A Consensus on Best R&D Practices

Abstract

OVERVIEW: Four respected consulting companies examined R&D practices, each with their own objectives, methods and scope. The authors believe that those R&D practices that are common among these studies are further validated and should have broad applicability. Looking for agreement in three or more of the studies, they found seven R&D practices. They cover technoloy strategies, program selection and management, core strenths, effectiveness, external awareness, technoloy transfer, and a personnel cateory that includes people-related issues. Managers of technology increasingly have to justify the level and focus of the technology services they provide. Their task is complicated by the fact that the link between R&D spending and business success has yet to be convincingly demonstrated. Using a quality approach, the technology manager must be able to show that the systems and approaches used are the ones most likely to yield the returns. Lester Krogh states (1): R&D, 'doing it right the first time' means doing it the right way the first time. But, in order to improve the way R&D is carried out, it is important to know what R&D practices are. In this article, we examine the practices reported in studies by Meritus Consulting Services (2), (3), SRI International (4), and Arthur D. Little (5). Each of these studies took a different approach to determining R&D practices. We believe that those practices that are common to the four studies provide a strong basis for best R&D practices. Meritus Consulting Services conducted a benchmarking study for a client, studying 15 companies in a single industry. Meritus screened the companies based on success in commercializing R&D and R&D's contribution to company profits. The better companies identified were then examined for common practices. The Meritus study, presented to the Conference Board in 1991, described 13 practices. The publication we refer to as Pugh-Roberts is an article from the Sloan Management Review, coauthored by D. W. McDonald of Pugh-Roberts, Paul Adler of USC, and Fred MacDonald. The study was built from the experience of the authors and an extensive literature search. The article lists important operation dimensions and then describes four levels of proficiency for each dimension. This provides a template for companies to rank their performance and target improvements. Our study focused on their descriptions of the most proficient levels. SRI International performed a study for a French government agency that included 200 companies and 360 different research facilities. Senior officers from companies in the U.S., Japan and Europe were surveyed through questionnaires and interviews. Each company's performance was based on the self-evaluation of their upper management. Common trends in the highest performing companies were then derived from this broad input base. The study can be purchased from SRI International. Third Generation R&D, by three members of Arthur D. Little, describes the evolution of companies incorporating R&D practices. While the other three sources are benchmarking studies, Arthur D. Little's views are based on accumulated knowledge and experience consulting on these issues. The book places an emphasis on partnership and mutual strategic planning. Because the viewpoints are explained as tradeoffs, the reader gets an added sense of the why, along with the how, for practices. Our study focused on the third generation R&D characteristics. We selected a set of somewhat generic operating dimensions in order to align comments from the four sources. It was necessary to paraphrase the various authors' original comments to fit our design. However, we worked to maintain the intent of their statements, and all four sources were given the opportunity to modify our work. The result of this examination is shown in Table 1. …