CTO Survey 2012

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Overview of the results of Spinverse's 2012 survey of Finnish CTOs. This presentation was first given at the CTO Forum in Espoo, Finland, on 13th January 2012.

The study was carried out by Spinverse with the support of Sitra, the Federation of Finnish Industries EK, and Technology Academy Finland.

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CTO Survey 2012

  1. 1. SpinverseYour Emerging Technology Partner CTO Survey 2012 Results Overview 13 Jan 2012 Tom Crawley, Jussi Kajala, Laura Kauhanen, Pekka Koponen
  2. 2. Spinverse accelerates the open innovation ecosystem Innovation Programs TechnologyPreparation and management of multi- Transfer&Scouting party programs:Vision, partner selection, international Market-driven technology transfer, networking, funding instrument business and strategy development selection, bid preparation. services Capital Raising capital from private and public sources. Advising public and private investors in technology specific business issues.
  3. 3. Contents• CTO Survey 2012 Introduction• CTO Profile• CTO Survey 2012• CTO Views on Innovation Management
  4. 4. CTO Survey 2012 Introduction
  5. 5. CTO Survey covers over 70 Finnish CTOs viewson their current environment and future outlook• Spinverse conducts annually a survey on Finnish Chief Technology Officers (CTO)• CTO Survey 2012 was made in partnership with Sitra, Elinkeinoelämän keskusliitto EK and Technology Academy Finland TAF• Survey received 70 online responses, followed by deeper interviews and analysis• Survey results are comparable to 2011 with many measures. Additional focus in 2012 was on large enterprises and innovation management processes
  6. 6. Responses cover all industries, ICT andMechanical Engineering being largest Electronics and IT Metal and Mechanical Engineering 1 3 2 Energy and Environment 5 18 Chemical Industry Services 5 Food 6 Healthcare, Wellbeing and Bio Mining and Metallurgy 11 6 Media and marketing 7 Forest, Pulp and Paper Construction (0)
  7. 7. Quantitative data was complemented byinterviewing representatives from large companies • Kemira: Heidi Fagerholm • Kone: Giuseppe Bilardello • Nokia: Henry Tirri • Orion Diagnostica: Juhani Luotola • Ruukki: Toni Hemminki • Stora Enso: Jukka Kilpeläinen • UPM: Pekka Hurskainen • Valio: Matti Harju
  8. 8. CTO Profile
  9. 9. CTO’s role may be distributed and titlesvary depending on organization structure • Research Director • Technology Manager • Director of Technology • Director, Engineering • Executive Vice President, R&D and Technology • Group Vice President, R&D • Global R&D Director • Head of Technology Management • SVP, Innovation & technology• All participants are referred as CTOs in the study
  10. 10. CTO job description is diverse and long Average % that CTOs use their resources for Developing new products or services 7% Developing technology with external 15% 8% partners Generating ideas for new products and services 9% Managing internal research projects 13% Implementing new product ideas from 11% the rest of your company Scouting external technologies 13% 11% Business analysis of new technologies or products 13% Monitoring and communicating technology trends within your organisation Managing IPR• The average responded use of resources adds to 132 %
  11. 11. The CTO gets most of the new ideas from the customer• 84 % of CTOs view customers and suppliers as an integral 4% part of the network for idea 15% harvesting Yes Neutral“60 – 70 % of the ideas come Nofrom the customer 81% –CTO has to meet the customerand keep up a two-way relationship”. % of CTOs who work well with the customer-facing“CTOs can be in charge of getting first departmentscontact to new customer – when thearea is new for marketing”.
  12. 12. CTOs on universities: beat internationalcompetition with a focus, aim at gettingto the top, build own global networks• ”In the traditional industries we have sufficient competences in Finland – for new areas we have started to look for partners also elsewhere”• ”The universities should focus on their areas of expertise”• ”Regarding IPR - University collaboration has been very easy. With VTT we have had some trouble but it is getting better.”• ”We have benefited from the international networks of the university professors”• ”Researchers should try to become more international”
  13. 13. Customer and employee satisfaction areimportant, in addition to the traditional successmetrics Customer satisfactionRevenue from new products and services Employee satisfaction Reducing costs of existing products Revenue from new markets Number of patents Number of publications 0 20 40 60 80 Very important Somewhat important No opinion Not very important Not at all important
  14. 14. Measuring CTO quantitatively is challenging, butpossible – some examples• New business: Corporate revenue and profit from new products (< 3 year)• Future profits: Net present value of the CTO portfolio• Cost savings: Manufacturing cost saving, productivity improvement• Process efficiency: Meeting stage-gate process timeline, and budget• Volume of innovation: # of new product releases, # patents• Visibility: Activity in public discussion, hits in media
  15. 15. Needs for new products, working with customersand driving extended organization are global• The global Arthur D. Little study of CTOs and CIOs in 2011 (N=100) found out that the most important area for innovation investment is gaining a deeper understanding of the customer• The share of products or services in new business areas is expected to double from 2010 to 2020• CTOs and CIOs see that their activity should be expanded outside new product development and innovation should be branched out to e.g. supply networks and quality control
  16. 16. CTO Outlook on 2012
  17. 17. CTOs are not cutting R&D budgets 2012 - almost half of the CTOs plan increases % of CTOs who increase R&D- investment 56% 60% 51% 46% 50% 40% 2011 Prediction 2011 Actual 30% 2012 Prediction 20% 10% ”Downturn is a good 0% time to innovate.”
  18. 18. Recruitment also continues, but declines from 2011 signalling increase in outsourcing % of CTOs who recruit personnel 73% 80% 65% 70% 54% 60% 2011 Prediction 50% 2011 Actual 40% 2012 Prediction 30% 20% 10% 0%
  19. 19. Licensing out is difficult for Finnish CTOs and they don’t see it very important % of CTOs who divest or • Only 32 % of CTOs think that license out a technology licensing and spinning out is important.25% 23% 23% 201120% prediction • Only 20 % of the CTOs think that their company is well prepared for15% 2011 licensing and spinning out. actual10% 7% 2012 5% prediction • 53 % of the CTOs don’t expect to generate revenue in 2012 by 0% licensing or spinning out technologies
  20. 20. Moreover, acquisitions are not seen important and little practicedIntroducing new technologies by We practice acquisitions in acquisitions is important order to introduce new technologies 17% 13% % Agree % Agree 14% 22% % Neutral % Neutral 61% 73% % Disagree % Disagree
  21. 21. Funding: Tekes dominates, SHOKs gain importance, EU funding seen as the least important 2011 2012100% 100% 17% 21% 31% 33% 80% 40% 36%80% 30% 77% 60% 77% 4%60% 19% 46% 5% 30% 60% 55% 40% 49%40% 4% 48% 4%20% 39% 37% 20% 20% 19% 0% 0% Tekes SHOKs European Other Tekes SHOKs European Other Commission Commission Not important No opinion Important Not important No opinion Important
  22. 22. Restructuring of Tekes-funding worry large companies and may move work abroad• ”Our company is willing to invest •”R & D support from TEKES heavily in our Finnish R&D- units, but companies basically to large public funding is a must goes directly to external to keep Finland being a research organizations.” competitive choice”• • ”Tekes-funding to large ”TEKES keeps up the companies basically goes almost ecosystem of open 100% to Finnish innovation.” universities, research institutes • and SMEs” ”Our company is willing to invest heavily and look into• ”Tekes keeps up the Finnish new programs if public ecosystem of open innovation.” funding is also given”• ”We need to look more into the EU-funding in the future”
  23. 23. CTO Views on Innovation Management
  24. 24. CTOs receive more backing from CEO than the rest ofthe organisation, communication being a keychallenge76 % Senior Mgmt 58 %  A broad Committment organisational73 % Appropriate 33 % commitment is often Resources lacking, perhaps Broad 70 % Organisational 40 % because of Committment difficulties in Aligned with communicating the 65 % Company 34 % Strategy innovation strategy Strategy to the organisation 62 % Communicated to 18 % Organisation as a whole Innovation 59 % Process Defined 28 %  Resource shortages Component of 47 % Shareholder 36 % may also reflect Value challenges in Managers have 33 % Innovation 8% aligning innovation Targets with the company strategy % agreeing that this is important % agreeing that this is practiced well
  25. 25. CTOs seek clear decision criteria, but face challengesin setting expectations and defining metrics Clear Decision 67 % Criteria 33 %  Portfolio and 57 % Process Owners 30 % Process Management is Expectations 55 % Defined 25 % important and performed well 53 % Metrics Applied 23 % 50 % Metrics Defined 21 %  A majority find 46 % Champions 18 % innovation Identified metrics to be Portfolio 44 % Management 33 % important, but Compentences few feel these 43 % Mapped 23 % are applied as Fast-Track 39 % Processes 18 % well as possible Process 39 % Management 28 % 38 % Incentives Aligned 15 % Fast-Failure 35 % Processes 10 % % agreeing that this is important % agreeing that this is practiced well
  26. 26. The capacity to generate and absorb ideas fromexternal sources is critical, but could still be improved Customer84% Participation 49 %  There is broad Capacity to Learn agreement on the 80% 44 % and Adapt importance of customers, market80 % Voice of Markets 50 % s and partners 71 % R&D with Partners 61 % External  Yet fewer 55 % Networking 53 % companies believe Internal that this is being 51 % 43 % Collaboration handled as well as possible 50 % In House R&D 59 % Broad Idea 44 % Generation 30 %  By contrast Alternative internal 32 % Exploitation Paths 20 % collaboration is felt Acquiring External to work well 17 % Firms 14 % % agreeing that this is important % agreeing that this is practiced well
  27. 27. Innovation does not require management – it requires empowerment and customer needs ”Innovation management isonly useful for measuring output, not forcreating or enhancing innovation.” ”Hiring, maintaining and developing competence is important: anything beyond that is completely unnecessary.” ” Inventions do not come “Stage-gate model doesn’t work because you ask anymore, we turn the model around but when you create a good place and get driven by customer needs” to innovate”
  28. 28. Conclusions andRecommendations
  29. 29. CTO is elementary for business success.Collaboration is the key to sufficient resources• CTO Survey 2012 by Spinverse was supported by Sitra, EK and TAF. Responses cover 70 CTOs from all industries, supported by face-to-face interviews• CTO’s Role is to bring new technologies and products to market collaborating with customers, suppliers and universities. Wide internal communication and translating technology to business language is a must• CTOs on universities: beat international competition with focus, aim at getting to the top, make IPR licencing easy• CTOs are measured by quantitative business and output metrics, but customer and employee satisfaction are important• Recruitment declines 2012, but still the majority of CTO’s plan to recruit 2012. Almost half of the CTOs plan to increase R&D-investment.• Licensing, spinoffs and acquisitions are unused tools – improvement needed for better utilization of assets and meeting global standards• Tekes dominates funding, SHOKs gain importance, EU funding seen as the least important. Tekes-funding cuts worry large companies and may move work abroad• CTO Views on Innovation Management CTOs receives more backing from CEO than the rest of the organisation; communication skills, target setting and transferring ideas from the outside into the organization need improvement

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