .

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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%

2011 americas r&d / innovation and product development priorities survey results

Business

section rdinnovation

growth team membership

section productivity

ideation section

companies ceos growth

survey purpose

internal challenges

rdinnovation budgets