R&D – Managing R is Different than D

It seems very obvious, but in daily corporate life it does not always happen: Research should be managed differently than Development. Although it is normal to mention Research & Development together, they are clearly quite different in nature. Sure, in the end they are part of the same innovation funnel, but their objectives and characteristics are very different. Research normally has as its objective exploration, while development has as its objective the exploitation of technology.

And different objectives require different:

• Human Resources
• Financial and Risk management
• Funding
• Responsibility
• Location

First of all, you will need people with different skills and different mindsets. Whereas in Research you will need researchers, in development you will need project managers and staff with business acumen to be able to commercialize the innovation (all very obvious, right?).

When it comes to risk, please forget the calculation of ROI and EBITDA on ideas in preliminary stages. If you want to kill a brand new research idea, give it to your finance department. As a global R&D manager at DuPont once said to me: make sure your researchers can explain why their project makes business sense, that’s enough. Risks in research are highly related to “unknowns”, which need to be eliminated one by one. Then again, your project manager needs to be able to give you a clearer view on finances and risks, especially when the idea gets closer to commercialization. Risks are related to market acceptance and technical feasibility and should be diminished as much as possible via testing with, amongst others, customers.

The issues above are reasonable well known by innovative companies, but funding and responsibility still give problems. Too often, I hear R&D managers complain that Business Units do not want to fund or allocate staff to Research projects. But this all makes sense…Business Unit managers might be interested in your Research projects, but they surely do not want to involve themselves heavily. Research projects generate results 3, 5, 10 years from now and the business unit manager is worried about the next trimester, year or at maximum two year results. Involve him/her, but do not expect money or people. These should come from corporate. And corporate should be responsible for managing, whereas development should be managed by, or have large involvement from the Business Unit, which, in the end, will profit from it.

Last, but not least, is the question on where to locate your R&D facilities. All too often, companies want to keep their Research facilities close to their current facilities, so to keep business focus. But, unless you are only looking for incremental ideas, this is not the right thing to do. Research should be close where competencies or customers are, not close to operations. Placing Research close to operations will give the opportunity to operational staff to reach out and ask researchers for help in daily issues. This will divert researchers’ attention from their high impact projects. Therefore, these researchers need to be close to the “Edge” of research knowledge, so they can collaborate and set up partnerships with the best. For development of course it makes sense to be close to operations and/or customers. They need to fine-tune the innovations to demand and production.

Don’t underestimate the impact of not using these best practices in your company. Especially, research will highly profit from it.

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Caspar van Rijnbach is a Brazilian based innovation consultant, author of several international publications and currently responsible for the innovation practice of Ernst & Young Brazil.