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Managing Research and Development

Managing Research and Development. Overview. Two Processes in Corporate Innovation Corporate Research Why, what, history Functions of Corporate Research Location of R&D Managing R&D at Different Levels. Corporate Innovation Strategic Processes. Induced Processes

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Managing Research and Development

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  1. Managing Research and Development

  2. Overview • Two Processes in Corporate Innovation • Corporate Research • Why, what, history • Functions of Corporate Research • Location of R&D • Managing R&D at Different Levels

  3. Corporate InnovationStrategic Processes • Induced Processes • From Strategy and External Environment • Incremental Innovation • Develop Strong Product and Process Development Capabilities • Commitment to R&D Investments

  4. Corporate InnovationStrategic Processes • Autonomous Processes • Outside Scope of Current Strategy • Changes Firm’s Strategic Concept • Radical, Unexpected, Serendipitous • Explore Potential Growth Areas • Internal Entrepeneurship

  5. CORPORATE RESEARCHKey Questions and Issues • What Is It? • Why Do It? • How Do You Control It ? • Lessons Learned

  6. Corporate ResearchWhat is it? “Plant the trees so others can some day sit in the shade” • Long-term • Top Management Driven • Independent of Business Units

  7. Corporate ResearchWhat is it? • Small, yet important • 10-15% of total R&D Budget • Basic or Applied Research • Never Developmental • High Risk or Exploratory

  8. Corporate ResearchHistory • Relatively New • Rapid Growth after WWII • Significant Growth in 50s - mid 60s • Reduced Investment (late 60s - 70s) • Emphasis on Financial Control • Back in Favor Today

  9. Corporate ResearchWhy? • Build Knowledge Base • High Uncertainty • Long Lead Times • Lack of Near-Term Returns Difficult Fit with Operating Units Difficult to Measure Its Success

  10. Corporate Research - Functions • Research Charter • Innovation • Improve Current technologies • Discover New Technologies • Threat/Opportunity Identification • Personnel Recruitment/Development • Technology Transfer

  11. Corporate Research - Functions • Technological Planning • Project Into the Future and New Strategic Direction • Consider Both Business Importance and Technical Opportunity • Link Research Management to Corporate Planning • Jointly Performed by Lab Staff and Operating Units

  12. Corporate Research How to Control • Corporate Supervision • Strategic, not Tactical • Top Mgmt Control/Operating Mgmt Input • Measures of Merit • Return on Investment (ROI) • Value of Previous Research • Future Value of Current Research • “Cutting Edge”

  13. Locating R&D - Characteristics • Corporate • Long time horizon (10 yrs~) • Weak internal linkage • Strong external linkage • Projects are relatively cheap • Divisional unit (5 yrs) • Business unit • Short time horizon (2-3 yrs) • Fast learning feedback • Strong internal linkage • Projects are relatively expensive

  14. Locating R&D - A Rule of Thumb • R&D supporting existing business (products, processes, divisions) should be located in established divisions • R&D supporting new businesses should be initially located in central lab, then transferred to divisions for exploitation

  15. R&D Centralization or Decentralization? • The firm’s major technological trajectory • Need basic advance or improvement in process and product? • The degree of maturity of the technology • During incubation stage better to isolate from commercial pressure • Corporate strategic style • Market or technology-driven strategy

  16. Corporate ResearchManaging Key Interfaces • Corporate Research - Divisional R&D • Differing Orientations (Long-term Vs. Short-term) • Geographical Proximity Needs To Be Considered for Better Communication • Corporate Research - Business Research • Scientific Method, Time Frames • Serendipity vs. Planning • Background, Interests

  17. Technical Personnel vs.Business Personnel • Work Environment • Structure • Methods • Work and Time Pressures • Professional Orientation • Operating Assumptions • Goals • Performance Criteria

  18. Technical Personnel vs.Business Personnel • Educational Background • Experience • Career Objectives • “Identification”

  19. Corporate ResearchLessons Learned • Commitment of Resources Over the Long Haul • Take No Product Life Cycle Projection at Face Value • Beware of “Not Invented Here” (NIH) • Maintain Balance in Research Portfolio • Flexibility is Key

  20. Corporate EntrepreneurshipNew Venture Divisions • NVD - Operating Division Interface Problems • NVD - Corporate Management Interface Problems

  21. Corporate EntrepreneurshipDesign Factors • Degree of autonomy • Nature of task • Life length of venture • Expected return • Basically, NVD should be folded into the existing structure of organization

  22. Corporate EntrepreneurshipOther Design Alternatives • Direct Integration • New Product Department • Special Business Units • Micro NV Department • Independent Business Units • Contracting / Nurturing • Spin-Off

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