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John Chambers, former CEO of Cisco Systems, famously stated, "Without an innovation strategy, different parts of an organization can easily wind up pursuing conflicting priorities – even if there's clear agreement on the company's overall goal."




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Flevy Management Insights: Research & Development


John Chambers, former CEO of Cisco Systems, famously stated, "Without an innovation strategy, different parts of an organization can easily wind up pursuing conflicting priorities – even if there's clear agreement on the company's overall goal."

Igniting the Engine of Research & Development

Research & Development (R&D) is the powerhouse of innovation for any forward-thinking corporation. In today's fast-paced business landscape, companies that prioritize R&D are forging an ecosystem of ingenuity, technological advancement, and competitive differentiation. In fact, PwC's 2020 Global Innovation 1000 study reports that "the world's most innovative companies spend, on average, $12 billion more on R&D than their peers."

The Importance of Strategic Planning in R&D

A robust Strategic Planning process is the foundation of successful R&D. It aligns R&D resources with the company's strategic objectives, drives optimal allocation of investment, and identifies critical capability gaps. A study by McKinsey underscores the importance of this, concluding that companies "can add up to 60% more value to their R&D portfolios by systematizing and getting strategic about where and how much they invest."

Embracing Digital Transformation in R&D

Digital Transformation is reshaping the R&D landscape. By integrating technologies like Artificial Intelligence, Machine Learning, and Big Data analytics, R&D departments can streamline their processes, create impactful innovations, and enhance collaboration. According to Accenture, companies employing digital technologies in their R&D drive “up to 10% more additional revenue and a 63% higher likelihood of achieving above-average profit margins”.

The Role of Operational Excellence in R&D

Operational Excellence enhances the effectiveness of R&D by optimizing resource utilization, minimizing wastage, and fostering a culture of constant improvement. Embracing Lean and Agile methodologies can significantly enhance Operational Excellence in R&D departments. The Boston Consulting Group ascertains that companies employing lean principles in R&D "can reduce time to market by 20% and increase productivity by up to 30%."

Adopting Risk Management in R&D

R&D naturally involves a significant degree of risk. Effective Risk Management ensures the mitigation of potential pitfalls and capitalizes on opportunities. Bain suggests, companies that integrate "Risk Management in their R&D have 17% higher likelihood of generating products that achieve both commercial and critical success."

The Impact of Culture on R&D

A supportive and open organizational Culture can significantly propel R&D initiatives. Creating a culture that rewards innovation, embraces failures, and encourages cross-team collaboration can foster an environment ripe for R&D success. Google's famous '20% time' policy- where employees are encouraged to spend 20% of their time working on what they think will most benefit Google- is a testament to the significance of Culture in driving R&D.

R&D for Future Growth: A C-Level Imperative

Leadership commitment to R&D is crucial to its success. C-level executives play an integral role in setting the vision, mandating resource allocation, and building a Culture of innovation. Ensuring active involvement in R&D will not only drive current organizational success but also ascertain future growth. As Albert Einstein once said, "The only thing that you absolutely have to know, is the location of the library"

For effective implementation, take a look at these Research & Development best practices:


Explore related management topics: Digital Transformation Operational Excellence Strategic Planning Artificial Intelligence Risk Management Machine Learning Agile Organizational Culture Big Data R&D Open Innovation Innovation Management




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