CTO Survey results, fall 2014

The View of Finnish CTOs on the Latest R&D Trends

Dr. Laura Koponen, Spinverse Oy

Eeva Viinikka, Laura Koponen, Lauri Tolvas

Executive Summary

• 69 Finnish CTOs were reached by online

questionnaire

– Today’s workshops focus on selected topics

– 10 in-depth interviews for drilling still deeper

– Final results published during next CTO-Forum

• Insight to the top investors views

– 10 of the top 25 R&D investors in Finland in the

Survey, 17 of the top 100

• The key findings of the survey are

– CTO’s plan to foster the R&D resources in 2015

– The share of public funding in R&D expected to

increase

– What you measure is what you get – also in

innovations

Background data

• Total of 69 respondents

• ~50% from Greater Helsinki

region

0

10

20

30

40

R&D headcount by number of respondents

Top-100 investors Rest

0

5

10

15

20

25

<2% 2-5% 6-9% 10-15% >15%

R&D Budget (% of revenues)

Top-100 investors Rest

Other

Metal and…

Chemical Industry

Life Sciences and…

Energy and…

Electronics and ICT

0 10 20 30 40

Distribution of respondents

Top-100 investors

Rest

R&D budget to be increased in 2015

46%

39%40%

47%46%

33 %

49%

54%

29%28%

38%

49%

31%

37%

20%

25%

30%

35%

40%

45%

50%

55%

60%

Prediction Actual Prediction Actual Prediction Actual 2015prediction

Share of CTOs who are planning on increasing their budget or headcount

R&D investments Headcount

41%

29%

2015prediction

Top100

2012 2013 2014

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

2015 prediction

Top-100

No plans to cut R&D headcount any more

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

2013 result 2014 result 2015 prediction

Share of CTOs vs. changes in R&D headcount

Decrease Stay the same Increase

World economy seems not to impact patenting

9%3% 3%

7%12% 14%

48% 47%50%

35% 38%33%

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

Patenting results in 2013 Patenting results in 2014 Patenting forecast for 2015

Share of CTOs vs. changes in patenting activity

Decreased No opinion Stayed the same Increased

The share of public funding in R&D:

expecting increase

Share of public funding in R&D budget (2014)

<5% 5-14% 15-29%

30-49% 50-70% >70%

0 % 50 % 100 %

New R&D projectsin 2014

Expected new R&Dprojects in 2015

Number of R&D Projects supported with public funding

Increased

Stayed the same

Decreased

No opinion

Technology and innovation are high on the

CEO’s and Board’s agenda, still only 35%

evaluate the process systematically

0 %

20 %

40 %

60 %

80 %

100 %

CEO Agenda Board agenda CTO satisfied withinnovation process

Systematicevaluation

CTO’s view of the innovation governance topics

No No opinion Yes

“There is a clear correlation between capability in innovation

measurement and innovation success….”(ADL Innovation Excellence Study, 2013)

YES - YES

NO - NO

Reviewing the innovation process seems to be

linked with the share of revenue from new product

0

5

10

15

20

25

30

35

<5% 5-14% 15-29% 30-39% 50-70% >70%

The share of revenue from products and applications introduced during the last five years

Systematic evaluation of innovation process No systematic evaluation of innovation process

newcomers

”Globally, top quartile innovation performers obtain on average 13%

more profit from new products and services than average performers.”(ADL Innovation Excellence Study, 2013)

What you measure is what you get

Companies see competitive importance in

carbon neutrality and low carbon solution –

however lacking economic incentives

Drivers

• Positive brand image

• Company strategy

• Reducing emissions

Obstacles

• No clear economic incentive

• Lack of markets

• Lack of political will

0

5

10

15

20

25

30

Veryimportant or

fairlyimportant

Not importantnow, but willbe important

in future

Not important

Carbon Neutrality and Low Carbon Solutions vs. expected impact on

competitiveness

Carbon neutrality Low carbon solutions

The companies who don’tsee CN or LC as importantfor their competitiveness aretypically from ICT sector orinstrument providers

Production and emissions in focus now

0 % 50 % 100 %

- in distribution (e.g. freight, logistics)

- in sales, marketing andcommunications

- in sourcing (e.g. materials, resourceuse, supplier conduct)

- in manufacturing (e.g. facilities,resources and emissions)

Very important or fairly important

Not important now, but will be in the future

Not important

Don't know yet

Current focus in manufacturing,

future potential in sourcing and

sales

Low carbon or carbon neutral solutions are implemented ...

Enablers look for new business

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

- products or services that enable othersto become low carbon or carbon neutral

- low carbon or carbon neutral productsor services

Very important or fairly important

Not important now, but will be in the future

Not important

Don't know yet

62% of respondents see it important to offer low carbon or carbon neutral

products or services

– however economic factors still seen as one major obstacle

The company provides

Industrial internet will have a major impact

- 35% don’t fear the security risks

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

The topic requires strong efforts frompublic authorities

The related education (IT, machinery)needs to be renewed

Information security risks will stronglyinhibit the growth of new related…

The related expectations are oversized,public debate is in hype

The related impact in economies will bestronger than currently understood

Strongly agree Agree Disagree Strongly disagree No opinion

85% believe in surprisingly strong impact

35% of respondents don’t fear the security risks

82% say education needs to change

Still 2-10 years of development before Industrial

internet reaches the ”Plateau of Productivity”

Source: Gartner (August 2014)

Internet of things

Big Data

Machine-to-Machine

communications

Cloud Computing

Majority of the companies have a plan for

developing competences for industrial internet

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

2014

2015

2016

2017 and later

Share of R&D resources to be dedicated for industrial internet

>30% 10-30% <10% 0 % No plans yet

The 0% of R&D resource group will vanish in a few years

Only one out of ten have no plans yet

Further discussion in the workgroupsSession and

WG number

Topic Chair

1 WG1 Carbon neutrality markets; what and where? Jyrki Ovaska, UPM

WG2 Carbon neutrality: How to find the solutions for

competitive advance?

Atte Haapalinna,

Okmetic

WG3 Carbon neutrality: How to identify the paths towards

growth, not just reducing the emissions?

Lars-Peter Lindfors,

Neste Oil

WG4 The best practices of managing the R&D project

portfolio

Ilari Kallio, Wärtsilä

2 WG5 From R&D to turnover Jari Riihilahti,

Metso

WG6 Corporate Venturing Ilari Kallio,

Wärtsilä

WG7 Industrial internet: What’s in it for me? Opportunities

for growth

Heli Antila,

Fortum

WG8 Industrial internet: Practicalities and challenges Antti Reijonen,

McAfee

Thank you!