Frost & Sullivan’s Growth Team Membership™ (GTM) recently completed its 2012 survey of R&D/innovation and product development executives throughout Europe. The executives were asked to identify their most pressing challenges for 2012.

The survey reveals that R&D executives continue to struggle with doing effective portfolio planning and leveraging a wide network for idea generation. Moreover, respondents are challenged by how to generate an accurate technology map—outlining customer needs, available solutions, and technology gaps—to guide portfolio planning and project prioritization. The other prominent challenge is a perennial one, identifying the next breakthrough idea.

To examine these challenges in more depth, the survey asked respondents to “root cause” their top challenges by indicating if they stem from issues with staffing, process, technology/systems, or strategic alignment. R&D executives attribute their challenges to two primary causes: limitations in staffing and processes. R&D executives are unlikely to see additional staff in 2012; most respondents expect staffing level to remain static. On a positive note, budgets are expected to increase in 2012. Despite the emphasis on breakthrough innovation, most of the budget increases will be allocated to short-, medium-term, and incremental innovation projects.

In view of open innovation’s (OI) growing prominence and potential to help R&D develop emerging or disruptive technologies, the survey asked respondents about their use of OI. Surprisingly, given its prominence in the last two years’ survey results, the majority of respondents do not leverage OI in their product development processes. This may be attributed to respondents’ challenges with establishing partnerships and measuring the ROI of OI efforts. In regards to creating OI partnerships, respondents struggle with identifying partners with the right IP, establishing clear communication channels, and building sustainable trust. The R&D departments that are embracing OI tend to use it for idea generation and screening during product development life cycle and customers are their primary source of ideas. In terms of staffing for open innovation activities, most respondents employ part-time technology scouts.

Frost & Sullivan’s Growth Team Membership™ (GTM) recently completed its 2012 survey of R&D/innovation and product development executives globally. The executives were asked to identify their most pressing challenges for 2012. GTM will focus its best practices research to address the prominent issues identified in the survey.

This year’s survey indicates R&D executive struggle with two chronic challenges: (1) managing the product portfolio and (2) finding the next disruptive idea. In regards to portfolio management challenges, respondents struggle to develop accurate technology maps for planning, to prioritize innovation projects, and measure their portfolios’ success rate. Overcoming these challenges requires R&D executives to map out their portfolio strategy and develop key performance indicators to guide project prioritization and monitoring.

Identifying the next breakthrough idea rarely involves a “Eureka” moment, but does require time and resources. While companies understand the need to develop emerging technologies, they are reluctant to commit substantial resources to high-risk projects. This risk aversion appears to be impacting R&D budget allocations—budgets for incremental innovations are increasing, while disruptive technology budgets remain stagnant.

The survey asked respondents to “root cause” their top challenges by indicating if they stem from issues with staffing, process, technology/systems, or strategic alignment. R&D executives attribute their challenges to two primary causes: understaffing and processes (ineffective or nonexistent process). On a more positive note, R&D executives foresee additional resources—both staffing levels and budgets are expected to increase in 2012.

Given the pressure on R&D executives to tap into new ideas and emerging technology, survey respondents were asked about their use of open innovation. The majority of respondents employ some form of open innovation team (OI)—typically a small, dedicated sub-group within R&D. It comes as no surprise that OI’s primary role in the product development life cycle is idea generation and that customers are the primary source of ideas.

Even though companies are committed to using OI to increase their ability to develop emerging or disruptive technologies, respondents struggle with the fundamentals of establishing an OI process: securing internal buy-in, getting resources for idea testing, and creating a collaborative framework with external partners.

Frost & Sullivan’s Growth Team Membership™ (GTM) recently completed its 2012 survey of R&D/Innovation and product development executives in North and South America. The executives were asked to identify their most pressing challenges for 2012. GTM will focus its best practices research to address the prominent issues identified in the survey.

According to the 2012 survey results, R&D executives continue to wrestle with portfolio management. Specifically, R&D executives need to prioritize innovation projects, balance the value and risk of the portfolio, and allocate budgets across a wide range of project categories. Respondents also struggle with two other persistent issues: (1) identifying breakthrough ideas and (2) integrating inputs from internal stakeholders (e.g., Sales and Marketing) with portfolio planning.

The survey reveals differences in challenges between different business models. For example, the key challenges for R&D executives in B-to-B companies are generating technology roadmaps for portfolio planning and managing an open innovation process. In contrast, their peers in B-to-C companies are challenged by securing buy-in for promising innovations with senior management and streamlining the product development process to reduce costs.

The survey asked respondents to “root cause” their top challenges by indicating if they stem from issues with staffing, process, technology/systems, or strategic alignment. By and large, R&D executives attribute their challenges to understaffing. Fortuitously, staffing and budgets are expected to increase in 2012. Ironically, though respondents stress the importance of driving breakthrough innovations, short-term or incremental projects account for the majority of the 2012 budget increase.

Given the potential of open innovation (OI) to tap emerging technologies, survey respondents were asked about their use of OI. The majority of respondents (58%) apply OI approaches to their product development process. When asked about the role OI plays in product development, respondents report using OI for ideation generation and screening. However, respondents in B-to-C companies are more likely to use OI throughout the product development process than their B-to-B peers. The composition of respondents’ OI teams varies by business model. Respondents within B-to-B companies employ small, dedicated open innovation teams, while R&D executives in B-to-C companies use part-time technology scouts.

While most R&D organizations engage in OI activities, R&D executives still struggle with implementation: establishing an effective OI process, garnering resources, and collaborating with partners. Respondents in B-to-B companies are focusing on developing a method to measure the ROI of OI activities, while their peers in B-to-C companies are endeavoring to establish a structured process to test the feasibility of idea submissions.

The Growth Team Membership™ (GTM) program recently surveyed marketing executives to identify their principal challenges for 2012. The survey found that marketers struggle to (1) cultivate a differentiated value proposition that resonates with clients, and (2) ensure Sales adopts the appropriate messaging and materials.

Survey respondents indicate that understaffing and a lack of strategic alignment across Sales and Marketing’s leadership are the primary causes of Marketing’s struggles. By joining forces with Sales, Marketing can address the strategic alignment issue and tap into additional staff. However, successful collaboration requires taking a closer look at the following three areas:

1. Goal Alignment—Since revitalizing the value proposition requires a substantial commitment in time and resources, it is essential that Marketing and Sales agree on the reason for the revitalization at the outset. To achieve this goal, marketing and sales executives need to build consensus on answers to the following questions:

• Are our assumptions about how we are perceived by our customers accurate?
• Can we quantitatively prove any of our assumptions?
• How does our value proposition differentiate us from the competition?
• Does our current messaging tell the story we want?
• How consistently is our messaging being used?

2. Sales Involvement—No matter how necessary, or how compelling, the redesigned value proposition may be, the sales force may still resist it. Successful marketers understand that sales reps want some measure of control over the way they communicate with their customers and are prone to resenting outside influence. Marketers therefore involve the sales force throughout each stage of the new value proposition’s development (including messaging creation). This inclusion builds cross-functional ownership of the new messaging and limits the likelihood that Sales will reject it later on. Furthermore, it speeds new messaging roll-out, since the sales force will already be familiar with the value proposition and how to tailor its message for various segments.

3. Continuous Engagement—Trust and transparency are crucial to any long-term successful collaboration between Sales and Marketing. One way to maintain this openness is through regularly scheduled meetings between senior management in Sales and Marketing. Growth Team Membership researchers have found that a monthly cadence works best for keeping the conversation flowing, collecting feedback, and addressing collaboration challenges. Monthly meetings also allow marketers to track value proposition adoption and identify opportunities for improvement.

While sales and marketing collaboration is a perennial challenge, some companies have found ways to unite these often-at-odds functions. Take the experience of Kronos, a workforce management software solutions company. For many years, Kronos considered itself a market leader, in spite of its flat product revenue growth. This disconnect stimulated Marketing and Sales to collaboratively revise and differentiate Kronos’ value proposition and messaging. Kronos’ sales and marketing teams followed the practices outlined above—alignment, inclusion, and engagement—to overcome key barriers to collaboration. Successful collaboration has resulted in 92% of the sales force consistently using the messaging.   Kronos’ new value proposition has also led to a 36% increase in its earnings before interest, taxes, and amortization (EBITA).

In conclusion, Growth Team Membership survey data suggest that marketers are committed to differentiating their companies through redesigned value propositions. However, Marketing’s efforts are constricted by a lack of coordination and buy-in from Sales. By including Sales in the development process, Marketing can ensure its efforts are adopted and strengthen its relationship with Sales for long-term success.

Want to learn more about best practices for sales and marketing integration?