From Portfolio Management to Open Innovation - 2012 R&D Innovation and Product Development...

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

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From Portfolio Management to Open Innovation

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2012 r&d/innovation and product development priorities survey results

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#2012priorities

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2012 survey resultsgrowth team m e m b e r s h i p™

CONTENTS

INTRO

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Survey Purpose and Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

What is the Growth Team Membership™ . . . . . . . . . . . . . . . . . . . . . . . . 5

R&D/Innovation and Product Development Overarching Challenges . . . . . . . . . . 6

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

1

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

4

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

2

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

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Growth Team Membership™ research.

Introduction

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 CausePrioritizing innovation ideas and projects Ineffective process

SECTION 2: R&D/Innovation and Product Development Resource Trends

Budgets Resources Resource AllocationR&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- and medium-term innovation projects

SECTION 3: Open Innovation (OI)

OI Team Key OI Challenge External OI Sources Majority of companies have some form of OI team

Establishing buy-in internally for open innovation

Customers are the primary source of OI ideas

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Introduction

Survey Purpose and Respondents

Co-SponsorSurvey PopulationMethodologyResearch Objective

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

Web-based survey platform Manager-level and above R&D/innovation and product development executives from companies throughout North and South America

146survey

respondents

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Introduction

What is the Growth Team Membership™?

GTM is a subscription program that supports executives within the functions that report to the CEO

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

CorporateStrategy

Corporate Development

Marketing

CompetitiveIntelligence

MarketResearch

SalesLeadership

R&D/Innovation

Investors/Finance

CEO

R&D/Innovation

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 functions’ and companies’ performance and productivity

[email protected] www.gtm.frost.com slideshare.net/FrostandSullivantwitter.com/Frost_GTM

mailto:GTMresearch%40frost.com?subject=

http://www.gtm.frost.com

http://www.slideshare.net/FrostandSullivan

https://twitter.com/#!/Frost_GTM

6




Introduction

R&D/Innovation and Product Development Overarching Challenges Sample Solutions from GTM

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

Contact us at GTMResearch@frost .com .

Portfolio ManagementR&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 InnovationAs 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 .

mailto:GTMResearch%40frost.com?subject=

http://www.frost.com/prod/servlet/cpo/248798731



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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3

SECTION

1 Key R&D/Innovation and Product Development Challenges

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Section 1

Challenge 1 Prioritizing innovation ideas and projects (14%)

Challenge 2 Allocating portfolio spend across short-, medium-, and long- term projects (11%)

Challenge 3 Identifying breakthrough new product ideas (13%)

Challenge 4 Maximizing portfolio value while mitigating portfolio risk (8%)

Challenge 5 Integrating input from partners in Sales, Marketing, etc . (10%)

Top Five R&D/Innovation and Product Development Challenges

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

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.

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Section 1

R&D executives in B-to-B companies are struggling with open innovation, while their peers in B-to-C companies endeavor to identify and secure buy-in for new ideas

Top Five R&D/Innovation and Product Development Challenges (By Business Model)

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.

B-to-B B-to-C

Challenge 1 Prioritizing innovation ideas and projects (18%)Securing executive buy-in for promising innovations (11%)

Challenge 2 Allocating portfolio spend across short-, medium-, and long- term projects (14%)

Prioritizing innovation ideas and projects (19%)

Challenge 3 Generating an accurate and relevant technology roadmap (9%)

Identifying breakthrough new product ideas (14%)

Challenge 4 Streamlining research, design, and development activities to reduce costs (10%)

Allocating portfolio spend across short-, medium-, and long- term projects (10%)

Challenge 5 Managing an open innovation process (15%)Streamlining research, design, and development activities to reduce costs (13%)

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Section 1

R&D executives’ challenges are predominantly attributed to understaffing

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

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

Top Five R&D/Innovation and Product Development Challenges

Challenge 1 Prioritizing innovation ideas and projects Process: Ineffective process (35%)

Challenge 2 Allocating portfolio spend across short-, medium-, and long- term projects Staff: Limited resources (46%)

Challenge 3 Identifying breakthrough new product ideas Staff: Limited resources (43%)

Challenge 4 Maximizing portfolio value while mitigating portfolio risk Staff: Limited resources (25%)

Challenge 5 Integrating input from partners in Sales, Marketing, etc . Staff: Limited resources (30%)

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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3

SECTION

2 R&D/Innovation and Product Development Resource Trends

12




Section 2

Most respondents report R&D/innovation budgets in excess of $20 million

2012 R&D/Innovation and Product Development Budgets (By Business Model)

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

All Companies B-to-B Companies B-to-C Companies

FF F

F

F

F

F

0%

10%

20%

30%

40%

24%

4%

9%

14%

11%

16%

4%

8%

15%

12%

7% 6%

30%

40%

14%12%

13%

6%

14%

7%

34%

The red percentages are for all respondents .

$500,000 to $999,999

Below $500,000 $1 Million to $2.99 Million

$3 Million to $4.99 Million



$20 Million or more

percentage of company revenue allocated to r&d

Companies dedicated approximately 3% of their 2011 revenue to their 2012 R&D/innovation and product development budgets.

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Section 2

All Companies

B-to-B Companies

B-to-C Companies

The majority of R&D executives are spending more on short-term innovation projects

Change in Portfolio Allocation (By Business Model)

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

58%

30%

12%

INCREASE

STAY THE SAME

DECREASE

INCREASE

STAY THE SAME

DECREASE

INCREASE

STAY THE SAME

DECREASE

38%

46%

16%

18%

46%

36%

30%

44%

26%

60%

25%

15%

35%

48%

17%

12%

52%

36%

37%

44%

19%

54%

36%

10%

42%

42%

16%

26%

34%

34%

25%

47%

28%

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

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Section 2

Respondents anticipate additional staff in 2012

R&D/Innovation and Product Development Staffing Changes (By Business Model)

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

19%

3%

4%

33%

40%

Stay the Same

Decrease Moderately

Decrease Substantially Increase Substantially

Increase Moderately

All Companies

B-to-C Companies

B-to-B Companies

27%

23%

44%

Stay the Same

Decrease Moderately

Increase Substantially

Increase Substantially

Increase Moderately

5% 4%

6%

39%

41%

12%

Stay the Same

Decrease Moderately

Decrease Substantially

Increase Moderately

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Section 2

R&D executives expect their budgets to increase in 2012

R&D/Innovation and Product Development Budget Changes (By Business Model)

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

15%

2%3%

31%45%

Stay the Same

Decrease Moderately

Decrease Substantially Increase Substantially Increase Substantially

Increase Moderately

All Companies

B-to-C Companies

B-to-B Companies

18%

33%41%

Stay the Same

Decrease Moderately Increase Substantially

Increase Moderately

4%6%

8%

27% 54%

13%

Stay the Same

Decrease Moderately

Decrease Substantially

Increase Moderately

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Section 2

Regardless of business model, respondents rank their functions’ effectiveness as “Above Average”

R&D/Innovation and Product Development Effectiveness (By Business Model)

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

All Companies B-to-B Companies

B-to-C Companies

4%

2%

2%

4%

2%

49% 48%

53%

33% 37%

31%

12% 12%

12%

Above AverageAbove Average

Above Average

Exceptional Exceptional

Exceptional

Below Average

Poor

Poor

Below Average

Below Average

AverageAverage

Average

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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3SECTION

3 Special Interest Topic: Open Innovation

18




Section 3

Most companies assign open innovation to a sub-team within R&D

OI Teams Within R&D (By Business Model)

SURVEY QUESTION: Do you have staff dedicated to open innovation? If so which of the above describes your open innovation team structure?

Yes YesYes

B-to-C CompaniesAll Companies B-to-B Companies

64%58%59%

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

OI Team StructureSub-group within R&D/product development (42%)

OI Team StructurePart-time technology scout(s) within R&D/product development (38%)

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Section 3

The majority of companies assign no more than four employees to open innovation tasks

Number of OI Staff (By Business Model)

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

All Companies B-to-B Companies B-to-C Companies0

3

6

3

4 4

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

Number of OI Staff

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Section 3

Respondents’ OI challenges run the gamut of garnering initial buy-in to collaborating with partners

Top Five Open Innovation Challenges (By Business Model)

SURVEY QUESTION: Rank the above open innovation challenges in order of importance .

Garnering the internal resources needed to test innovation concepts’ feasibility (14%)

Creating a shared understanding of the challenge(s) to be addressed through open innovation (14%)

Overcoming the fear of lost IP and competitive advantage (11%)

Creating mutually agreed-upon key performance indicators (17%)

Developing a process to assess innovation concepts’ feasibility (17%)

Creating an effective open innovation collaboration framework (17%)

Creating a shared understanding of the challenge(s) to be addressed through open innovation (23%)

Measuring the impact of open innovation on product development efforts as a whole (11%)

Measuring the impact of open innovation on product development efforts as a whole (20%)

Developing a process to assess innovation concepts’ feasibility (16%)

Assessing the viability of a potential partner (11%)

Assessing the viability of a potential partner (14%)

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

Establishing buy-in internally for open innovation (25%)

Creating mutually agreed-upon key performance indicators (22%)

Creating an effective open innovation collaboration framework (19%)


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Section 3

B-to-C respondents are more likely to use OI throughout the product development cycle than their B-to-B peers

Use OI in the Product Development Cycle (By Business Model)

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

All Companies

38% 25% 24% 1%

B-to-B Companies

33% 21% 18% 1%

B-to-C Companies

46% 33% 35% 2%

Idea generation Idea screening Concept testing and development Product launch

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Section 3

Regardless of business model, customers are R&D’s primary source of OI ideas

Top Three OI Sources (By Business Model)

SURVEY QUESTION: Please rank your top three sources of open innovation ideas .

Academia (28%) Academia (27%) Academia (29%)

Customers (33%)Customers (44%)

Adjacent businesses (30%)

Customers (39%)

Adjacent businesses (33%) Adjacent businesses (28%)


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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3

SECTION

4 Respondent Demographics

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Section 4

Respondent Demographics

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

N = 144

N = 142N = 149

Enterprise Type Business Model

Company Revenue

37%

1%6%

3% 3%

50%

31%

14%

55%Public

Private

Hybrid

B-to-B Company

Venture CapitalGovernment/Public Sector

Not for Profit

0%

25%

50%

31%

17%

6%

30%

16%

Below $100 Million



$1 Billion to $11 Billion

More than $11 Billion

B-to-C Company (Indirect)

B-to-C Company (Direct)

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

The majority of respondents work in publicly held companies .

25




Section 4

Electronics and Security

Consumer Goods

Chemicals, Materials, and Food

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

Respondent Demographics: Top Six Participating Industries

N = 146

0% 20% 40%

36%

22%

20%

17%

16%

16%

Automotive and Transportation

Healthcare and Life Sciences

Information and Communication Technologies

Date post:	18-Jul-2015
Category:	Business
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