How to understand if the R&D function suffers from lack of innovation

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17 marzo 2018

The R&D is a strategic function of the entire company organization. It represents the division which determines the ability of the company to build and preserve the competitive advantage.

In fact, this function performs at the same time two primary activities: research of new products, supported by the parallel track of the search for new technologies. It is a function that in order to be effective must pursue precise and targeted objectives with the aim of obtaining concrete and satisfactory results, developing a constant dialogue with all the other strategic functions, such as production or marketing.

Investments in research and development are the lighthouse for determining future innovative opportunities, but the research and development function not always is able to produce the expected results. This can be determined by several concomitant factors, and not necessarily dependent on the function itself. If the research and development department suffers from lack of innovation, the whole organizational structure will soon be affected. The good news is that there are some signals to understand what may be the problem.

  1. It is not in keeping up with technology: if the research and development function cannot keep up with the exponential rate of technology development, there could be a problem in setting up the function. If the function is built on the old model of closed innovation, it is very likely is not able to import innovations from the outside. Many of the recent innovations such as those relating to information technology are gradually becoming enabling blocks in additional product sectors (automotive, financial services).
  2. Innovation is generated globally: openness to the innovative ecosystem promotes the productivity of the internal division that deals with research and development. Through the open innovation processes companies not to remain isolated from the galaxy of startups and ecosystems such as Silicon Valley and many others, a factor that realigns the organizational strategy to reality, to the market.
  3. The R & D function is slow in the product-market fit: an R & D division based on the traditional model often found difficult to combine technological innovation with the innovation of the business model. The product/market alignment can be favored by approaches and methodologies adopted by startups to quickly iterate the business model, such as lean startup approach, the design thinking or customer development.
  4. Fast competition: the greater availability of risk capital in the form of equity, also thanks to crowdfunding, is concretely leading to a steady growth of new businesses able to resolve and identify needs much faster than the more structured companies. Regardless of how much a company is willing to invest in R & D, a hyper-connected world amplifies the competition effect, making startups with high potential for developing competitors in a few years.
  5. Internal dialogue: In order for the research and development department to be interconnected and dynamic with respect to the internal and external boundaries of the company, the function must interact internally with the others function in order to strategically combine the technology with other types of innovation.
  6. Metrics: one last factor that can affect a poor attitude towards innovation is the measurement of the results deriving from the research process. The measurement of innovative results is based on principles and metrics different from accounting or financial, so it is necessary to have a highly customized and flexible dashboard that allows mapping the innovative processes and their results.