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Growth Team Membership™:2010 Priorities
R&D/Innovation and Product Development Americas Survey Results
May 2010
Contact us at [email protected]
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2Growth Team Membership™ Research.
What is Growth Team Membership™?
Growth Team Membership™ (GTM) is an annual subscription program that offers research, events and services designed to increase the effectiveness, productivity, and impact of executives in the functions that support the CEO’s growth strategy.
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3Growth Team Membership™ Research.
Table of Contents
Page
Section 1: Survey Purpose and Respondents 4
Section 2: External Factors Shaping R&D/Innovation and Product Development Strategies 5
Section 2.1: By Business Model 8
Section 3: Key R&D/Innovation and Product Development Challenges 9
Section 3.1: By Business Model 13
Section 4: R&D/Innovation and Product Development Effectiveness and Expenditures 14
Section 4.1: By Business Model 15
Section 5: Respondent Demographics 25
The content of these pages are © 2010 Frost & Sullivan. All rights reserved.
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4Growth Team Membership™ Research.
Survey Purpose and Respondents
There were 94 survey
respondents
Research ObjectiveTo understand the most pressing external and internal challenges shaping R&D/innovation and product development executives’ 2010 planning.
MethodologyWeb-based survey platform
Survey PopulationTarget respondents were Manager level and above R&D/innovation and product development executives from companies throughout North and Latin America.
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5Growth Team Membership™ Research.
External Factors Shaping R&D/Innovation and Product Development Strategies
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6Growth Team Membership™ Research.
Top Three External Factors
36%
20%
17%
0% 25% 50%
Need for product/service innovation and capabilities
Tapping into global market opportunities
Intensifying competition
N = 84
KEY TAKEAWAY: Innovation strategies are heavily influenced by the need to find new opportunities—via markets or products.
Survey Question: Please indicate the three business environment factors that have the most impact on your 2010 R&D/innovation and product development strategies.
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7Growth Team Membership™ Research.
External Factors Impact on R&D/Innovation and Product Development
72% 69%77%
0%
50%
100%
Need for product/service innovation and capabilities
Tapping into global market opportunities
Intensifying competition
N = 84
Survey Question: Please indicate the impact that each of the following forces have on your 2010 R&D/innovation and product development strategies.
KEY TAKEAWAY: For 2010, two of the top three external factors impacting strategies are seen as overwhelmingly positive.
Negative ImpactPositive Impact
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8Growth Team Membership™ Research.
B-to-B B-to-C Hybrid
Need for product/service innovation and capabilities (31%)
Need for product/service innovation and capabilities (50%)
Need for product/service innovation and capabilities (36%)
Tapping into global market opportunities (24%)
Tapping into global market opportunities (25%)
Need for green/sustainability initiatives (16%)
Intensifying competition (19%)
Need for green/sustainability initiatives (25%)
Changes in customer /government regulation (16%)
External Factor 1
KEY TAKEAWAY: There is a considerable overlap in external challenges regardless of business model.
Top Three External Factors (By Business Model)
N = 84
External Factor 2
External Factor 3
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9Growth Team Membership™ Research.
Key R&D/Innovation and Product Development Challenges
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10Growth Team Membership™ Research.
Key R&D/Innovation and Product Development Challenges Snapshot
All CompaniesTop three challenges:
Identifying and developing breakthrough innovation ideas
Allocating portfolio spend across short-, medium-, and long-term horizon projects
Embedding the voice-of-the customer in innovation processes
B-to-B CompaniesTop three challenges:
Identifying and developing breakthrough innovation ideas
Creating and implementing metrics to measure innovation portfolios’ performance
Finding suitable external partners with complementary technologies
B-to-C CompaniesTop three challenges:
Identifying and developing breakthrough innovation ideas
Managing an open innovation process effectively
Allocating portfolio spend across short-, medium-, and long-term horizon projects
1
2
3
1
2
3
1
2
3
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11Growth Team Membership™ Research.
Top Five Key R&D/Innovation and Product Development Challenges
Challenge 1 Identifying and developing breakthrough innovation ideas (26%)
Challenge 2 Allocating portfolio spend across short-, medium-, and long-term horizon projects (10%)
Challenge 3 Embedding the voice-of-the customer in innovation processes (12%)
N = 69
Survey Question: Please indicate the top five challenges shaping your R&D/Innovation and Product Development decision-making in 2010.
KEY TAKEAWAY: Respondents’ concerns range from identifying breakthrough innovations to maximizing the value of Intellectual Property.
Challenge 4 Creating and implementing metrics to measure innovation portfolios’ performance (9%)
Challenge 5 Maximizing the value of Intellectual Property (commercializing, protecting, licensing and partnering) (11%)
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12Growth Team Membership™ Research.
Root Cause of Top Five R&D/Innovation and Product Development Challenges
Process61%
Process57% Process
50%
Process66%
Process67%
Staff39% Staff
43% Staff50%
Staff17%
Staff33%
0%
50%
100%
N = 69
Survey Question: For the top five challenges you selected above, please indicate whether the root cause of the challenge is staff, technology, or process.
KEY TAKEAWAY: Process or Staff are the primary root cause of R&D/Innovation and Product Development’s top challenges.
Systems Technology
17%
Identifying and developing
breakthrough innovation ideas
Maximizing the value of
Intellectual Property
(commercializing, protecting,
licensing, and partnering
Allocating portfolio spend across short-, medium-, and long-
term horizon projects
Embedding the voice-of-the customer in innovation processes
Creating and implementing
metrics to measure innovation portfolios
performance
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13Growth Team Membership™ Research.
B-to-B B-to-C HybridIdentifying and developing breakthrough innovation ideas (27%)
Identifying and developing breakthrough innovation ideas (39%)
Identifying and developing breakthrough innovation ideas (22%)
Creating and implementing metrics to measure innovation portfolios performance (15%)
Managing an open innovation process effectively (23%) Managing an open innovation
process effectively (18%)
Finding suitable external partners with complementary technologies (15%)
Allocating portfolio spend across short-, medium-, and long-term horizon projects (16%)
Finding viable new applications for existing products/capabilities (25%)
Finding viable new applications for existing products/capabilities (12%)
Creating and implementing metrics to measure innovation portfolios performance (15%)
Finding suitable external partners with complementary technologies (19%)
Allocating portfolio spend across short-, medium-, and long-term horizon projects (9%)
Maximizing the value of Intellectual Property (commercializing, protecting, licensing and partnering) (23%)
Allocating portfolio spend across short-, medium-, and long-term horizon projects (13%)
Challenge 1
KEY TAKEAWAY: Regardless of business model, respondents’ primary challenge centers on identifying and developing breakthrough innovation ideas.
Top Three R&D/Innovation and Product Development Challenges (By Business Model)
N = 69
Challenge 2
Challenge 3
Challenge 4
Challenge 5
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14Growth Team Membership™ Research.
R&D/Innovation and Product Development Effectiveness and Expenditures
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15Growth Team Membership™ Research.
R&D/Innovation and Product Development Expenditures and Effectiveness SnapshotAll Companies
Rank their R&D/innovation and product development effectiveness as “above average”
Allocate approximately 1% of their annual revenue to R&D/innovation and product development budget
Expect to increase their budget for the development of short-term horizon or incremental projects
Expect their staffing levels to stay the same in 2010
Expect their budgets to increase moderately in 2010
B-to-B CompaniesRank their R&D/innovation and product development effectiveness as “above average”
Allocate approximately 1% of their annual revenue to R&D/innovation and product development budget
Expect to increase their budget for the development of short-term horizon or incremental projects
Expect their staffing levels to stay the same in 2010
Expect their budgets to increase moderately in 2010
B-to-C CompaniesRank their R&D/innovation and product development effectiveness as “above average”
Allocate approximately 3% to 5%of their annual revenue to R&D/innovation and product development budget
Expect to increase their budget for the development of long-term and medium-term horizon projects
Expect their staffing levels to stay the same in 2010
Expect their budgets to increase moderately in 2010
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16Growth Team Membership™ Research.
Below Average17%
Average30%
Above Average45%
Exceptional8%
Below Average12%
Average38%
Above Average38%
Exceptional12%
Below Average25%
Average27%
Above Average39%
Exceptional9%
All Companies B-to-B Companies
Hybrid Companies
R&D/Innovation and Product Development’s View of Its Effectiveness (By Business Model)
N = 64
Survey Question: Please assess the overall effectiveness of your R&D/innovation and product development function compared to those in other firmswithin your industry.
KEY TAKEAWAY: Regardless of business model, executives are likely to rank their function’s effectiveness as “Above Average.”
B-to-C CompaniesAverage
9%
Above Average91%
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17Growth Team Membership™ Research.
23%
13%
7%
3%
13%
3% 3%
10%
25%
20%
30%
20%
30%31%
15%
8%
46%
20%15%
11%6%
13%
2%4%
2% 2%
9%16%
0%
25%
50%
1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% or more
B-to-B B-to-C Hybrid All Companies
2009 R&D/Innovation and Product Development Budgets(By Business Model)
N = 55
Survey Question: Please provide your 2009 total R&D/innovation and product development budget as a percentage of total company revenue.
KEY TAKEAWAY: B-to-C companies are more likely to allocate over 1% of their annual revenue to their R&D/innovation and product development budget than companies from other business models.
The red percentages are for all respondents.
Percentage of Total Company Revenue
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18Growth Team Membership™ Research.
2009 vs. 2010 R&D/Innovation and Product Development Project Pipeline (All Companies)
18%8% 8% 10% 9%
27%
32%23% 22% 27%
37%37%
40%48% 42%
16%20%
17%
12% 19%
2% 3%12% 8% 3%
0%
50%
100%
N = 59
Survey Question: In comparison to 2009, your 2010 R&D/innovation and product development budget for each of the following project categories will:
KEY TAKEAWAY: Companies are allocating more resources to short-term innovation projects in 2010.
Decrease Substantially
Decrease Moderately
Increase Moderately
Increase Substantially
Stay the Same
Short-term horizon incremental technology innovation
projects: adoption within 2 years
Incremental improvement
projects
Medium-term horizon incremental
technology innovation projects:
adoption within 2 to 4 years
Long-term horizon technology innovation
projects: adoption in 4 to 10+ years
Disruptive technologies
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19Growth Team Membership™ Research.
2009 vs. 2010 R&D/Innovation and Product Development Project Pipeline (By Business Model: B-to-B Companies)
15%9%
3% 6% 9%
33%
24%
12%
25%31%
37%
37%
49%
44%
41%
15%
24%
18%
16%13%
6%18%
9% 6%
0%
50%
100%
N = 36
Survey Question: In comparison to 2009, your 2010 R&D/innovation and product development budget for each of the following project categories will:
KEY TAKEAWAY: B-to-B companies are less likely to increase budget allocations to long-term innovation projects.
Decrease Substantially
Decrease Moderately
Increase Moderately
Increase Substantially
Stay the Same
Short-term horizon incremental technology innovation
projects: adoption within 2 years
Incremental improvement
projects
Medium-term horizon incremental
technology innovation projects:
adoption within 2 to 4 years
Long-term horizon technology innovation
projects: adoption in 4 to 10+ years
Disruptive technologies
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20Growth Team Membership™ Research.
2009 vs. 2010 R&D/Innovation and Product Development Project Pipeline (By Business Model: B-to-C Companies)
30%
10%20%
30%
50%40% 20%
20%
60%
30% 30%40%
40%
10% 10%
40%
10% 10%
0%
50%
100%
N = 10
Survey Question: In comparison to 2009, your 2010 R&D/innovation and product development budget for each of the following project categories will:
KEY TAKEAWAY: B-to-C companies are increasing their spend on medium-term innovation project in 2010.
Decrease Substantially
Decrease Moderately
Increase ModeratelyIncrease Substantially
Stay the Same
Short-term horizon incremental technology innovation
projects: adoption within 2 years
Incremental improvement
projects
Medium-term horizon incremental
technology innovation projects:
adoption within 2 to 4 years
Long-term horizon technology innovation
projects: adoption in 4 to 10+ years
Disruptive technologies
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21Growth Team Membership™ Research.
2009 vs. 2010 R&D/Innovation and Product Development Project Pipeline (By Business Model: Hybrid Companies)
15% 15%8% 8%
31%
46%
46%
23%31%
31%
54%31%
69% 53%
15%
8% 8%8%
0%
50%
100%
N = 13
Survey Question: In comparison to 2009, your 2010 R&D/innovation and product development budget for each of the following project categories will:
KEY TAKEAWAY: The majority of hybrid companies are increasing their budget for long-term innovation projects.
Decrease SubstantiallyDecrease Moderately
Increase Moderately
Increase Substantially
Stay the Same
Short-term horizon incremental technology innovation
projects: adoption within 2 years
Incremental improvement
projects
Medium-term horizon incremental
technology innovation projects:
adoption within 2 to 4 years
Long-term horizon technology innovation
projects: adoption in 4 to 10+ years
Disruptive technologies
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22Growth Team Membership™ Research.
Increase Substantially
9%
Increase Moderately
31%
Stay the Same40%
Decrease Moderately
18%
Decrease Substantially
2%
Increase Substantially
8%
Increase Moderately
39%
Stay the Same46%
Decrease Moderately
7%
Increase Substantially
9%
Increase Moderately
34%Stay the Same41%
Decrease Moderately
13%
Decrease Substantially
3%
2010 vs. 2009 Staffing Plans (By Business Model)
N = 59
Survey Question: In comparison to 2009, your 2010 R&D/innovation and product development staff will:
KEY TAKEAWAY: Staffing levels will largely remain unchanged from 2009.
All Companies B-to-B Companies
Hybrid CompaniesIncrease
Moderately20%
Stay the Same50%
Decrease Moderately
30%
B-to-C Companies
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23Growth Team Membership™ Research.
Increase Substantially
7%
Increase Moderately
30%
Stay the Same41%
Decrease Moderately
17%
Decrease Substantially
5%
Increase Substantially
7%
Increase Moderately
39%Stay the Same
39%
Decrease Moderately
8%
Decrease Substantially
7%
Increase Substantially
10%
Increase Moderately
30%Stay the Same
42%
Decrease Moderately
15%
Decrease Substantially
3%
All Companies B-to-B Companies
Hybrid Companies
2010 vs. 2009 Budgets (By Business Model)
N = 60
Survey Question: In comparison to 2009, your 2010 R&D/innovation and product development budget will:
KEY TAKEAWAY: The majority of respondents’ 2010 budgets will stay the same or increase.
Increase Moderately
20%
Stay the Same60%
Decrease Moderately
20%
B-to-C Companies
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24Growth Team Membership™ Research.
Increase Substantially
21%
Increase Moderately
52%
Stay the Same24%
Decrease Moderately
3%
Increase Substantially
10%
Increase Moderately
70%
Stay the Same20%
Increase Substantially
19%
Increase Moderately
58%
Stay the Same20%
Decrease Moderately
3%
Increase Substantially
25%
Increase Moderately
67%
Decrease Moderately
8%
All Companies B-to-B Companies
B-to-C Companies
Anticipated Company Performance in 2010 (By Business Model)
N = 59
Survey Question: In comparison to 2009, your company’s performance by the end of 2010 will:
KEY TAKEAWAY: The majority of respondents are optimistic, expecting a moderate increase in their company’s 2010 performance.
Hybrid Companies
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25Growth Team Membership™ Research.
Respondent Demographics
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26Growth Team Membership™ Research.
18% 21%10%
30%18%
0%
30%
60%
Below $100 million $100 to $499.99 million
$500 million to $999.99 million
$1 billion to $11 billion
More than $11 billion
Demographics
Private35%
Venture Capital
4%
Public61%
N = 87
Over half of the respondents work in a public company.
Survey Question: Please indicate the type of enterprise best represents your organization.
Respondents tended to be from public, B-to-B companies whose 2009 revenue ranged from $1 to $11 billion.
Enterprise Type Business Model
Company Revenue
N = 89
N = 85
B-to-B Company
52%Hybrid
Company28%
B-to-C Company
20%
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27Growth Team Membership™ Research.
Demographics: Top Five Participating Industries
23%
23%
16%
16%
14%
0% 15% 30%
Healthcare and Life Sciences
Chemicals, Materials, and Food
Information and Communication Technologies
Automotive and Transportation
Electronics and Security
N = 93
Survey Question: Please indicate which of these Industry categories best describes you organization (please indicate all that apply).
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28Growth Team Membership™ Research.
Contact GTM
If you have any questions or comments about this or our other surveys, please contact us at [email protected]