Growth Team Membership™:2010 R&D/Innovation and Product
Development PrioritiesEuropean Survey Results
May 2010
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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
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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%)
12Growth Team Membership™ Research.
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
13Growth Team Membership™ Research.
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
20Growth Team Membership™ Research.
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).
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