R&D Structure in a Changing World

1. R&D Structure in a Changing World Subcommittee 04-03 Tom Tirpak, Larry Schwartz, David Kashdan (Co-chairs) IRI Meeting 2005 Tucson, AZ

2. Overview • Objective/Scope • To combine IRI ROR research on “Innovation Games” with the body of knowledge on R&D organization structure, and thereby identify trends and actionable guidelines for managing R&D structures and competencies that support an organization’s market and technology strategy. • Dates • Start: 2/2004, SIS in November, Planned Completion: 12/2005? • Value Proposition • Improved R&D effectiveness. • Increased alignment with corporate strategy. • Provide framework for discussion about organizational issues Subcommittee Name Presenter; Location

3. Participants • Co-Chairs • Tom Tirpak (Motorola) • David Kashdan (Eastman) • Larry Schwartz (Intellectual ASSETS Inc). • University Partners • Roger Miller Montreal Polytechnique • CIMS/NCSU • Members • Thanks to the ~25 participants Subcommittee Name Presenter; Location

4. 04-3 R&D Structure in a Changing World • Status: • CIMS/NCSC survey completed, 66 participants in 16 industries • MINE Survey in process, ~150 interviews in 2 business sectors complete. • RTM article outlined • SIS planned (November, 2005). • Remain in Phase III Subcommittee Name Presenter; Location

5. CIMS/NCSU Summary • 66 Interviews (2/3 IRI Companies) • 16 Industries Subcommittee Name Presenter; Location

6. Our Investigation • Collected Data using survey form and website • http://www.ncsu-survey.org Subcommittee Name Presenter; Location

7. Revenue Spectrum of Organizational Structure Corporate Decentralized Subcommittee Name Presenter; Location

8. MINE Study • Games • R&D Structure • Real Cost of Innovation Subcommittee Name Presenter; Location

9. R&D Structure Survey • Multiyear, Multiindustry study, lead researchers from Montreal Polytechnique • 143 surveys completed to date • Plan to survey 1200 firms • 20 sectors • 4 continents • Web-based version of the instrument: • Initial personnel contact with CTOs, VP R&D level • Self-paced responses • Instant feedback / comparison to best performers and average Subcommittee Name Presenter; Location

10. Major Learnings • "Game" (Business Design or Strategy) is the largest determinant of organizational structure • Pioneer Entry  Battle for Architecture  Mass Customization • Engineering IP  Battlefield of Systems • Startup with IP  "Safe Journey"  Optimizing But…There exists an overlay of other factors -- Roger Miller, Montreal Polytechnic Subcommittee Name Presenter; Location

11. Other Factors • Ubiquitous IT • Globalization • Division of Labor (What is core and what's not) • Customer Intimacy • Cyclical Patterns of Centralization and Decentralization • Cost Savings Subcommittee Name Presenter; Location

12. R&D Structure Influencers Subcommittee Name Presenter; Location

13. MINE • Real Cost of Innovation • ~30% of Innovation is performed outside of the functional R&D structure in other functions (Marketing, Manufacturing, Sales, HSE, etc. Subcommittee Name Presenter; Location

14. RTM Paper • Hypothesis 1: Selection of R&D Structure is heavily influenced by “Games of Value Creation” • Hypothesis 2: There are “passing trends” that affect all structures • Ubiquitous IT • Globalization • Division of Labor (What’s core and what is not) • Customer Intimacy • Cyclical Patterns of Centralization and Decentralization (e.g. Du Pont every 12 years, Raychem every 3 years). • Hypothesis 3: Beyond the structure of the R&D Organization, there are capabilities and processes that contribute substantially to innovation and the cost thereof. Subcommittee Name Presenter; Location

15. Next Steps • June to November • Continue MINE survey • * IRI Participation requested and essential • Present SIS at November IRI Meeting • Complete draft of RTM Article Subcommittee Name Presenter; Location