#125 from R&D Innovator Volume 3, Number 11          November 1994

World-Class R&D Management
by Robert Szakonyi, Ph.D.

Dr. Szakonyi, director of the Center on Technology Management at the IIT Research Institute in Chicago, Illinois, has consulted for many companies.  While studying what R&D managers need, he interviewed R&D and engineering managers in 500 companies.  He's editor of Technology Management (Auerbach Publications, Boston, MA, 1993 and 1994), a two-volume series of articles by experts in the field.

Although nearly everyone involved in managing industrial companies believes R&D should play a vital role in sustaining and growing a company's businesses, only a small percentage of companies have world-class R&D management.  The problem usually stems from a significant gap between management's desire to exploit the results of R&D and its knowledge of how to manage R&D effectively.

More exactly, the problem originates in a mystique about R&D shared by many business and R&D managers.  Most managers, who lack training in science and engineering, think they cannot participate in managing R&D people.  And that renders them incapable of asking the hard questions about R&D that they do about sales, manufacturing, or accounting.  On the other hand, R&D managers, trained in science or engineering, tend to think creative tasks should be managed differently than other tasks within the company.  R&D people also tend to neglect management questions of schedules, budgets, and people as less interesting than questions of science or engineering.

Challenges

In most companies, therefore, any R&D leadership usually originates with R&D managers; yet these managers face two major challenges in exercising this leadership.

First, they must develop methods for integrating R&D into business operations, while simultaneously ensuring that the necessary research is accomplished.  To do the former, they must translate R&D results into terms that business managers can fathom and support.  To do the latter, they must champion the R&D projects needed for company survival, even if the research may pay off more slowly than most managers prefer. 

R&D managers must establish procedures for selecting, planning, executing, and transferring R&D effectively, while at the same time nurturing a climate that promotes creativity.  Thus they must educate R&D people about using their skills for the company's benefit, while preserving the excitement of discovery within their organization.

The better R&D managers enlist support of their business counterparts to integrate long-term R&D into business operations and the more successful they are in getting R&D people to use their creative talents for the benefit of the company, the better the R&D management.

A simple definition of world-class R&D management is:  a situation in which R&D and business managers are actively involved in selecting and utilizing R&D, and in which the R&D people are creative and able to manage their projects effectively.  In other words, world-class management requires that the company as a whole, not just the R&D managers, help manage R&D.

Signs of World-Class R&D Management

Although top-flight R&D management is most obvious in internal company practice, it's not these practices per se that comprise the root of exceptional R&D management.  Rather, it's an internal attitude that fosters world-class R&D management, particularly the key belief that R&D is vital to sustaining and growing the company's business.  Although most companies have this belief, only companies with the best R&D management consistently act as if they have it.

The best way to see whether a company consistently acts on this belief is to watch the senior business manager.  For example, in one chemical company, the president, a former banker, recognized that the future required a greater stress on technology, and so he recruited an R&D manager to lead the company into new technologies and markets.  Similarly, in a specialty metal firm, all senior business executives play active roles in directing R&D, while the head of R&D, in turn, is intimately involved in developing the company's business strategies and dealing with customers.  In this company, technology is viewed as a key resource that all business executives must deal with effectively.

The R&D organization in companies with world-class R&D management also manages itself differently; typically by putting greater emphasis on the quality of products and services, and understanding the user's needs.  For example, at a machine-tool company, the R&D organization enacted the principles of total quality management in its operations.  At a copier company, the R&D group instilled in its people a desire to understand the needs of the users of their products and services.

Excellent R&D managers are also able to select which issues are highest priority.  Whereas most R&D organizations still emphasize better selection of projects or transfering technology to manufacturing, world-class organizations have mastered the normal problems and are tackling problems that other organizations usually don't get time to think about.  For example, one R&D organization emphasizes identifying the technical skills that the group will need in five to 10 years. Another puts its main concern into finding ways to use R&D resources efficiently because of marketplace reluctance to pay what its products are really worth.  This crunch has forced the research group to align with the business divisions; it can afford to focus on efficiency questions rather than more mundane questions like what projects to choose in the first place or how to transfer technology. 

In sum, world-class R&D managers consistently act as if R&D is vital to sustaining and expanding the business.  So R&D and business managers must work together in managing R&D, to ensure that R&D people are creative and able to manage their projects effectively.  R&D shouldn’t isolate itself from business functions, and business shouldn’t let R&D isolate itself.  You should all be working for the same goal:  success of the organization.