Is your Research, Development & Engineering Strategically Aligned?

How much and what does the Research Development & Engineering contribute to your organization? I’m sure people will have a lot to say about it but I doubt that anyone will provide a crisp answer articulating the true benefit derived from RD&E. RD&E sucks in millions of dollars towards new product & feature development. It is also the first to face budget cuts in an economic downturn. RD&E doesn’t produce cash directly and hence becomes an easy target to derive short term cost savings. Further, engineering managers have a hard time articulating investment returns since the benefits can accrue over a period of 2 years or more; depending on the product lifecycle. These benefits are in terms of improved market share, higher product returns, IPs, Patents etc. RD&E is the spine of product development organizations. Not knowing how exactly your R&D projects and innovation initiatives contribute to the organization and not knowing the “true” investment returns will lead to blind decisions, undefined losses and waste and most important of all, reduced competitiveness in the market.

A Mckinsey survey of global companies points out that increased performance accountability & spending, use of global resources and portfolio decision processes have been some of the focus areas of change within R&D since 2009. (http://www.mckinseyquarterly.com/RD_after_the_crisis_McKinsey_Global_Survey_results_2576)

To be able to make change initiatives within RD&E and product and project portfolio decisions effective, we need accurate answers to questions like: (a) What is the purpose of R&D initiative? (b) For whom is this needed /beneficiary? (SBU, CEO, Shareholders etc.) (c) What needs to be measured, how do we measure it and how often? (d) Which processes are needed for this initiative to succeed?

To be able to answer these questions, an organization needs to be truly strategically aligned. By this I mean that instead of being “budget controlled”, organizations need to be strategy controlled. The highest level corporate strategy should be translated and cascaded to RD&E strategy and objectives. Based on the RD&E strategy a plan for relevant products, projects and budgets should be made which needs to be followed up with an “Execution Plan” defining the required processes and functions and their KPI’s. Only then can RD&E be truly aligned and be an effective contributor to organization’s profitable growth and sustainability.