The learning curve, R & D management, and marketing strategies for new products

This paper represents a review of the learning phenomenon which is useful in evaluating the potential of new industrial products. The learning curve in quantitative form provides a means for forecasting costs and prices in many industrial situations. While there are many metho-dological problems to be solved in any specific new project evaluation, the utilization of the learning curve should lead to improved estimates of costs, revenues, and profits. The important role of R & D management in connection with the learning curve is discussed. The interrelationships involving R & D, the learning curve, and marketing strategies are examined.     

Applications of computers in R & D management

R & D Managers use computers extensively in solving technical problems. This paper examines the use they make of computers in solving Management problems. Applications of computers to various aspects of R & D programme formulation, project planning, technical information storage and retrieval, management information systems, and computer-aided training have been investigated by many companies and, in some cases, have been implemented. Some of the techniques have become well established but others are still at a development stage. No attempt has been made to evaluate the techniques described. This topic was the subject of a study by a Working Group of the European Industrial Research Management Association (EIRMA), and a report ‘Computers as Aids to R & D Management’ was distributed to members of the Association. EIRMA has now agreed to release information contained in that report and this paper is based on that information updated by the author, who was Chairman of the EIRMA Working Group.     

R & D management practices:* chemical industry in Europe

The paper summarizes the results of interviews with R & D managers in forty-three chemical companies in France, Germany, Italy, the Netherlands, Switzerland and the U.K. covering questions concerned with: R & D planning, size and distribution of R & D efforts, organization of R & D and project management. The results are presented in quantitative and qualitative terms, and the differences between various categories of chemical industry and between various national practices are discussed.     

Managing Supplier Involvement in New Product Development: A Multiple‐Case Study*

Existing studies of supplier involvement in new product development have mainly focused on project‐related short‐term processes and success factors. This study validates and extends an existing exploratory framework, which comprises both long‐term strategic processes and short‐term operational processes that are related to supplier involvement. The empirical validation is based on a multiple‐case study of supplier collaborations at a manufacturer in the copier and printer industry. The analysis of eight cases of supplier involvement reveals that the results of supplier–manufacturer collaborations and the associated issues and problems can best be explained by the patterns in the extent to which the manufacturer manages supplier involvement in the short term and the long term. The results of this study reveal that the initial framework is helpful in understanding why certain collaborations are not effectively managed yet conclude that the existing analytical distinction among four different management areas does not sufficiently reflect empirical reality. This leads to the reconceptualization and further detailing of the framework. Instead of four managerial areas, this study proposes to distinguish between the strategic management arena and the operational management arena. The strategic management arena contains processes that together provide long‐term, strategic direction and operational support for project teams adopting supplier involvement. These processes also contribute to building up a supplier base that can meet current and future technology and capability needs. The operational management arena contains processes that are aimed at planning, managing, and evaluating the actual collaborations in a specific development project. The results of this study suggest that success of involving suppliers in product development is reflected by the firm's ability to capture both short‐ and long‐term benefits. If companies spend most of their time on operational management in development projects, they will fail to use the leverage effect of planning and preparing such involvement through strategic management activities. Also, they will not be sufficiently able to capture possible long‐term technology and learning benefits that may spin off from individual projects. Long‐term collaboration benefits can only be captured if a company can build long‐term relationships with key suppliers, with which it builds learning routines and ensures that the capability sets of both parties are aligned and remain useful for future joint projects.     

The changing face of research anddevelopment in the public sector

This paper examines the changes that have occurred in the management and scale of R & D, in the contextof the'gas industry's experience. As a resultof the discovery o f North Sea gas and new and expanding operations, R & D has become larger, more central, and thus more integrated into and accountable to the organization as a whole. This has resulted in greater centralization and planning administered according to the ‘sponsorship’ principle. These changes have highlighted the problems of R & D choice and the comparison of commercial and non-commercial objectives in a public sector industry. The unique constraints under which nationalized industries operate and their commitment to the ‘public interest’ as well as to commercial goals, are discussed. These bear upon the way in which R & D decisions not amenable to cost/benefit analysis (such as the balance between long and short term work) are made. It is emphasized that these decisions are made by the industry as a whole and that R & D must thus be seen to be complying with industry objectives. The example of British Gas R & D Planning is used to show how ‘sponsorship’ operates and its values for R & D and the restof the industry. Comparison with other public sector industries indicates that there is no one great system for R & D and that its administration is a function of the history, technological characteristics, and present situation of the industry. These imply different procedures appropriate for the innovation process within the Industry. The role of British Gas within a national energy policy is discussed. The separation of the fuel industries affects the assumptions on which R & D plans are made and thus the degree of uncertainty inherent in all R & D planning. This raises interest- ing questions about the degree of flexibility possible in defining each industry's own objectives.     

Coordination of multinational R & D: A Swedish case study

The need to coordinate multinational R & D increases in many corporations which want to take advantages of scale, synergy and multinationality on a world-wide basis. The Swedish engineering corporation SKF has tackled this problem as an early internationalized but lately diversified corporation working in mature technologies and markets. Substantial coordination has been achieved through a heavy resource commitment in a foreign corporate R & D lab, and a subsequent build-up of a rather elaborate system for R & D management throughout the corporation. The structure and processes of the system are described, together with experiences of coordinating effects, and a project case is given. The chosen mode of coordination is finally compared with situations in other industries.     

Three-dimensional representation of company business and investigational activities

This paper describes a management aid devised to illustrate the inter-relationships between present company business activities and the investigational activities of the various company R&D functions. It is based on the- construction of a three-dimensional model in which the raw material, process and market parameters are the axes. Use of the model can facilitate project definition and selection in R and D departments and can be extended as a management aid in studies of R & D resource allocation and acquisition studies.     

Research on the interface factor in the development and utilization of new technology

The interface factor in the development and utilization of new technology is analyzed with questionnaire surveys. The interface factor is found to determine R&D performance in a study of large manufacturing companies in the United States and in a study of computer utilization performance in commercial banks in the United States. A comparison of the interface factor in the functioning of R & D in the United States and Japan suggests that interface problems may be less serious in Japan. Company experience is reported which indicates that the interface function can be controlled by management policies, procedures and practices. The need for greater attention to the interface factor by executives and by researchers on R & D management is a conclusion which follows from the findings presented in this paper.     

Conflicts and value co-creation in project networks

The present study aims to (i) extend knowledge of the nature of conflicts and of their influence on value co-creation in project networks and (ii) contribute to the management of conflicts to enable value co-creation.This work is based on an action research methodology conducted during a five-year case study of a firm operating in the Information and Communication (IT) industry. Three dimensions of conflicts are identified: (i) types, (ii) timing and (iii) effects. An understanding of these dimensions facilitates the management of conflicts. Two levels of intervention are isolated: (i) the strategic level and (ii) the operational level. The paper offers a new understanding of conflicts that should precede their management, which is crucial to enabling project network value.     

The management of Army R & D projects

This study of the accuracy of cost and duration estimates for British defence R & D projects is based on an analysis of the records of 29 Army projects, initiated since 1960. The results are generally similar to American defence studies with which they are compared. The reasons for schedule slippages and cost escalations are examined and it is suggested that performance could be improved by more thorough project feasibility and definition studies and by a stronger project management organization.     

Methodology for increasing the adoption of R & D project selection models

Although some studies and experiences have shown that R & D project selection models can be potentially useful decision aids, their adoption and routine use is not widespread. This lack of usage may be a consequence of the lack of attention which model builders have traditionally given to the prevailing adoption attitudes of R & D managers. A design methodology centering around the measurement of adoption attitudes has been developed and used by the authors. The methodology consists of procedures for analyzing the organizational climate relative to project selection model usage, developing an acceptable model form relative to the organizational climate, and inducing the adoption of this model form within the climate. Three case applications of the methodology are described in which negative-to-positive shifts in adoption attitudes occurred and project selection models were adopted for long-term use. These results indicate that the use of this general methodology may lead to increased formal adoption and widespread usage of project selection model forms in R & D.     

R & D and the company's requirements

Numerous models have been put forward in the literature for the selection and evaluation of projects, many of which are based on optimizing the return on investment by the company in R & D projects. This is a noble aim but in practice the financial data available are often of dubious accuracy and so many other factors are involved in actually adopting a portfolio of selected projects that project selection often becomes a theoretical exercise. It is suggested that the selection of projects is in essence the adoption of a strategy which is within the policy and long-term aims of the company and also within the policy and scientific development of the R & D part of the company. Such a strategy is usually sub-optimum for both the company and the R & D division, as it is a compromise between a desire for high pay-back investments by the company and the maintenance of a scientifically balanced R & D involving some long-term, unknown return, investments. A method is currently being experimented with by Unilever Research which illustrates where conflicts arise between the policy of the main company and that of research, and assists management in arriving at a strategy which most closely fulfils the needs of both policies. Both the concept of the method and its practical use are described in this paper.     

The boundary relevance of the project manager's job: findings and implications for R & D management

Much of the stress and conflict in the project manager's job can be attributed to the boundary nature of that position. This study explores the relevance of recent developments in organizational role theory for clarification and understanding of the project manager's job. Findings are reported from a study which show that traditional management thought is inadequate for understanding the factors which regulate the project manager's behavior. One must recognize the boundary relevance of the project manager's role in order to avoid organizational or administrative arrangements that would be undesirable for project management. Several implications, which logically follow from the theory and findings on boundary role behavior, are noted for their relevance for R & D management.     

A study of the diffusion of management concepts and techniques amongst R & D managers

The management of R & D has been the focus of a great deal of research and writing during the past decade. It is, however, by no means certain that these have produced a significant effect amongst R & D decision makers. This paper describes a study of the extent to which R & D managers are aware of management concepts and techniques. The subjects were 57 senior R & D managers from British and Continental organizations who attended courses at the Management Centre, University of Bradford in 1974/5. The study was conducted by means of a questionnaire and a 100 question forced choice Quiz. The paper suggests that knowledge of modern management thinking has, to date, made only a limited penetration into R&D.     

Empowering project scope decisions: introducing R&D content graphs

There have been several studies confirming the strategic and operational importance of choosing a proper project scope. There is a lack of empirically tested managerial tools to assist in this matter, and studies with longitudinally analysed R&D projects with respect to content are scarce. This article discusses the management of advanced engineering in the automotive industry. The study presents a structured approach where individual project leaders together with top management could prepare project material, discuss, visualize, and evaluate the content around a common tool. This tool, i.e. the R&D content graphs, facilitates project content selection, both during the start‐up and during the execution phase of the project. The studied project has been studied for nearly two years using an abductive case‐based research design. Since the project has been longitudinally studied, it has also been possible to test the graphs' predicting capabilities. The graphs are based on a visualization of the project content along five identified dimensions. The results reveal that the tools bring structure to project scope discussions, have some predictive value, and can also function as a vertical as well as a horizontal communication tool.     

Balancing resources in pharmaceutical research

Within the financial and technical objectives of pharmaceutical R & D, an important sub-goal is the maintenance of a long-term balance between the different activities of research. Such a balance provides stability and, by ensuring a high utilization of research man-power, offers a higher output from a given level of investment. This paper describes the development and use of a simple technique to assist in attaining this balance. The performance of a strategic plan, in both the long- and short-term, is assessed, and the scope for corrective action to deal with deviations from the plan is explored. The flexibility and robustness of suitable strategic plans are demonstrated by the use of simulation.     

The application of a research project selection method

This paper describes the application of a linear programming model to project selection and resource allocation problems in two industrial R & D laboratories. Mathematical models have not been widely used in practice because of the inherent uncertainty of research. The model discussed here yields information about the outcome of decisions under conditions of uncertainty. The elements of the model are developed, using simple examples, and the form of the complete model outlined. Benefit evaluation is carried out using probabilistic networks and uncertainty in benefits included by utilizing the concept of certainty equivalence. The use of the model in practical situations is discussed, with examples of the information obtained from the solution, and sensitivity studies to investigate the uncertain environment are described. The result is a flexible model, which produces information necessary for planning purposes and which is acceptable to practising R & D Managers.     

Qualitative aspects of the evaluation and control of research and development projects

Decisions in research and development are usually based on a variety of data inputs. Some of these will be concerned with the returns offered by projects in money terms. Others will relate to more qualitative aspects of research work such as, perhaps, the establishment of a base in a new area of technology or the achievement of a stronger market position. This paper describes and illustrates how checklists may be used to assemble qualitative data for purposes of decision. These were formulated in an industrial R & D laboratory and the illustrative examples in the text make reference to real projects. The checklists described are an integral part of a comprehensive system of project evaluation and control in R & D which includes an analysis of the financial implications using net present value or discounted cash flow rate of return of the project risk, analysis and sensitivity tests. The detail of this part of the scheme is conventional and is therefore omitted from the paper.     

Upper management control of new product development projects and project performance

While some degree of freedom and flexibility is an essential ingredient to productive cross‐functional NPD teams, upper‐managers are faced with the challenge of instituting effective control mechanisms which head projects in the right strategic direction, monitor progress toward organizational and project goals, and allow for adjustments in the project if necessary. But too much or the wrong type of control may constrain the team's creativity, impede their progress, and injure their ultimate performance. Therefore, this study examines formal and interactive control mechanisms available to upper‐managers in controlling new product development (NPD) projects, and the relationship between these mechanisms and NPD project performance. Formal output and process controls are examined which consist of the setting and monitoring of outcomes, such as goals, schedule and budgets, and of processes and procedures, respectively. This study also looks at how the effectiveness of these control mechanisms may be contingent upon the degree of innovativeness in the project and the degree to which the project is part of a broad product program. In addition, the use of formal rewards for achieving team performance as opposed to rewards for individual achievement is investigated. Lastly, interactive controls are examined which consist of upper‐managers interacting directly with project members in the development of strategy and operational goals and procedures prior to the start of the project, and upper‐managers intervening in project decision‐making. Questionnaire data are collected on 95 projects across a variety of industries. The findings suggest that while NPD projects teams need some level of strategic direction concerning the objectives to be accomplished and the procedures to be followed, upper‐level managers can exert too much control. In particular, the findings showed a negative association between the use of upper manager‐imposed process controls and project performance. The findings also indicated that the degree to which upper‐managers intervened in project‐level decisions during the project was negatively related to project performance. However, the results showed support for the notion that early and interactive decision‐making on control mechanisms is important for effective projects. In particular, early team member and upper‐management involvement in the setting of operational controls, such as goals and procedures for monitoring and evaluating the project, was positively associated with project performance. This study provides additional insight into our understanding of upper‐management support in new product development. The study suggests that upper‐managers can over control with the wrong type of controls, and suggests effective ways of implementing participative and interactive control mechanisms.     

Equitable payment in the R & D function

This paper discusses the problems associated with constructing equitable salary structures for Senior R & D employees. The use of job evaluation and performance appraisal are both considered. It is suggested that the decision band method of job evaluation is particularly useful in this context and a case study of its application within the R & D division of a large manufacturing firm is presented. Job grading and salary structuring in terms of decision-making responsibility are demonstrated. It is argued that the decision band approach assists rational administration of R & D in a number of ways including analysis and, perhaps, restructuring of the function. Methods of rewarding individual performance and measuring career development within R & D are also discussed in terms of the decision band concept.