If the numbers tell the tale, there is a little less truly new product development going on, less interest in the soon-to-be obsolete Dietary Guidelines, a longer product development cycle and more use of open innovation.
Those are some of the topline results from our 43rd annual R&D Survey. The numbers on the following pages are based on 215 responses to our electronic survey, which was taken during the March and early April. (The number of respondents is down considerably due to a "service attack" – more on that in the methodology section.)
One of the more remarkable points is the growth of companies practicing open innovation. In the three years we've been asking that as part of a larger question (see Figure 12), it's grown annually to where it's now 50 percent in this year's survey.
As for your most important priority for the year under way (Figure 2), "really new" product development held onto first place, its traditional place, although it is at its lowest point since at least 2009 (maybe longer – our earlier records are sketchy). The 39 percent who are making it Job One is 9 points behind last year. Other than the 40 percent who voted for it in 2012, that answer has tracked between 47 and 49 percent.
But swinging for the fences still excites the R&D crowd. "I want to create flavor profiles that make people go 'wow,' " said a maker of cheese cakes.
"New product development is on a fast track and resources committed. Funds and management will be increased for faster development," wrote one respondent.
"We're investing staff and dollars in the R&D Dept." said a product developer. Another notes, "The company focus has changed to natural & non-GMO, and it is recognized that requires significant R&D investment."
While cost savings didn't produce an overwhelming vote, it did overwhelm the write-in comments. "We have a big number to hit for cost savings this year," wrote a product developer at a maker of soups and sauces.
"Competition from the Asian markets is forcing a review of the slow moving products," said another respondent. "Cost optimization will be a big focus this year," wrote a large processor of frozen seafood.
Ingredient and energy price increases were worrisome to a respondent at a small company. One product developer noted looking at egg replacers to reduce costs. And then there's the commonplace "always have to do more with less."
Existing product improvement and "cleaning up" current products – which admittedly may be similar – tied for second with 16 percent each. Those scores are down 2 points from last year for existing product improvement and up 6 points for "cleaning up."
A slightly different question (Figure 1) asks for the overarching strategy in your R&D Dept. As always, food safety gets the obligatory No. 1 nod but going organic or natural made its strongest showing in at least seven years. That figure shows how an issue that doesn’t get that many first-place votes can be everyone’s No. 2 concern – as with “sustainable/eco-friendly/fair trade” capturing only 3.3 percent of first-place votes but coming in third place in overall points. The converse is true with removing partially hydrogenated oils – it will be Job One for 9.4 percent of respondents, the third highest vote-getter in the “most important” category, but the lowest score overall.
Looking a little further down the road, "healthier/better-for-you foods" remains the top theme for the foreseeable future (Figure 8), up a couple of points from last year. Regulatory issues again came in second, while following consumer trends slipped 8 points. Seven of those points went to outsourcing, which has only scored in the low teens before this year.
And finding qualified personnel and other labor issues continue to be a concern for 27 percent of respondents. One respondent noted his overall R&D budget has been cut because "We've been unable to find adequate replacements for staff that have retired in the last couple of years." But going green and going global, separate answers, each continued three-year declines.
As for your R&D Dept.'s budget, it's pretty much a wash versus last year. Both "it's been increased" and "it's been cut" grew by 1 percentage point. After all, "The economy isn't improving," at least in the eyes of one respondent.
But at least some companies are investing in product development.