Growth Team MembershipTM:European

Innovation and Product Development Priorities Survey Results

April 2009

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What is Growth Team Membership™?

The Growth Team Membership™ (GTM) is an annual subscription program that supports individual executives in the eight functions (CEO’s Growth Team) that CEOs rely on to shape and execute their growth strategy.

GTM offers growth-focused research, events and services designed to increase the effectiveness, productivity and impact of these executives.

If you have any questions or comments, please contact us at GTMResearch@frost.com

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Table of Contents Growth Team MembershipTM Research

Page

Section 1: Summary of Findings …………………………………..……………….…..4

Section 2: Business Environment Factors….............................……………………..7

Section 3: Key Innovation and Product Development Challenges…..……….........10

Section 4: Conclusions and Implications……………………..……………………....14

Section 5: Respondent Demographics……………………..…………………...…....15

The content of these pages are © 2009 Frost & Sullivan. All rights reserved.

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Summary of Findings Growth Team MembershipTM Research

Factors in current business environment impacting Innovation and Product Development Strategy

Respondents identified the following as the top five environmental factors:

1. Emerging global markets (39%)

2. Increasing need for product/service innovation (38%)

3. Global economic downturn (32%)

4. Increasing demand for green/sustainability initiatives (28%)

5. Tied between: Intensifying competition (16%), and Corporate restructuring (16%)

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Summary of Findings continued Growth Team MembershipTM Research

Key Challenges facing Innovation and Product Development

Respondents were asked to designate their top three key issues:

1. Generating and maintaining a pipeline of commercially viable innovations (27%)

2. Implementing customer value-driven innovation (19%)

3. There was a tie for the third challenge:

• Identifying and developing breakthrough innovation ideas (12%)

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

The effectiveness of the Innovation and Product Development Function

• The majority of respondents (44%) rated the effectiveness of their function as “Average,” while 42% rated it as “Above Average”

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Summary of Findings continued Growth Team MembershipTM Research

Sample Population

• The survey was sent to Innovation and Product Development executives throughout the European Union

• The total number of respondents was 157

Respondent Demographics

• 69% work in a B2B company while 21% work in a hybrid (B2B and B2C)

• 63% work in a private company while 30% work in a public company

• The largest number of respondents (27%) was from companies with revenues of below € 70million

• The Healthcare and Life Sciences (27%) industry had the largest number of survey respondents

Business Environment Factors

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Top Business Environment Factors Growth Team MembershipTM Research

Emerging global markets (39%) and the Increasing need for product/service innovation (38%) were the predominant environment factors influencing Innovation and Product Development strategy for 2009. This indicates a strong focus on growth even in the current state of economic turbulence.

Please indicate the two business environment factors that have the most impact on your 2009 Innovation and Product Development strategy.

39% 38%

32%

28%

16% 16%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Emerging globalmarkets

Increasing need forproduct/service

innovation

Global economicdownturn

Increasing demandfor

green/sustainabilityinitiatives

Intensifyingcompetition

Corporaterestructuring

N=123

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Business Environment Impact on Innovation StrategyGrowth Team MembershipTM Research

Three of the top business environment factors were reported as having a positive impact. This reflects the growth potential of innovation in new markets and green initiatives. However, the present economic climate and its effects in intensifying competition and corporate restructuring are prominent negative factors.

** indicates statistical significance at p=.05, *** indicates statistical significance at .01

(N=127)

Please indicate the impact that each of the following forces have on your 2009 Innovation and Product Development plans.

Business Environment Factor Positive Impact No Impact Negative

Impact

Emerging global markets 71% 21% 8%

Corporate restructuring (budget restraints)** 9% 34% 57%

Increasing need for product/service innovation 85% 9% 6%

Global economic downturn 4% 24% 72%

Increasing demand for green/sustainability initiatives*** 62% 33% 5%

Intensifying competition 38% 16% 46%

Key Innovation and Product Development Challenges

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Top Three Innovation and Product Development Challenges Growth Team MembershipTM Research

The main challenges lie in generating and maintaining commercial viability in the innovation pipeline (28%) and in focusing innovation on what the customer values (17%). The third challenge was tied between driving cost efficiencies and trying to generate breakthrough ideas.

(N=92)

Please indicate the top three challenges shaping your Innovation and Product Development strategy and decision-making in 2009.

Challenge One• Generating and maintaing a pipeline of commercially viable innovations

(27%)

Challenge Two • Implementing customer value-driven innovation (markey pull vs. technology push) (19%)

Challenge Three• Identifying and developing breakthrough innovation ideas (12%)• Streamlining design and development activities to create cost efficiencies

(12%)

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Root-cause of Top Three Key Innovation and Product Development Challenges Growth Team MembershipTM Research

Staffing issues were the root-causes of challenges in implementation and ideation . Process was the root-cause for Streamlining design and development activities to create cost efficiencies. Technology was the issue for Generating and maintaining a pipeline of commercially viable innovations.

* Indicates statistical significance at p=0.1, ** indicates statistical significance at p=.05, *** indicates statistical significance at .01

(N=88)

For the top three challenges you selected above, please indicate whether the root-cause of the challenge is staff, technology or process.

Challenge Staff Technology Process

1. Generating and maintaining a pipeline of commercially viable innovations *** 33% 54% 13%

2. Implementing customer value-driven innovation 50% 31% 19%

3a. Identifying and developing breakthrough innovation improvements 46% 18% 36%

3b. Streamlining design and development activities to create cost efficiencies 33% 0% 64%

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Innovation and Product Development Function Effectiveness Growth Team MembershipTM Research

The largest set of respondents (44%) rated their Innovation and Product Development Function’s effectiveness as “Average,”while 42% rated theirs as “Above Average.”

Please asses the overall effectiveness of your Innovation and Product Development function as compared to other firms in your industry.

7%

42% 44%

7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Exceptional Above Average Average Below Average

N=132

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Conclusions and Implications Growth Team MembershipTM Research

Business EnvironmentRespondents view the environment as characterized by increased pressure on Innovation to be a growth engine, which is reflected in respondents’ interest in green or sustainability initiatives, and emerging markets. The recession is prominent in the impact it has had on heightening competition and in driving corporate restructuring.

Key Innovation and Product Development ChallengesThe main challenges are focused on identifying breakthrough ideas and managing a commercially viable pipeline. Increasing competitive pressure has amplified the need to be market led in the innovation process so that all offerings address key customer needs. Corporate restructuring and the need to increase financial return on innovation necessitate streamlining innovation processes for greater efficiency and returns. The root causes of these challenges, while staff is more prominent, encompass shortcomings in processes and technology.

Moving ForwardThe Growth Team MembershipTM is focusing its Best Practice Guidebooks to address the key issues that have been identified in this survey.If you have any questions or comments please contact us at GTMResearch@frost.com

Respondent Demographics

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Demographics: Enterprise Type Growth Team MembershipTM Research

The majority of the respondents work in a private company

Please indicate the type of enterprise best represents your organisation.

30%

63%

7%

0%

10%

20%

30%

40%

50%

60%

70%

Public Private Venture Capital

N=134

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Demographics: Business Model Growth Team MembershipTM Research

The overwhelming majority of the respondents work in a B2B company

Please indicate which of these options best describes your business model.

69%

10%

21%

0%

10%

20%

30%

40%

50%

60%

70%

B2B B2C Both B2B and B2C

N=133

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Demographics: Company Revenue Growth Team MembershipTM Research

The largest group of respondents work in a company with revenues of below €70 million

Please indicate which of these company revenue ranges best represent your organisation. This should include all divisions, business units, and facilities.

27%

21%

8%

21%

11%

0%

5%

10%

15%

20%

25%

30%

Below € 70 million € 70 million to€347.99 million

€348 million to€695.99 million

€ 696 million to €7 billion

More than € 7 billion

N=132

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Demographics: Top Six Participating Industries Growth Team MembershipTM Research

Over a third of respondents work in the Healthcare and Life Sciences Industry

Please indicate which of these Industry categories best describes you organisation.

32%

19% 19% 18%17% 17%

0%

5%

10%

15%

20%

25%

30%

35%

Healthcare andLife Sciences

Information andCommunications

Technologies

Chemicals,Materials and

Food

Electronics andSecurity

Automotive andTransportation

Energy andPower Systems

N=133