Open Innovation for Idea Generation - 2012 R&D Innovation Priorities Survey Results

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

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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19SECTION

4

R&D/Innovation and Product Development Resource Trends . . . . . . . . . . . . . . 10SECTION

2

Special Interest Topic: Open Innovation . . . . . . . . . . . . . . . . . . . . . . . . . 15SECTION

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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 CauseGenerating an accurate and relevant technology roadmap Insufficient personnel

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

Budgets Resources Portfolio AllocationR&D typically has an annual budget of $20 million or more

Budgets are expected to increase moderately, but staffing levels will stay the same

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 do not maintain an OI team

Measuring the impact of open innovation on product development efforts as a whole

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 Europe

83survey

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

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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 .

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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 Generating an accurate and relevant technology roadmap (16%)

Challenge 2 Prioritizing innovation ideas and projects (15%)

Challenge 3 Identifying breakthrough new product ideas (13%)

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

Challenge 5 Managing an open innovation process (15%)

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’ challenges are attributed to staff and process limitations

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 Generating an accurate and relevant technology roadmap Staff: Limited resources (50%)

Challenge 2 Prioritizing innovation ideas and projects Staff: Limited resources (71%)

Challenge 3 Identifying breakthrough new product ideas Staff: Inadequate skills (29%)

Challenge 4 Streamlining research, design, and development activities to reduce costs Process: Ineffective process (40%)

Challenge 5 Managing an open innovation process Process: Lack of process (29%)

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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3

SECTION

2 R&D/Innovation and Product Development Resource Trends

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Section 2

Most R&D budgets tend to fall at extreme ends of the spectrum

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)?

0%

10%

20%

30%

40%

25%

6%

12%

6% 6%

14%

31%

$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 5% of their 2011 revenue to their 2012 R&D/innovation and product development budgets.

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Section 2

There is little change in budget allocations to long-term and disruptive innovations

Change in Portfolio Allocations

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

51%

35%

14%

INCREASE

STAY THE SAME

DECREASE

49%

41%

10%

33%

46%

21%

27%

52%

21%

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

Although R&D executives foresee few changes in staffing levels, budgets will increase

R&D/Innovation and Product Development Staffing and Budget Changes

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

13%

6%

44%

31%

Stay the Same

Decrease Moderately

Decrease Substantially Increase Substantially

Increase Moderately

Staffing Budget

Decrease Substantially Increase Substantially

6% 4%4%

31% 50%

11%

Stay the Same

Decrease Moderately

Increase Moderately

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Section 2

Most R&D executives rank their functions’ effectiveness “Average”

R&D/Innovation and Product Development Effectiveness

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

2%

40%

45%

13%

Above Average

ExceptionalBelow Average

Average

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INTRO

SECTION

1

SECTION

2

SECTION

4

SECTION

3SECTION

3 Special Interest Topic: Open Innovation

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Section 3

Companies that have open innovation teams tend to employ part-time technology scouts

OI Teams Within R&D

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

Yes42%

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

number of oi staffThe majority of companies that employ open innovation have three dedicated OI staff members. This number is based on the median value for this question.

OI Team StructurePart-time technology scout(s) within R&D/product development (35%)

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Section 3

Respondents are focused on challenges associated with establishing partnerships and measuring ROI

Top Five Open Innovation Challenges

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

Fostering trust between your employees and strategic partners (16%)

Creating a shared understanding of the challenge(s) to be addressed through open innovation (20%)

Finding partners with suitable intellectual property (IP) (18%)

Assessing the viability of a potential partner (18%)

Measuring the impact of open innovation on product development efforts as a whole (17%)

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Section 3

Academia (30%)

Open innovation is used primarily for idea generation

Use OI in the Product Development Cycle

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

30% 25% 23% 8%

Idea generation Idea screening Concept testing and development Product launch

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

Top Three OI Sources

Customers (53%) Adjacent Business (21%)

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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 = 83

N = 82N = 83

Enterprise Type Business Model

Company Revenue

53%

6%

6%6%

2%

27% 21%

11%

68%

Public

Private

Hybrid

B-to-B Company

Venture Capital

Government/Public Sector

Not for Profit

0%

25%

50%

33%

18%

8%

28%

13%

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 respondents come from B-to-B companies .

Most of the respondents work in privately held companies .

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Section 4

Energy and Power Systems

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 Five Participating Industries

N = 83

0% 20% 40%

40%

23%

23%

22%

18%

Automotive and Transportation

Healthcare and Life Sciences

Information and Communication Technologies