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Empowering Innovation with New Materials and Applications

SUMMARYA new study from independent research firm Tech-Clarity identifies six lessons to help companies secure future revenue streams with a focus on innovation, while manag-ing risk. The study examines the importance of new materials and applications and identifies how more successful companies improve their competitiveness by tapping into expanded sources of innovation, including the latest developments in materials.

SECRETS TO GROWING REVENUE AND INCREASING PROFIT MARGINS

Knovel

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EXECUTIVE OVERVIEWIt is not easy competing in today’s market. Companies today must stand out from a field of global competitors. Plus crowd-funding options such as Kickstarter have lowered the barrier to entry for new start-ups with innovative offerings. Companies who stay with the status quo will find it increasingly difficult to compete in this market.

Innovation is key to developing future revenue streams. Yet, there is a certain amount of risk when investing in new ideas. How do leading companies man-age risks around innovating? How do they empower their teams? How do they opti-mize their ideas for innovation? What are the risks of staying with the status quo?

To answer these questions, independent research firm Tech-Clarity surveyed heads of R&D and engineering, scientists and engineers from 318 companies. Survey respondents were located around the globe and represented companies rang-ing from under $100 million to over $5 billion. Companies came from a variety of industries including automotive, chem-icals, electronics, industrial equipment, and aerospace and defense.

Tech-Clarity identified Top Performing companies to understand which practices lead to success. More successful compa-nies look beyond their products and local expertise to expand their sources of inno-vation. In fact, leading companies are 66% more likely than their lesser performing competitors to empower their teams with access to the latest academic research.

They also invest in technology that will help their teams tap into resources that support the discovery and use of new materials and applications. While the dis-covery and commercialization processes are critical to bring the right innovations to market, new innovations must also transition from concept to manufac-ture at scale. Top Performers look at the entire system to successfully make this transition.

While there is a common view that too much focus on break-through innovation means sacrificing short-term results, the research finds that leading companies balance their innovation portfolios with different levels of innovation, putting more emphasis on break-through and major innovations than their lesser performing competitors.

The combination of this and other find-ings enables Top Performing companies to experience 2.1 times the revenue growth of their lessor performing com-petitors. This paper identifies six lessons companies can learn from Top Performing companies and apply to their own businesses to help them realize similar success.

Innovation is key to developing future revenue streams.

Tech-Clarity identified Top Performing companies to understand which practices lead to success. More successful companies look beyond their products and local expertise to expand their sources of innovation.

Leading companies are more likely than their

lesser performing com-petitors to empower their teams with access to the latest academic research.

66%

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BUSINESS DRIVERS FOR INNOVATIONIn today’s competitive market, companies who are not simultaneously investing in their future as they develop their current products, will eventually find themselves at a significant disadvantage. While the status quo may seem safe, competitors who are thinking about innovation will have an easier time eventually stealing market share from those who are not.Tech-Clarity’s research study, Preparing Industrial Equipment Manufacturers for Growth finds that, “Innovation, par-ticularly transformative or breakthrough innovation, is critical for companies to stand out and remain competitive. It is needed to ensure the future revenue streams for the company.” This applies to all industries and drives companies to make investments in innovation (Figure 1).

Clearly, companies agree that investments in innovation are key to revenue growth and profitability. Yet, while staying with the status quo is risky, there is a certain amount of risk when investing in new and unproven ideas. However, not addressing innovation challenges is very costly to the business (Figure 2).

To boost profitability, companies need to invest in innovation while mitigating risks. Note how few indicate there is no impact, with a full 89% agreeing there is a business impact when companies are unable to innovate.

Figure 3 shows the risks that have the most negative impact on the commercial success of new products. To be successful, these are the risks companies should look to address. How do successful companies accomplish this?

FIGURE 1. TOP 5 GOALS FOR INNOVATION INVESTMENT

Bring new innovations to market sooner

Increase market share

Improve success rate of new products

Increase profit margins

Increase revenue

64%

56%

50%

54%

46%

FIGURE 2. BUSINESS IMPACT OF NOT ADDRESSING INNOVATION CHALLENGES

Poor profit margins

There are no impacts

Other

Lost revenue

Lost market share

51%

49%

11%

45%

9%

FIGURE 3. RISKS HAVING A NEGATIVE IMPACT ON COMMERCIAL SUCCESS

Too late

Lack of suppliers

Poor risk mitigation

Technical failures

Poor alignment to customer needs

Lost budget

Other

48%

46%

21%

19%

34%

19%

6%

Companies who are not simultaneously investing in their future as they develop their current products, will eventually find themselves at a significant disadvantage.

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IDENTIFYING THE TOP PERFORMERSTo understand how successful compa-nies innovate, Tech-Clarity identified Top Performing companies and analyzed what they do differently compared to their competitors. These practices make the difference in their performance.

Survey respondents were asked to rank their performance in relation to their competitors on four key metrics. Respondents used a scale of one to five, with five being extremely effective. The top 20% were defined as Top Performers. Table 1 shows the metrics used to define success and each group’s respective performance.

Top Performers do a good job of com-ing up with innovative ideas and then

selecting the right ones. They are also better at transitioning concepts to pro-duction and ramping up to production at scale. The impact of these abilities can be seen in Figure 4.

Compared to their lesser performing competitors, Top Performers see:

• 2.1 times the revenue growth

• 75% larger profit margin expansion

• 70% more of their revenue comes from new products

Clearly they do the right things to ensure current and future revenue streams.Further analysis reveals six lessons that contribute to Top Performing success.

Top performers report higher revenue growth and profit margin expansion in a 24-month period.

Revenue growth (over the last 24 months)

Profit margin expansion (over the last 24 months)

Percent of sales from new products (<3 years old)

17%

14%

17%

8%

8%

10%

FIGURE 4. BENEFITS OF TOP PERFORMERS

Top Performer Average

Criteria Top Performers Average Performer

Generating innovative concepts 4.5 3.3

Selecting concepts from R&D pipeline for development based on technical criteria

4.7 3.2

Identifying the required manufacturing processes and equipment at pilot stage

4.4 3.3

Identifying the appropriate feed stock / materials to manufacture the desired products at scale

4.5 3.3

TABLE 1. TOP PERFORMERS DEFINED

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UNDERSTAND THE OPPORTUNITIES IN NEW MATERIALS

The endless opportunities for innovation can be over-whelming. How should companies prioritize focus? New materials represent a very exciting opportunity for innovation. In fact, Top Performers view new materials as extremely important to meeting their innovation goals (Figure 5).

On a scale of one to five, with five being extremely important, Top Performers rated new materials and their applications a 4.4 in terms of importance for meeting their innovation goals. This says that Top Performers feel new materials and applications play a critical role in innovation.

WHY DO TOP PERFORMERS FIND NEW MATERIALS SO IMPORTANT? Respondents were asked to pick the top three reasons driving requirements for new materials (Figure 6).

Performance and cost overwhelmingly drive Top Performers to use new materials. This shows that Top Performers often choose to look at new materials to make their products better and more affordable.

Based on past research from Tech-Clarity’s Reducing Non-Value Added Work in Engineering, performance and cost are among the top five ways companies look to differentiate themselves. Therefore, Top Performers find that innovation around new materials and appli-cations provides them with a competitive advantage. Interestingly, all of the Top Performing companies said they have requirements for new materials and applications.

Considering the importance and opportunities sur-rounding new materials and applications, companies should establish practices to enable team members to understand the latest developments in new mate-rials so that they too can enjoy similar benefits of more competitive products.

FIGURE 6. TOP DRIVERS FOR NEW MATERIALS

Customer needs

Regulations

Sustainability

Cost

Performance

82%

69%

31%

38%

26%

Top Performer

“Top Performers find that innovation around new materials and applications provides them with a competitive advantage.”

4.4

3.9

FIGURE 5. IMPORTANCE OF NEW MATERIALS AND APPLICATIONS TO INNOVATION GOALS


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CONSIDER HOW TO BALANCE DIFFERENT LEVELS OF INNOVATION

The different levels of innovation can be divided into four categories:

• Break-through Innovation: This represents the most innovation. Products are new to the world.

• Major Improvements: These are major improve-ments over an existing product or a “better mousetrap.” This category also represents a high level of innovation.

• Incremental Innovation: This is minor updates to existing products.

• Me-too: This is more of a fast-follower approach. It involves offering products that are similar to what is already available at a competitor.

A product portfolio typically consists of a mix of these categories. Companies need to balance the more risky, yet potentially more profitable innovations with safer investments that typically yield less reward.

Figure 7 compares the typical innovation mix of new materials development for Top Performers and Average Performing companies.

Compared to lesser performing competitors, Top Performers put far more emphasis on greater levels

of innovation, with 55% of their portfolio dedicated to break-through innovation and major improvements.

When looking at applications for new materials, the differences become even more striking (Figure 8). Top Performers dedicate 63% of their portfolio to greater innovation, compared to only 39% for Average Performers. Meanwhile, Average Performers focus 66% of their portfolio on products that are less innovative.

Top Performers take a very balanced approach with innovation, meeting short-term goals, but also putting more emphasis on a long-term approach that will yield a strong pipeline for future revenue streams.

“Top Performers put far more emphasis on greater levels of Innovation, with 55% of their portfolio dedicated to break-through innovation and major improvements.”

FIGURE 7. BALANCE OF INNOVATION PORTFOLIO FOR NEW MATERIALS

Top Performer

Average

Break-Through Innovation Major Improvement Other

“Me-too” Incremental Innovation

20%

12%

35%

29%

16%

32%

27%

25%

2%

2%

0% 20% 40% 60% 80% 100%

Top Performer

Average

Break-Through Innovation Major Improvement Other

“Me-too” Incremental Innovation

0% 20% 40% 60% 80% 100%

FIGURE 8. BALANCE OF INNOVATION PORTFOLIO FOR NEW MATERIAL APPLICATIONS

32%

11%

31%

28%

17%

34%

18%

22%

2%

4%

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IMPLEMENT THE RIGHT INNOVATION STRATEGIES

Which strategies make the difference for Top Performing success (Figure 9)?

Tech-Clarity’s report, Creating the Environment to Innovate finds, “To drive innovation, companies must put strategies in place to improve the way that people, processes, and tools enable and contribute to innovation.” Figure 9 shows that Top Performers do just this. They are 32% more likely to have a strategy to implement processes that expand their sources for new ideas. They recognize the value of looking at multiple resources for inspiration and ideas. With a large funnel of ideas, they have a better shot of pick-ing the right ones. They also support their people by establishing a culture of innovation so that people feel empowered to explore new ideas. The biggest difference is the use of technology. Top Performers are 56% more likely than their competitors to use technology to help them, including technology that taps into new sources for innovation.

To execute these strategies, Top Performers follow several processes to support innovation (Figure 10).

To stay focused on customer needs and help them address the top risks of commercial success (Figure 3), Top Performers implement several customer-oriented processes. As their top process, they define the customer problem and stay focused on it. Then, they ensure they meet customer needs by involving customers or those in customer facing roles to evaluate commercial potential. To efficiently arrive at potential solutions and expand their sources of ideas, they research existing discoveries and involve experts from different areas of expertise. They also define what success means up front and use this success criteria to evaluate projects throughout the lifecycle to ensure continued investments make sense.

“Top Performers are 32% more likely to have a strategy to implement processes that expand their sources for new ideas.”

FIGURE 9. STRATEGIES TO BECOME MORE INNOVATIVE

Expand sources of new ideas and solutions

Establish a culture of innovation

Invest in technology to support innovation processes

66%

66%

64%

50%

56%

41%


FIGURE 10. TOP PROCESSES USED BY TOP PERFORMERS TO BECOME MORE INNOVATIVE

Access experts outside of area of expertise

Involve customers or those in customer facing roles in evaluating commercial potential

Establish success metrics to justify continued investment

Research existing discoveries for potential solutions

Define and focus on customer problems

50%

52%

68%

66%

34%

Top Performer

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PRIORITIZE RESOURCES AND PROCESSES THAT HELP ACCELERATE DISCOVERY AND COMMERCIALIZATION

The uncertainly around the time required to realize a return on an innovation investment creates risk. Companies who successfully accelerate the discovery phase and then efficiently commercialize those ideas, will have an advantage. By accelerating these phases, they invest less, which lowers their risk. Figure 11 shows how Top Performing companies accelerate discovery and commercialization.

Top Performers take a strategic approach to innova-tion and support it through planning and research. The biggest difference between Top Performers and their lesser performing competitors is that Top Performers are 66% more likely to take advantage of the latest academic research. This helps them identify cutting edge advances while also lowering their risk by learning from the efforts of academic researchers.

This saves them both time and money. Armed with the latest research, companies are also better positioned to mitigate the top three risks of com-mercial success: poor alignment to customer needs, technical failures and loss of time (Figure 3). With access to reliable information, companies can better understand customer needs and align projects to them. In addition, with good research resources, they are well informed about technology advances to help avoid technical failures. Plus, by using research, they can arrive at solutions faster, helping them to get to market more quickly.

Top Performers do not stop there when planning for commercialization. They also investigate options to further mitigate risk. They are 46% more likely to research cost drivers and 24% more likely to research limitations of the materials. With these efforts they are better prepared to make informed decisions about which ideas to move forward for commercial-ization. With a good understanding of cost drivers, they can better assess profitability risks. They can also plan around cost drivers to better manage costs. With a good understanding of material limitations they can make better decisions around feasibility for different applications and catch projects that have a high risk of technical failure before much investment.

“The biggest difference between Top Performers and their lesser performing competitors is that Top Performers are 66% more likely to take advantage of the latest academic research.”

FIGURE 11. HOW TO ACCELERATE THE DISCOVERY AND COMMERCIALIZATION OF NEW MATERIALS

Take advantage of the latest academic research

Research cost drivers

Research material limitations

58%

54%

50%

35%

37%

40%


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SUCCESSFULLY TRANSITION FROM CONCEPT TO MANUFACTURE AT SCALE BY LOOKING AT THE ENTIRE SYSTEM

While the discovery process is critical to innovation, transitioning concepts to manufacture at scale is also important to success. Figure 12 shows how Top Performers successfully do this.

Everyone, regardless of performance, agrees that all components of new concepts should scale up based on costs and volume. Components include things such as supplies and equipment. However, Top Performers look beyond this. They do not view this as a siloed process and consider other implications for the company. They are 71% more likely than their competitors to manage the environmental, safety, and health risks and 24% more likely to research latest developments on production and process tech-niques. Further supporting this, they are 39% more likely to enable continuous improvement so that as they learn, they can continually implement better practices so they ramp up more quickly.

“Everyone, regardless of performance, agrees that all components of new concepts should scale up based on costs and volume.Components include things such as supplies and equipment. However, Top Performers look beyond this.”

FIGURE 12. TRANSITIONING CONCEPTS TO MANUFACTURE AT SCALE

Enable continuous improvement

Ensure that all components of new concepts can scale up based on costs and volume

Manage environmental, safety, and health risks

Research latest developments on production and process techniques

62%

54%

54%

51%

44%

54%

31%

41%


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EMPOWER PEOPLE WITH KNOWLEDGE AND A CULTURE OF INNOVATION

A big piece of creating a culture of innovation is empowering people to innovate. Figure 13 shows how Top Performers do this.

Top Performers empower their people to innovate by giving them access to additional resources. Top Performers are 24% more likely to give their teams access to the right resources, 53% more likely to ensure those resources are in an easy-to-find format,

and 63% more likely to use research that is pre-sented in a way that can be applied and acted on. With access to the right resources, staff can tap into expanded sources of ideas and potential solutions. They can research existing discoveries for potential solutions which not only saves time, but also allows them to tap into resources outside of their areas of technical expertise. All of this helps to reduce risks associated with commercial success (Figure 3). Furthering this, the make up of teams should include varied backgrounds and disciplines. Finally, Top Performers are 18% more likely to allow teams to fail. Without being hindered by the fear of failure, teams are more likely to try out new ideas that will lead to more break-through innovations. Some ideas fail, but with the freedom to explore ideas, there will be more in the pipeline which will eventually lead to a greater number of successful ideas.

Given the results in Figure 13, why are resources so important? Survey respondents indicated what they see as the benefits of both academic and technical references (Figure 14).

Regardless of performance, companies see a lot of value in both academic and technical references, with only 3% saying there are no benefits. Companies find that academic resources help them expand their sources of innovation without investing time and money in those discoveries. They also find both academic and technical references help avoid rein-venting the wheel. They can take advantage of work done by others and focus their efforts on new work. This also contributes to why resources save time.When the content is searchable, they can save time finding what they need. Technical references comple-ment the relatively more experimental and early stage nature of technologies discussed in academic research. Companies like that technical references are trustworthy so they know they can rely on it to make important decisions, unlike informa-tion found when searching the internet or message forums. Finally technical references minimize risk because companies can take advantage of proven work done by reputable sources, without investing time and money. The time saving benefits also reduce risk because more efficient, faster innovation processes mean less development investment.

In addition to access to searchable technical information resources, other technologies help too (Figure 15).

“Top Performers empower their people to innovate by giving them access to additional resources.”

FIGURE 13. HOW TEAMS ARE EMPOWERED TO INNOVATE

Access to the right resources

Teams include multiple disciplines and diverse backgrounds

People are allowed to fail

Resource material is searchable and easy to find

Resource material is presented in a digestible / actionable format

73%

68%

62%

46%

41%

59%

65%

53%

30%

25%


13

A variety of tools are used to support innovation.These tools help Top Performing companies tap into new sources of ideas, manage ideas, pick the right ideas, and manage the process for commercializing them.

“Regardless of performance, companies see a lot of value in both academic and technical references.”

FIGURE 14. BENEFITS OF RESOURCES

Expands sources of innovation with minimal investment

Avoids reinventing the wheel

Saves time

Searchable

Trustworthy

Minimizes risk

There are no benefits

50%

50%

39%

39%

27%

17%

3%

35%

53%

53%

46%

48%

40%

1%

Academic References Technical References

FIGURE 15. TECHNOLOGY SUPPORTING INNOVATION

Project Management

IP/Patent Management

Idea Management

Product Portfolio Management

Search tools or online databases to tap into unstructured data from

PLM (Product Lifecycle Management)

67%

56%

56%

53%

44%

44%

59%

39%

32%

28%

40%

22%


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CONCLUSIONIn a global environment where competi-tive pressures are significant, innovation is key to ensuring future revenue streams. However, it can be hard to focus on innova-tion when day-to-day activities take priority and when high levels of innovation can bring risk. Tech-Clarity’s research reveals that with a balanced strategy that considers people, process, and technology, compa-nies can accelerate the time for discovery and commercialization and successfully transition to manufacture at scale. The research uncovers 6 lessons learned from Top Performing companies that lead to greater revenue growth, higher profit margins, and a portfolio that sees more revenue from new products.

Among these lessons, Top Performing companies view new materials and applica-tions as very important to meeting their innovation goals. Market requirements for better performance and lower cost, as well customer needs, are driving companies to look at new options for new materials and applications, which improves their competitiveness. Best practices used by Top Performing companies includes empowering their teams to take advantage of the latest advances in materials with access to the right resources.

RECOMMENDATIONSBased on industry experience and research for this report, Tech-Clarity offers the following lessons:

1. Understand the opportunities in new materials

2. Consider how to balance the innova-tion portfolio with different levels of innovation, but ensure greater levels of innovation make up a good portion of the overall portfolio

3. Implement the right innovation strate-gies by expanding sources of innovation, establishing a culture of innovation, and investing in technology to support inno-vation processes

4. Prioritize resources and processes that help accelerate discovery and commercialization

5. Successfully transition concepts to manufacture at scale by looking at the entire system

6. Empower people with knowledge and a culture of innovation.

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ABOUT THE TECH-CLARITY RESEARCHER, MICHELLE BOUCHERMichelle Boucher ([email protected]) is the Vice President for research firm Tech-Clarity (www.tech-clarity.com). Michelle has spent over 20 years in various roles in engineer-ing, marketing, management, and as an analyst. She has broad experience with topics such as innovation, product design, simulation, systems engineering, mecha-tronics, embedded systems, PCB design, improving product performance, process improvement, and mass customization. She graduated magna cum laude with an MBA from Babson College and earned a BS in Mechanical Engineering, with distinction, from Worcester Polytechnic Institute.

Ms. Boucher began her career holding various roles as a mechanical engineer at Pratt & Whitney and KONA (now Synventive Molding Solutions). She then spent over 10 years at PTC, a leading MCAD and PLM solution provider. While at PTC, she developed a deep understand-ing of end user needs through roles in technical support, management, and product marketing. She worked in techni-cal marketing at Moldflow Corporation (acquired by Autodesk), the market leader in injection molding simulation. Here she was instrumental in developing product positioning and go-to-market mes-sages. Ms. Boucher then joined Aberdeen Group and covered product innovation,

product development, and engineering processes, eventually running the Product Innovation and Engineering practice.

Ms. Boucher is an experienced researcher and author. She has benchmarked over 7000 product development professionals and published over 90 reports on product development best practices. She focuses on helping companies manage the complexity of today’s products, markets, design environments, and value chains to achieve higher profitability.

ABOUT THE RESEARCHTech-Clarity gathered and analyzed 318 responses to a web-based survey on enabling innovation with new materials and applications. Survey responses were gathered by direct e-mail, social media, and online postings by Tech-Clarity, Engineering.com, Materials Today readership, and Elsevier.

The responding companies were a good representation of industries, including:

Note that these numbers add up to greater than 100% because some compa-nies indicated that they are active in more than one industry.

The respondents reported doing busi-ness globally, with most companies doing business in:

The respondents represented a mix of company sizes, including:

All company sizes were reported in US dollar equivalent.

The respondents were comprised of:

The organizational function of the respondents included:

Respondents determined not to be directly involved in developing or produc-ing products (including software vendors and consultants) were not included in the analysis. The majority of companies were considered to have direct involvement in developing and/or producing products and the report reflects their experience.

23%20%19%18%16%13%13%11%10%

AutomotiveChemicalsHigh-tech and ElectronicsIndustrial EquipmentAerospace and DefenseBuilding ProductsConsumer ProductsEnergy / UtilitiesLife Sciences and others.

62%42%43%17%18%5%

North AmericaFollowed by Western EuropeAsia-Pacific regionsEastern Europe Latin AmericaAfrica

Chemical Engineering or Chemical Process EngineersChemistsMaterial Scientists or EngineerManufacturing EngineersOther EngineeringGeneral ManagementOther functions.

5%9%23%19%26%10%8%

From smaller companies (less than $100 million)

Between $100 million and $1 billion

Over $1 billion

Chose not to disclose their company size or did not know

33%

20%

34%

19%

About one-half who were individual contributors (scientists, R&D, engineers, etc).

Another one-third were manager or director level.

The remainder VP or executive levels.

53%

31%

16%

Knovel is a trademark of Reed Elsevier Properties SA, used under license. Copyright© 2016 Elsevier B.V. All rights reserved. July 2016

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