Chapter 16. R&D ORGANIZATIONS AND STRATEGY

Why should R&D organizations focus on strategy? Like any other organization, a variety of events or challenges can trigger the need to think deeply about long-term objectives, and the actions required to achieve them, including:

• When a new organization—or a new division within an existing organization—is started

• When an organization has new leadership

• When a division wants to raise its profile in the larger organization

• When a division wants to integrate itself into a broader corporate strategy process

• When a "strategic inflection point" changes the fundamentals of the way an organization approaches the future (Grove, 1996)

• When a gap in performance occurs

• When external forces—partners, lenders, or acquirers—require that a strategy is needed to address important issues

According to a study by Rheem (1995), which investigated the relationship between productivity growth and corporate activities, highly productive companies had long-term strategic planning whereas less productive ones did not. High-performing companies planned four to six years ahead and reviewed their plans every two to three years, whereas low-performing companies did not have a long-term strategic plan. If long-term thinking and strategic planning are important for corporations in general, then strategic planning for R&D-based organizations is arguably even more important because of the future orientation of the enterprise, and the dynamic environment that has become synonymous with technological innovation.

In this chapter basic concepts of strategy related to formulation, implementation, evaluation, and innovation are addressed. Many of these concepts are applicable to organizations in general; however, where appropriate the concepts are tailored to R&D-based organizations in which science and engineering play defining roles. At the end of the chapter a model for a process is proposed, which can be used to develop strategy.