We define innovation excellence as the ability to rapidly transform creative ideas into commercially viable product and service offerings while optimizing selection and development. Finding new ways to meet the market’s future needs for reliable, energy-efficient solutions is critical to driving our organic revenue growth.
Our average innovation revenue from 2016 to 2018 was 19.7%.
In 2018, we spent $228.7 million on research and development and launched 91 new products and services, spanning nearly every business and region. We refreshed 20.5% of our product portfolio over the past four years, achieving superior breadth and depth in every major category. Each of these new products features sustainable design, is aligned with total lifecycle management principles and uses natural resources more efficiently than before. Read more about the Ingersoll Rand Product Development Process (IRPDP) and our product life cycle management.
Our innovation roadmap focuses on ensuring that Ingersoll Rand remains positioned in the right markets with the right products, services and technology capabilities. We do this by leveraging customer relationships, applying advanced data analytics and systemically drawing feedback from our global supplier base. We use our Business Operating System (BOS) as a framework to translate the market intelligence we have gathered into new products, services and solutions.
Looking ahead, trends like climate change, urbanization and industrialization trends will have an especially powerful impact on our customers and the solutions we provide. Enterprise-wide collaboration and knowledge transfer, which we foster through frequent exchange programs with global engineering leaders, drive our culture of innovation. We also form global distributed team structures for all new developed-market product engineers to grow skills in emerging-market R&D teams.
One of our growth strategies is to increase our engagement in emerging markets, with the goal of improving living conditions in base of the pyramid communities while addressing poverty and urbanization. Ingersoll Rand’s emerging market revenues were $3.1 billion in 2018.
We use a three-step process to prioritize our investments in emerging markets.
We consider the macroeconomic and geopolitical conditions at the country level.
Where these factors are acceptable, we perform an analytical assessment of the current attractiveness of our business, considering competitors, customers and channels.
We consider how the attractiveness of our business will likely evolve over time.
One example of how we can enter early-stage markets with our products is a recent program the Ingersoll Rand HVAC business is working on in China. The “Coal to Electricity” program initiated by China’s government is intended to significantly lower coal consumption for winter heating in North China, prevent air pollution and reduce PM2.5 emissions to improve long-term air quality in China. Our market and engineering teams and sales channels are collaborating to develop a new product with vapor injection and variable-speed technology to deliver heating capability that meets the needs of low-temperature environments. We continue to aggressively participate in more early-stage market opportunities.