growth team membership 2010 priorities survey r&d/innovation and product development european...

Growth Team Membership™:2010 R&D/Innovation and Product

Development PrioritiesEuropean Survey Results

May 2010

Contact us at GTMResearch@frost.com

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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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Table of Contents

Page

Section 1: Survey Purpose and Respondents 4

Section 2: External Factors Shaping R&D/Innovation and Product Development Strategy 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 Effectivenessand 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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Survey Purpose and Respondents

There were 103 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 Europe

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

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Top Three External Factors

25%

16%

14%

0% 25% 50%

Need for product/service innovation and capabilities

Need for green/sustainability initiatives

Intensifying competition

N = 85

KEY TAKEAWAY: Strategies are heavily influenced by the need to stand out from the competition through new products or sustainability initiatives.

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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External Factors Impact on R&D/Innovation and Product Development

75%

100%

73%

0%

50%

100%

Need for product/service innovation and capabilities

Need for green/sustainability initiatives Intensifying competition

N = 85

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 positive.

Negative ImpactPositive Impact

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B-to-B B-to-C Hybrid

Need for product/service innovation and capabilities (34%)

Tapping into global market opportunities (25%)

Tapping into global market opportunities (28%)

Need for green/sustainability initiatives (16%)

Need for product/service innovation and capabilities (50%)

Need for product/service innovation and capabilities (25%)

Changes in customer /government regulation (14%)

Rising/high material (input) costs (25%)

Intensifying competition (26%)

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 = 85

External Factor 2

External Factor 3

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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

All CompaniesTop three challenges:

Identifying and developing breakthrough innovation ideas

Streamlining research, design and development activities to create cost efficiencies

Matching innovation projects to unmet customers needs

B-to-B CompaniesTop three challenges:

Streamlining research, design and development activities to create cost efficiencies

Identifying and developing breakthrough innovation ideas

Matching innovation projects to unmet customers needs

B-to-C CompaniesTop three challenges:

Obtaining external funding for innovation (e.g. government)

Maximising portfolio value while mitigating portfolio risk

Managing an open innovation process effectively

1

2

3

1

2

3

1

2

3

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Top Five Key R&D/Innovation and Product Development Challenges

Challenge 1 Identifying and developing breakthrough innovation ideas (18%)

Challenge 2 Streamlining research, design and development activities to create cost efficiencies (10%)

Challenge 3 Matching innovation projects to unmet customers needs (12%)

N = 71

Survey Question: Please indicate the top five challenges shaping your R&D/innovation and product development decision-making in 2010.

KEY TAKEAWAY: R&D/innovation and product development’s challenges are highly varied—ranging from identifying breakthrough ideas to budget allocations across the product portfolio.

Challenge 4 Managing an end-to-end innovation process (11%)

Challenge 5 Allocating portfolio spend across short-, medium-, and long-term horizon projects(13%)

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

Process62%

Process14%

Process100% Process

63%

Staff38% Staff

43%

Staff25%

Staff25%

0%

50%

100%

N = 71

Survey Question: For the top five challenges you selected above, please indicate whether the root cause of the challenge is staff, systems technology, or process.

KEY TAKEAWAY: Process or Systems Technology are cited as the primary root cause of R&D/Innovation and Product Development’s top challenges.

Systems Technology

43%

Systems Technology

75%

Systems Technology

12%

Identifying and developing

breakthrough innovation ideas

Allocating portfolio spend across

short-, medium-, and long-term

horizon projects

Streamlining research, design and development activities to create cost efficiencies

Matching innovation projects

to unmet customers needs

Managing an open innovation process

effectively

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B-to-B B-to-C Hybrid

Streamlining research, design and development activities to create cost efficiencies (21%)

Obtaining external funding for innovation (e.g. government) (25%)

Identifying and developing breakthrough innovation ideas (24%)

Identifying and developing breakthrough innovation ideas (18%)

Maximising portfolio value while mitigating portfolio risk (14%)

Streamlining research, design and development activities to create cost efficiencies (12%)

Matching innovation projects to unmet customers needs (14%)

Managing an open innovation process effectively (29%)

Creating and implementing metrics to measure innovation portfolios performance (13%)

Managing an open innovation process effectively (10%)

Streamlining research, design and development activities to create cost efficiencies (17%)

Maximising portfolio value while mitigating portfolio risk (13%)

Obtaining external funding for innovation (e.g. government) (10%)

Finding suitable partners to license technology (17%)

Allocating portfolio spend across short-, medium-, and long-term horizon projects (29%)

Challenge 1

KEY TAKEAWAY: The challenges remain primarily the same across business models only varying by their prioritization.

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

N = 71

Challenge 2

Challenge 3

Challenge 4

Challenge 5

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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 SnapshotAll Companies

Rank their R&D/innovation and product development effectiveness as “above average”

Allocate approximately 5% or 10% 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 increase moderately in 2010

Expect their budgets to stay the same in 2010

B-to-B CompaniesRank their R&D/innovation and product development effectiveness as “above average”

Allocate approximately 5% 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 increase moderately in 2010

Expect their budgets to stay the same in 2010

B-to-C CompaniesRank their R&D/innovation and product development effectiveness as “average”

Allocate approximately 3% of their annual revenue to R&D/innovation and product development budget

Expect to increase their budget for the development of medium-term horizon projects

Expect their staffing levels to increase moderately in 2010

Expect their budgets to increase in 2010

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Below Average17%

Average30%

Above Average45%

Exceptional8%

Average20%

Above Average67%

Exceptional13%

Below Average10%

Average34%

Above Average46%

Exceptional10%

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: Respondents in B-to-C companies are more likely to rank their function’s effectiveness as “Average.”

B-to-C Companies

Average42%

Above Average29%

Exceptional29%

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11%8% 8%

6%

17%

11%8%

31%29%

14%

8% 8% 8%

33%

43%

11%

6%

11%

4%

13%

2%0%

7%

0%

13%

43%

0%

10%

20%

30%

40%

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 than twice as likely to allocate 3% of their company revenue to their innovation budgets, than firms with other business models.

The red percentages are for all respondents.

Percentage of Total Company Revenue

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2009 vs. 2010 R&D/Innovation and Product Development Project Pipeline (All Companies)

14%3% 2%

10% 8%

41%

42%

29%

31% 33%

34%

40%

48%

41% 41%

9% 14%19% 12% 15%

2% 2% 6% 3%

0%

50%

100%

N = 64

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 increasing their budget allocations to short-term horizon 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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2009 vs. 2010 R&D/Innovation and Product Development Project Pipeline (By Business Model: B-to-B Companies)

7% 8% 10%

49%

39%

27%

36% 31%

32%

46%

54%

41% 44%

12% 15%17% 8% 10%

0%

50%

100%

N = 43

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 increasing their 2010 budget allocations to short-term horizon 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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2009 vs. 2010 R&D/Innovation and Product Development Project Pipeline (By Business Model: B-to-C Companies)

14% 14% 17%

29%

57%

33%

29%

43%

29%

29%

50%

57%

43%

14%

14% 14%14%

0%

50%

100%

N = 7

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 horizon projects for 2010.

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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2009 vs. 2010 R&D/Innovation and Product Development Project Pipeline (By Business Model: Hybrid Companies)

33%

7% 7%14%

7%

20%

40%33% 21% 35%

47%

33%

27% 36%29%

20%33% 21%

29%

7%

0%

50%

100%

N = 14

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: Hybrid companies plan to increase their budget for short-term horizon 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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Increase Substantially

10%

Increase Moderately

42%

Stay the Same32%

Decrease Moderately

16%

Increase Substantially

13%

Increase Moderately

33%Stay the Same27%

Decrease Moderately

27%

Increase Substantially

5%

Increase Moderately

48%

Stay the Same35%

Decrease Moderately

12%

2010 vs. 2009 Staffing Plans (By Business Model)

N = 63

Survey Question: In comparison to 2009, your 2010 R&D/innovation and product development staff will:

KEY TAKEAWAY: Regardless of business model, respondents expect a moderate increase in staffing levels for 2010.

All Companies B-to-B Companies

Hybrid Companies

Increase Substantially

29%

Increase Moderately

43%

Stay the Same14%

Decrease Moderately

14%

B-to-C Companies

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Increase Substantially

6%

Increase Moderately

29%

Stay the Same51%

Decrease Moderately

11%

Decrease Substantially

3%

Increase Substantially

7%

Increase Moderately

27%

Stay the Same46%

Decrease Moderately

17%

Decrease Substantially

7%

Increase Substantially

8%

Increase Moderately

27%

Stay the Same52%

Decrease Moderately

10%

Decrease Substantially

3%

All Companies B-to-B Companies

Hybrid Companies

2010 vs. 2009 Budgets (By Business Model)

N = 63

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 Substantially

43%

Increase Moderately

43%

Stay the Same14%

B-to-C Companies

24Growth Team Membership™ Research.

Hybrid Companies

Increase Substantially

28%

Increase Moderately

48%

Stay the Same19%

Decrease Moderately

5%

All Companies B-to-B Companies

B-to-C Companies

Anticipated Company Performance in 2010 (By Business Model)

N = 61

Survey Question: In comparison to 2009, your company’s performance by the end of 2010 will:

KEY TAKEAWAY: R&D/innovation and product development executives are optimistic about their company’s performance in 2010.

Increase Substantially

29%

Increase Moderately

58%

Stay the Same13%

Increase Substantially

26%

Increase Moderately

49%

Stay the Same21%

Decrease Moderately

4%

Increase Substantially

36%

Increase Moderately

43%

Stay the Same14%

Decrease Moderately

7%

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Respondent Demographics

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Demographics

Private62%

Venture Capital20%

Public18%

B-to-B Company60%

B-to-C Company9%

Hybrid Company31%

N = 97

Over half of the respondents work in a private company.

Survey Question: Please indicate the type of enterprise best represents your organisation.

Respondents tended to be from private, B-to-B companies whose 2009 revenue was below € 70 Million

49%

18%6%

18%9%

0%

30%

60%

Below € 70 Million € 70 Million to €3 47.99 Million

€ 348 Million to €695.99 Million

€ 696 Million to € 7 Billion

More than € 7 Billion

Enterprise Type Business Model

Company Revenue

N = 98 N = 94

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Demographics: Top Six Participating Industries

28%

20%

20%

18%

17%

17%

0% 20% 40%

Healthcare and Life Sciences

Chemicals, Materials, and Food

Energy and Power Systems

Automotive and Transportation

Electronics and Security

Information and Communication Technologies

N = 103

Survey Question: Please indicate which of these Industry categories best describes you organisation (please indicate all that apply).

28Growth Team Membership™ Research.

Contact GTM

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