Questions and answers from IRI's members: what are IRI members talking about? These questions were recently posed on IRI's Community Forum.
What do you think the pros and cons are for each type of R&D organization--centralized, decentralized, and hybrid? What has your experience been with effective R&D organizations? What type of R&D organization do you have in your company and what makes it effective? Lastly, if you have central or hybrid R&D, how do you name your groups so that anyone in the company knows where to come to for what?
Director, Global Technology Center Air Products and Chemicals, Inc.
Here at Waters Corp, I would say we are in the 60/40 or even 80/20 range of business/corporate activity. We have four main business areas: Liquid Chromatograph (LC) Instruments, Mass Spectrometry (MS) Instruments, Thermal Analysis (TA) Instruments, and Chemistry Operations. These businesses are scattered around the globe--US, UK, Singapore, and others. Each of these business units runs its research and development mostly
In this space, we publish queries and answers from IRI's e-mail-based community forum. Questions and responses are selected for completeness, relevance, and broad interest and are edited for format, grammar, and to fit the available space.
The community forum is available to IRI members via the IRI website; from the home page, select Collaboration Center, then Community Forum. For more information about IRI membership, visit our website, http://www.iriweb.org autonomously. The corporate coordination and direction is accomplished in four main ways:
1. We talk frequently, mostly via teleconferences but also in person. If there is an interface required to products in another business unit (almost always these days), we will have a representative participate in weekly project meetings. We also encourage more frequent personal conversations and emailing.
2. We are now using a Corporate Instrument Development Process (referred to as the CIDP). In the past, each business had their own process and many of the phase gates had different definitions and deliverables. Two years ago, we formed a team to unify the independent processes. This was no easy task and, although this effort was promoted and sanctioned at the senior level, the time/resources to accomplish it were not directly planned on. Initially, the motivation was mainly to simplify our position with various regulatory bodies such as ISO and FDA, but the advantages of using a common language when defining and reporting on projects was also recognized. We are now fully onto the new process (no remaining grandfathered projects) and have fully trained everyone. We have built a fair amount of flexibility into our CIDP by letting the marketing and project managers define the scope up front as needed. For example, a relatively minor hardware improvement to an existing instrument in which the research group has already built a prototype, might elect to go directly from spec and planning to beta phase, skipping the usual alpha phase. Any deviations from the norm have to be presented and approved by senior-level management at the feasibility phase gate review so there aren't any surprises later and before the spec and planning phase can begin. Enforcing our CIDP has had some difficulties. Its all too easy to let the process slide when faced with the inevitable technical and scheduling challenges and it is also very, very tempting for upper-level management to specify a product delivery date (i.e., for a trade show) before feasibility has been achieved, which means the project team is faced with inventing while on a timeline! Suffice it to say, we need better adherence to the process while not losing sight of the business demands.
3. We have yearly planning meetings for each of the business areas and then a combined meeting where product roadmaps are worked out. This has a very strong emphasis on required support from other business units. These meetings involve all senior management, including our CEO. This goes a long way towards getting everyone on page.
4. The entire corporation is now using common engineering tools. This may seem obvious, but it wasn't true until recently, and it isn't easy to transition a business unit onto different tools because of legacy support and use of existing subassemblies, PCBs, software algorithms, etc., in new products--not to mention training--all while still pumping out new products. Keeping these tools at the same revision level and maintaining common practices within the tools is an ongoing challenge.
Items 1-3 above also apply within each business area, where several product lines often compete for precious resources.
Senior Director, Instrument Development Waters Corporation
I've had experience in completely centralized, completely decentralized, and combination R&D organizational models. In my view, any of these organizations can work, if the 'concerns' are proactively managed. My brief thoughts follow:
a) Advantages: administrative simplicity, more control for the R&D group on portfolio makeup/balance, facilitation of cross-business programs, more interaction with corporate leadership, the ability to utilize core skills across different business units, and a better ability to support longer range developments
b) Concerns: budget risk (as the central number becomes a visible target when major cost reductions are necessary) and the risk the R&D group will decouple from the businesses (working on problems they feel are relevant, such as blue sky research)
a) Advantages: controls to ensure the R&D group is working on business-relevant programs, increased business acumen in the R&D staff, more interaction with business leaders, and budget stability (assuming funding comes from several businesses, offering a 'diversified' investment portfolio)
b) Concerns: the risk that the portfolio will become too short-term focused, that the R&D group will spend disproportionate efforts attracting money, that core skills are duplicated for different business units, and that cross-business synergies go unrealized
a) Advantages: the ability to maintain a balanced portfolio, to still leverage core skills across different business units and cross business programs, and to effectively manage technology transfer
b) Concerns: responsibility definitions (who does what) could lead to gaps or duplications. Does central research do all the longer-term work (and only longer-term work, leading to concerns stated above)? Does the business do all the applied work (and applied work only)?
Executive VP Technology & Regulatory Affairs Crown Holdings
This question really keys in on the topic of "organizing a company's R&D for success." I don't believe there is any simple answer beyond the following truism: R&D needs to be organized to be effective in the current culture of the company it serves. Several key topics are implicit in this statement:
1. R&D is a service organization and in any culture needs to deliver to its customers (internal & external) the products and/or services needed for that company to be successful against its competition. The specifics of this are plethora depending on the competitive climate each company and its specific industry plays in, but the second topic stems from this.
2. R&D needs to be effective for each company's competitive environment. P&G realized this, 1 believe, when they moved from centralized to decentralized so that their R&D functions became focused on each business's customers in which the company wanted to compete and be innovative. But the downside of this is perhaps why P&G has further evolved to the hybrid scheme; too much specific focus can stifle open innovation and the ability to see the big picture and the trends of an industry. Many a good company failed to become great by not paying enough attention to the bigger picture, the competitive threats from other industries or displacement technologies, things that a decentralized R&D organization needs to guard against. Not that it can't be done, but the rewards and incentives are often not applied to these sustained activities. This leads to the next topic.
3. R&D needs to be organized; a subjunctive verb tense is used to show how this hopes to happen and wants to happen in a renewing sense of leadership for an R&D organization to be the best it possibly can. This leadership has to come from the highest levels in an organization so that the message is neither ambiguous nor debatable and reflects the elements of a company's culture that integrates the R&D functions with the rest of the organization. The culture and its leadership may favor a more centralized, decentralized, or hybrid structure to accomplish this, but the particular structure should be thought out to mitigate the weaknesses and leverage the strengths of the company's available resources through communication throughout the organization.
My personal experiences over my 26-year career in R&D leads me to conclude that the hybrid model, especially the 60:40 split, if allowed some flexibility around it, is the most flexible and robust for most growing organizations of any size. By its very nature, it recognizes the short term and the long term as well as the currently employed versus the "could be" employed technology elements. But any organization with a leadership that recognizes these and other conflicting yet complimentary forces as necessary and vital to a company's future prosperity can probably make any of the R&D structures work by employing balanced metrics and incentives.
R&D Section Manager Champion Technologies, Inc.
1. Centralized R&D organization offers a chance at long-term focus, achieving great company-changing innovation, broad utilization of skill sets, and relative ease of achieving critical mass with minimal resources. But centralized R&D organizations often struggle to direct their efforts in a way that adds value to the existing businesses, and may eventually earn the pejorative nickname of "ivory tower"--a sure sign that it has lost contact with the rest of the organization, and is not working on projects seen as valuable by the company's existing businesses. It is the poor interactions with business folks and customers that is often the downfall of centralized R&D organizations. Companies are driven toward centralized organizations when they have few resources or customers, and they do not perceive that a lot of customer interaction is needed in their R&D processes.
2. Decentralized R&D organization gives the R&D folks excellent contact with the business people, good direction on projects that are needed to help the existing business, and a chance to learn firsthand what customers need. But while decentralized organizations often work on good projects, they rarely work on great projects that will make a big impact on the company. They are often driven to fix the last problem that a customer complained about, and only until the next customer registers his/her complaint about something else. These organizations often use up the company's "seed corn"--its collection of ideas and novel scientific leads--as the R&D organization pursues low-hanging fruit, and may appear extraordinarily productive for a while. But these organizations are notoriously poor at creating new novel ideas, new directions to pursue, and the work begins to look unexciting and lacking in creativity after a few years. As the wealth of new ideas are consumed but not replaced, workers will complain they are just tweaking existing products and processes (vs. inventing new ones) and come to believe that the R&D organization has a lot more D than R in it. After some time has passed, the business folks will begin to wonder where their next big source of growth will come from. Companies are driven toward decentralized organizations when they have a great many different customers and their many product lines are customized towards each group of customers.
3. Hybrid tries to utilize the strengths and overcome the weaknesses of centralized and decentralized organizations. In its best format, it is able to do both long- and short-term work effectively, enable good customer and business contracts for the R&D workers, and receive good direction from business and customers while still having a long-term vision that can make a difference for the company. Companies are often driven toward a hybrid R&D structure when they have grown large and have experienced the limitations of centralized and/or decentralized organizational structures.
Probably the best situation is when R&D workers can move from one environment to another on a 3-4 year cycle. As they move into a decentralized organization, they can build business and customer relationships while they can still rely on the relationships with the central R&D function that they developed in prior years (so they know where to go for help). After a while those old relationships begin to fade, and the person needs a stint back in a centralized organization, where his/her fresh business and customer contacts will help him/her focus on relevant work, yet have the long-term focus and resources only available in the centralized organization. Some companies can achieve this back-andforth mobility by moving people between organizations, while others periodically change the company's R&D structure.
Dave Kashdan, IRI Emeritus Member
OSRAM Sylvania is the #1 lighting company in North America and a subsidiary of Siemens. We have a hybrid R&D organization, which fits our business needs. The development departments of the business units focus on executing the product development roadmaps. They can flexibly address the specific market needs of the respective BU. We have decentralized the development organization long ago, and we don't question that his has been the right move. On the other hand, the tasks of the central R&D organization are technology scouting, evaluation and funneling of ideas, and development of (platform) technologies up to roughly two years before market introduction, when some technologies are handed over to the business units. OSRAM Sylvania feels that there is a need for an internal Central R&D organization that can address high-risk and crossdivisional topics, or those beyond the scope of the business units. Traditionally we have used the terminology of "Research" and "Development" for the two portions of R&D. Naming conventions change frequently in our organization, and the terms Central Technology, Central R&D, or Conceptual Engineering can also be found.
Vice President R&D OSRAM Sylvania
Our R&D effort at USG Corporation is centralized. The laboratories are organized at the central technology center in Libertyville in alignment with the business units. For instance, my lab, the Ceilings Laboratory, encompasses tile and grid and is aligned with the Ceilings Division. In a similar fashion, another lab, the Performance Surfaces Laboratory, is aligned with the Performance Surfaces Division. And so on. In the product laboratories, the work is a composite of support activities for the business units (current product property and manufacturing issues), development projects for the business units (new products/ processes in traditional product lines), and long-range strategic projects. Our analytical and systems test laboratories are co-located at the site.
Associate Director USG Corporation
Over my 30 years of experience I have seem all different types of R&D structures. There is no perfect answer. It depends on the strategy of the business. In general there are two negative extremes you want to avoid: the functional silo or the business unit silo. The functional silo can easily get disconnected from the market and the business unity strategy and in some ways become self-serving. The business unit silo can easily prioritize R&D on short-term needs and create project stops and starts for hitting quarterly results. Therefore, you need to balance R&D in the enterprise.
At DuPont, we do both. We have dedicated R&D for each business unit with sufficient critical mass and we have a central research unit focused on long-term transformational R&D, with projects that are dedicated to the business units. The CTO maintains governance over all R&D in the corporation for people development, R&D processes, competencies, growth & productivity metrics, and infrastructure. We review the R&D portfolio for each business unit at least once a year to maintain the tension.
Director DuPont Science & Technology
Q: Do you have a formal system to manage tech project portfolios?
We are considering developing/implementing a system to manage our technology project portfolio. We have done some preliminary research on the web already but have found many alternatives available. I would like to learn from your own experiences about how you keep good track of your project portfolio and if you use any commercial or in-house developed application for this purpose.
Metalsa SA de CV
We have an approach for managing our technology portfolio that we have been using for the past six years. Our approach was developed in-house after studying many of the contemporary frameworks for portfolio management and value creation. It does not rely heavily on any commercial tools as we found most tools to offer a particular and often narrow perspective. However, some commercial tools can be helpful as you will see below. Our approach has three components:
1. Strategic Views: This is a series of views that we create from our portfolio. Its shows us our projects and investments along several dimensions. Important dimensions to look at are Technology Newness and Market Newness. Another one is Project Maturity (from exploratory at one end and transfer/commercialization at the other end). There are more that we use, but they are specific to internal governance and funding models.
2. Project Scorecards: Each project in the portfolio completes a qualitative scorecard. The scorecard asks questions that attempt to capture the assumptions we are making about our ability to create value and capture value with the project. The questionnaire has been crafted to cover projects at almost any stage of development. A key output from this exercise is charts that depict value creation and value capture (essentially risk) potential of the portfolio. The real value of this exercise is having the structured conversations about the assumptions. It's a great tool for looking at outliers in the portfolio and for testing that we have a solid investment thesis--e.g., more investment to higher value projects. Scorecards are a good precursor to developing a more detailed business case.
3. Specific Project Valuations: For a relatively small number of projects we perform more detailed business modeling and analysis, ranging from simple NPV analysis for well-understood opportunities to options analysis for projects with more uncertainty. Here, commercial tools are routinely used.
VP, Strategy and Alliances Xerox Innovation Group
I would recommend that you consider using Microsoft Project with MS Project Server. In the 2010 version, the software successfully integrates Project Management and Portfolio Management. The software can be customized to collect various data to drive the portfolio optimizer via formal workflows if necessary (SharePoint), but for the most part, everything you need is built right in.
Since our technology portfolio interacts with many disciplines and stakeholders, we utilize the enterprise-wide resource and planning features which are the backbone of MS Project Server. The portfolio drivers are customizable, so your specific weightings (ROI, strategic fit, etc.) and rankings by project can be defined easily. This facilitates scenario analysis and other more sophisticated portfolio assessments. Finally, you should be using a disciplined PM approach anyway, so if you are using MS Project, the hurdle to Project server is small with a great deal of benefit.
Joseph M. Lehman
Manager--Innovation Technology Carpenter Technology Corporation
In our corporate research organization, we use a Stage-Gate process called ETD (Early Technology Development). It is our technology development pipeline that takes raw ideas and provides a process in which they can be explored and improved upon. ETD is a way to manage technology programs through various stages of development and associated risk. It allows researchers to pursue ideas with less definition than in our product development Stage-Gate process and focuses their efforts on technology development. The entire ETD process is managed through Microsoft SharePoint and K2 workflow software. This process provides a portal for hundreds of ideas to be entered, tracked, and advanced with minimal project management burden/ overhead compared to what is required when a project enters the business project portfolio. We have had the ETD process in operation for approximately five years, and it has generated several technologies that have proven valuable in meeting the needs of our consumers and customers.
Large consumer products company
We use an in-house developed project portfolio system. By project, we record, discuss, and document:
* The project justification information and drivers
* The project requirements
* The project plans
* The customer/market verification of targets
* Developments and project updates
* Customer/market evaluations of experimental materials
* Product acceptance
* Product scale-up
* Customer/market feedback
* Product modifications
* Project learnings
* Implementation systems
The system is globally accessible through a web-based server.
Director of Commercial Technology Michelman Inc.
Q: Do you use social networking tools for technology development projects?
We are currently making plans to organize and set up global communities for technology capabilities. The goal is to connect people to share their knowledge, problems, findings, and to implement best and better practices. There are a variety of tools available for social networking, communities of practice, and virtual teams, and we are interested to understand what tools are being used and why. Also, we are interested in learning what processes are needed as well as the structures and roles necessary to sustain the communities.
IT Manager Alcoa Technical Center
E2.0 technologies exist to facilitate collaboration. LinkedIn is a familiar social networking tool to reach out externally. Internally, Microsoft Sharepoint is a common platform that supports communities through document storage, wiki, and blog capabilities. They also have an application called NewsGator that supports collaboration, social networking, and document storage. While I'm less familiar with it, another product called Yakabox also has similar capabilities. Communispace is another company that provides services to companies to build and help facilitate private online communities. Like traditional communities of practice, success requires a strong leader or facilitator. Adoption of these tools requires a significant behavior change, and depending on the purpose, a shift from e-mails, and so change management initiatives must be implemented accordingly.
Associate Director, Open Innovation and Knowledge Management Kraft Foods
I have had one consulting client who used Yahoo workgroups and another who attempted LinkedIn. The Yahoo experience, which was focused on a specific project, worked well, but the LinkedIn attempt failed, I think because of lack of leadership and vagueness of purpose. It is much easier to generate information and post it than to read it and understand it.
Posters tend not to be concise, and the turnaround times can be long. Also, some of the platforms are cumbersome to use. These kinds of things can easily become more trouble than they are worth to users. Here are my initial suggestions in order of priority, based on my experience:
1. Focus the efforts on well-defined issues; taking care to define clearly and succinctly what you are trying to accomplish is the most important step.
2. Pick a platform that is easy to use.
3. Provide some training, even if minimal, not just in how to use the platform but in how best to communicate (brevity, etc.). Ideally, the training effort should include a demonstration of situations in which benefit results.
4. Have someone available as support --not just tech support but to monitor and help steer.
5. I am not familiar with some of the tools Nanako Mura references, but I agree with his comments otherwise, too.
Ora Smith, IRI Emeritus
We recently launched Eureka Streams enterprise social networking as an open source project. We now have more than 36,000 employees with access to Eureka Streams in our own enterprise. If you think of social media as Content and Conversation, Eureka Streams is focused on Conversation. That is, it empowers employees to make informed decisions by finding relevant colleagues and groups, following their streams of activity, and engaging in conversation. Eureka Streams complements content management systems such as SharePoint that provide capabilities like shared documents, blog, and wikis. You might consider having your team download and evaluate the Eureka Streams open-source software.
Director, Social Media Solutions Lockheed Martin IS&GS
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|Comment:||Questions and answers from IRI's members: what are IRI members talking about?|
|Author:||Collins, Martha; Ciolkosz, Ted; Abramowicz, Dan; Goss, Will; Kashdan, Dave; Zachau, Martin Rosenstie|
|Date:||Jul 1, 2016|
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