Controlling new product R&D projects

New products are critical to the success of most corporations. But managing the R&D projects that produce new products has proven to be a risky and tricky business. Theorists and practitioners claim that one of the major obstacles to higher new product output is the ‘tight’ control practices found in large corporations. The conventional wisdom argues that, to correct this, firms need to find ways ‘to loosen-up.’ But is that all there is to it? This article presents five findings for effectively controlling new product R&D projects. These findings emerged at the conclusion of an empirical research investigation into the formal and informal control practices that business unit managers use to control various new product R&D situations. The article concludes with several recommendations for those managers who want to control their new product R&D projects better.     

Marketing research for new product ideas arising from R&D departments

R&D departments often develop products, processes or ideas which they consider might have potential as new products. Such products may have arisen as a result of fundamental research or as a by-product of research into specific problems rather than as solutions to needs already identified in the market place. This paper discusses the problems involved in identifying and assessing the needs for product ideas originating within R&D. It indicates the need for understanding and co-operation between R&D and marketing departments in this particular form of new product development.     

Patterns of international R&D cooperation for new product development: the Olivetti multimedia product

Abstract
The aim of the paper is to identify a number of different patterns of international R&D cooperation during the initial phases of the product development process. This is a case-study of new product development based on the work of the Olivetti Multimedia Laboratory in Pisa, how it set up its own pattern of multinational collaboration in the idea generation and pre-competitive phase; how, in turn, this collaboration led to new R&D collaboration agreements to satisfy specific problem-solving requirements connected with the confirmation of a dominant design, though limited to a certain extent by previous agreements between Olivetti and other firms; the role played by marketing in the choice of alternative solutions. Finally, in the product implementation phase, the emergence of a defined technological paradigm leads to a highly competitive environment, where R&D collaboration is increasingly directed towards multifunctional requirements (R&D, manufacturing, marketing) within a strategic network of alliances that involves large sized companies, start-up firms, industrial and university research units.     

Changing control strategies in industrial R&D

This article reports a comparative study of six in-house and eight independent industrial R&D organisations. These organisations are analysed in terms of three types of control strategy - market control, hierarchical control and professional control. The paper suggests that the professional control strategy, emergent after World War Two, is now being increasingly challenged by market control strategies. R&D organisations under or adopting market control are shown to enjoy marked productivity advantages. The distinctive managerial practices of market controlled R&D are analysed. It is concluded that many in-house laboratories have much to gain by partial adoption of these market control practices.     

Peer assessment in industrial R&D departments

The paper reviews the current state of knowledge on peer assessment of performance with special reference to industrial R&D organisations. The authors define the term "peer" and discuss briefly various techniques for assessment (nomination, ranking and rating). The authors review the literature of peer review to show that it can add to the value of assessment and that certain obvious objections to peer rating apply also to supervisory review. Their conclusion is that peer review is a useful adjunct to appraisal, but only if it is completely acceptable to all involved. The conditions for achieving this acceptance are discussed. The paper concludes by showing how peer rating can be used for team development.     

Development and application of a new methodology of evaluating industrial R&D projects

This paper proposes a new methodology of evaluating industrial R&D projects to assess the effectiveness of future R&D in terms of financial credibility, to prioritize them efficiently by clear criteria to reduce the time and burden consumed by both project leaders and management staffs. A new methodology has been developed and applied to all Sumitomo Electric Industries (SEI) R&D projects, and is recognized as a useful system for evaluating many R&D projects in a short period, such as 150 projects per month.     

Barriers to scientific and technical knowledge acquisition in industrial R&D

An understanding of how companies acquire external knowledge is important for any organisation which participates in technology transfer partnerships. The process of external knowledge acquisition within the development function of the pharmaceutical industry is described. Six pharmaceutical companies participated in this study. Group depth interviews were conducted with scientists from a wide range of disciplines and at different levels of seniority within their companies. Senior managers and information officers were interviewed individually. The findings indicated that, although this industry is a leader in formalised information services and commercial database usage, even here significant barriers to the acquisition of scientific and technological knowledge exist. In several of the companies examined the process of information acquisition is not addressed strategically and implemented at laboratory level.     

Organization of industrial R&D on a global scale

Although the globalization of industrial R&D processes has increasingly attracted management scientists and considerable work on R&D internationalization has been done since the 70s, important problems in organizing geographically distributed R&D sites have not yet been resolved. This analysis is based on 165 interviews in 31 technology-based multinationals from Switzerland, Germany, USA, and Japan conducted between 1994 and 1997. We describe the extent of R&D internationalization, its key drivers and principal impediments. Two trends are identified: (i) a geographic concentration on leading technology centres, and (ii) a tightened coordination of R&D units. Overlaying structures, superimposed to regional and functional structures, play a central role in overcoming current deficits in global R&D management. Organizational constituents of this structure are technology offices (Schering), technology management as a competence center (Schindler), central project offices (IBM), central project management (Bayer), project oriented career development (Bosch), virtual project management departments (Roche), and cross-cultural job rotation (ATR).     

How a patent conflict affects industrial R&D Management

The authors relate and analyse the case of a long-running patent conflict between two very large multinational firms in the synthetic fibre business - AKZO and Du Pont. The subject of the conflict was a new fibre of the aramid dass. They show that the case reveals deficiencies in international patent law in need of correction.
The analysis is conducted with the aid of social network theory applied to pub-lished information and data supplied by AKZO and other sources. The theory takes as its starting point that when a number of related functional groups unite behind a common and vital interest the pursuit of this interest becomes virtually unstoppable. In this case the crucial social network was formed first within AKZO and then extended outside to include politicians and government. It propelled the firm to pursue to the end attempts to by-pass a patent position held by Du Pont.
The paper reveals that an apparently strong patent position can actually help a rival to circumvent it. This defect in the patent law is leading companies to avoid patenting and to rely instead on secrecy alone. The authors believe that this will act against the public interest, for exam-ple, by preventing thorough public assessment of a new technology before it is implemented. They argue for changes in the patent law to reduce this risk.     

Measuring perceived pre-purchase risk for a new industrial product

Risk is an important element in industrial adoption decisions. This paper proposes a method to investigate how different group of individuals influencing the adoption of a new industrial product differ in their assessment of the risks. Two dimensions of risk are distinguished: (1) the likelihood that adoption of the new product will have undesirable consequences, and (2) the perceived intensity of these consequences both at the organizational and at the individual level. Purchase consequences are measured in terms of product economics and product reliability. Multivariate analysis of variance is used to assess how decision participants differ in their assessment of risk components. An attempt is made to assess the relative importance of these various components in the formation of individual preferences. The implications of the analysis for the development of better industrial marketing strategies are discussed.     

Choosing government R&D policies: Tax incentives vs. direct funding

A major policy debate continues in many industrialized nations over the rationales for government support of technology development. This debate is unstructured due to the weakness of the underlying economics. Government intervention at any stage in the economic process is based on the recognition of market failure. In the case of technology-based markets, a rather vague allusion to excessive risk is often the best rationale put forward. Real risk/reward ratios are often distorted, leading to underinvestment, but the causes are several and vary significantly in character. As a result of this variance, the appropriate policy response also varies, ranging from varying tax incentives to direct government funding of R&D.     

The economic impact of subsidized industrial R&D in Israel

Israel offers contingent subsidies to selected industrial R&D projects, with the purpose of creating high–quality jobs, reducing the trade deficit, increasing productivity and promoting growth. In 1987–94, 1,200 firms received $1,400 million of subsidies in support of $3,500 million of R&D (in constant 1996 dollars). We estimate that this R&D generated more than $31,000 million of sales, increasing industrial employment by about 10% and contributing to the trade balance a sum slightly less than the entire private sector deficit in the current account. It added 0.3% to GDP in increased productivity, each dollar of supported R&D adding an additional $0.45 to GDP and earning the economy a direct annual return of 13.4%. Electronics, broadly defined, received roughly half the subsidies while accounting for nearly two thirds of the gains; small firms that received one sixth of the subsidies contributed over a quarter of the gains.     

The structure and organization of Chinese industrial R&D activities

The paper is an account of the authors visit to the Peoples Republic of China in 1981. It shows how a highly centralised state deals with innovation, in this context innovation being equated with R&D. The first part of the paper deals with the way the responsibility for planning and execution of scientific and technical effort is distributed through the state and industry. The second looks at the manpower and organisational problems resulting from the economic backwardness of the country and past mistakes in trying to overcome it.     

Institutional means-ends decoupling work in industrial R&D project implementation

Managing goals is a key network management function and is critical in the implementation of industrial R&D projects. In this paper, we explore the implementation of an industrial R&D project, focusing in particular upon the role of means-ends decoupling work to understand how the goals are managed. We combine several data sources in our case research to explore project implementation through an understanding of means-ends decoupling work. We collected in-depth interviews, archival records and field observations within the R&D research setting of an industrial R&D project in the period of 2015 to 2017. Our findings identify three types of means-ends decoupling work in R&D project implementation: ‘work on’ causal complexity, ‘work at’ behavioural invisibility, and ‘work with’ practice multiplicity. In addition, we uncover six dynamic micro-mechanisms that collectively influence the making and nature of means-ends decoupling work and therefore serve to allow for the fluid switching of work as the institutional conditions permit. Overall, our findings have significant implications for understanding means-ends decoupling as a highly skilled network competence for managing R&D project implementation goals.     

Nature of the R&D/Marketing co-operation in the design of technologically advanced new industrial products

Many studies have consistently reported that success in industrial new product innovation is linked with the degree of interfacing between R&D and Marketing in the early stages of the product development process. However, very little evidence of such an interface has been reported in advanced technology firms and the relevant literature provides little empirical material on the matter.
Based on a pilot study of 23 new product projects in ten firms in the U.K. it is argued that, in many instances, firms are missing a fundamental issue in the R&D/Marketing cooperation. Too often, the interface is limited to the identification of general market need for a particular new product idea.
The paper emphasises the fact that the interface should provide the means for an efficient product design procedure between R&D and Marketing. This design link should, in turn, profit both the engineering design of the product and its future marketability. The paper also outlines the advantages and the problems inherent in the exercise and proposes a framework for implementation.     

Managing R&D-marketing integration in the new product development process

Cross-functional coordination and collaboration between R&D and marketing is crucial to the success of the new product development process. By understanding how organizational characteristics influence the quality and quantity of information exchanged during the planning and implementation stages of innovation, managers can take steps to increase the communication within their firm, and thereby increase the probability of new product development success. This examines the effects of several organizational characteristics posited to play an important role in the effective cross-functional information exchange using data collected from 376 U.S. firms. The authors found (1) positive impacts on information exchange are attributed to a formalized system of procedural interaction, the quality of the cross-functional relationship, and a joint-rewards structure; and (2) the quality and quantity of cross-functional information exchanges are influenced negatively by the lack of credibility, and positively by rewards for interaction and a high quality of cross-functional relationship.     

Price indices for industrial R&D: A project level approach

In this paper a fairty tractable approach which managers could use to infer the rate of increase in relative RBD costs over time using actual RBD expenditure data is demonstrated. Two common measures of relative cost increase which in a sense represent bounds, the Laspeyres and Faaschs indices, are estimated for a firm, based on representative projects performed by the firm. The results which are consistent with rnothear study using company level data indicate that the official R&D statistics tend to exaggwate the increase during 1M9-79 in industrial RhQ performance. In particular using the GNP deftstor, one would appuently Qwmimate real 1979 R&D expenditures (in 1963 dolfatrs) by almost 20% in the chemical industry atone.     

Managerial perceptions of technology licensing as an alternative to internal R&D in new product development: an empirical investigation

Increasingly, companies are using the licensing approach to acquire external technology as an alternative to internal new product development. However, the licensing literature presents lists of benefits and costs without identifying either their relative importance or the underlying dimensions. This article presents the results of a survey of Australian licensee firms designed to fill this gap in the literature. The results show that the major reason for licensing relates more to the immediate need to gain competitive advantage than the relative low cost advantage of technology licensing or having access to future technology. The major impediments to licensing are the entry and exit costs and the loss of decision-making autonomy resulting from licensor-imposed restrictions. Further, only two factors, perceived search costs and low cost market entry advantage of licensing appear to vary among the industries studied. Future research and managerial implications of the results are discussed.     

Flexibility planning for managing R&D projects under risk

Incorporating managerial flexibility in an innovative R&D project is important, because managers face greater uncertainty in today's competitive and dynamic changing environment. It is essential to bring managerial flexibility into R&D project planning to decrease technical and market risks, while increasing potential market value. The objective of this paper is to develop a flexibility planning methodology based on real option analysis to improve managerial flexibility for R&D projects. The proposed methodology identifies potential risks that may occur during every R&D stage. It also recognizes a cascading option structure to resolve the identified risks, and evaluates and selects adequate options that maximize the potential value of the project. Instead of using a traditional option pricing method, a dynamic programming model that considers multidimensional product performance and market payoff is used to evaluate the R&D project value. Using the proposed methodology, managers can identify future scenarios as a function of their management actions. The proposed flexibility planning methodology can help managers improve managerial flexibility of R&D project and increase the success rate of product launch. A drug development project is used to illustrate the proposed methodology.