Management of R&D - Reaction Paper No. 2

1. R&D Strategic Management & Planning

A. “The Strategic Management Response to the Challenge of Global Change”

(Summary) Because we live in a turbulent world, planning needs to be an iterative activity. Furthermore, “we need a planning model that allows us to anticipate the future” so that we can analyze our organization and formulate forward looking strategies based on this anticipated future. Strategic management provides such a model. Strategic management puts traditional management activities such as “budgeting, planning, monitoring, marketing, reporting, and controlling” in the context of the “organization's external environment, internal organizational capabilities and overall purpose and direction”. A key component of strategic management is external analysis. External analysis pertains to understanding the threats and opportunities arising or that might arise from changes or events in the organization's environment. It is about knowing the social, technological, economic, environment and political environment where the organization operates and involves environment scanning, environment monitoring and forecasting (e.g. developing scenarios through the SRI model). Another key component is internal assessment. Internal assessment is about knowing the organization's strength and weaknesses; its capacities, resources and future needs so as to understand what it takes to succeed in the future. Together, these two enables the organization to chart its strategic direction. Strategic direction includes reviewing an organization's mission, developing its vision, setting goals and identifying issues that need to be addressed for the organization to achieve its vision. In order to identify and focus on the most crucial issues, it is important to assess issues based on their potential impact on the organization, their likelihood of happening and the time frame over which they might materialize. Once the direction has been established, strategic plans must be developed on how to achieve the goals and address the issues that have been identified. “Strategic plans are the documented, specific courses of action” that reflects the input of the organization's stakeholders, consistent with the organization's direction, enable the organization to take advantage of its strengths and opportunities while mitigating threats and weaknesses, are action-oriented and flexible and arrived at by evaluating available alternatives. Strategic management is not just about coming up strategic plans. The implementation of these plans is just as crucial. To make the strategic plans integral to the organization's day-to-day operations, the organization must have the “right organizational structure, systems, and culture, as well as the allocation of sufficient resources in the right places”. Finally, there must be a performance evaluation system to monitor how well the plans are being implemented in terms of schedule and utilization of resources and whether it is achieving the desired results. Performance evaluation must be a continuous process with periodic reviews. It is also expected to subject the plans to discussion and testing in the context of the real world.

(Reaction) The true test of strategic management in an organization is on how well individual members incorporate the organization's objective into their daily activities. Ensuring that individuals know what is expected of them and what they must do to contribute is just as crucial as having a well formulated strategies.

B. “Robust R&D – Managing Engineering and Technology Based Organizations”

(Summary) R&D organizations must deal with “both continuous and disruptive innovations and manage the integration of new technologies” into the organization's products and services. It must also identify and respond to emerging needs and “requirements for future products and services”. To do this, R&D organizations must not only adopt a knowledge-based strategy but also turn the strategy into a high-performance operation. It must have a structured, systematic management approach to develop and implement the strategy (a key component of which is to interpret the strategy into annual goals and allocate resources to achieve them). In other words, organizations must possess both a great business strategy and operational excellence. Strategic management provides a framework to have both by providing a comprehensive view of the operation and identifying areas key to achieving an organization's goals. In the context of the R&D enterprise, it involves “knowledge-based decision-making and competence-based performance through superior execution of key disciplines.” A robust R&D organization must be able to translate its business strategies into projects and must continually find balance between product diversity and focus and short and long term needs and returns. Its organizational performance must be evaluated against factors such as “entrepreneurship, precision in planning, execution in key disciplines, competence in technology and the quality of products.” As is apparent from the mentioned factors, knowledge and innovation, which both rely on the curiosity and creativity of the human mind, form part of the foundation of a robust R&D organization. As such, a robust R&D organization must have a culture (i.e. structures and mechanisms) of learning, collaboration and knowledge-sharing (e.g. sharing of best practices) to promote continual growth in its competences. Competence must be viewed as “demonstrated capability” and thus “can be interpreted into expected performance”. A robust R&D organization must seek to continuously improve and develop its “people, process, technology and content” to create and maintain advantage. It must be dynamic enough to standardize certain best practices and recognize that best practices today may no longer be best practices tomorrow. It must also be able to identify key disciplines and provide the infrastructure (i.e. tools and technology) to support them,  understand value-engineering and always seek to add value to customer solutions, leverage knowledge to solve complex, complicated and critical problems and increase intellectual capital through organizational learning.

(Reaction) Since the primary challenge and motivation behind having a robust R&D organization is to manage continuous and disruptive change perhaps borrowing principles (e.g. projects built around small cross-functional, self-managing teams) from agile software development (which aims to overcome the same challenge) can contribute to having a robust R&D.

2. Strategic Foresighting Techniques

A. “Plotting Your Scenarios”

(Summary) Scenarios are not predictions but narratives or hypotheses of alternative futures. Scenario development must be done by a team of individuals coming from a wide-variety of backgrounds (i.e. economics, political sciences, social sciences, engineering, history, etc.) and cultures because to come up with substantial, insightful scenarios requires a diversity of ideas, views and perspectives. Furthermore, for scenarios to be useful, it must address a focal issue or question. Thus, the time-frame of the scenarios must be clear for the onset since they will influence the range of ideas to the focal issue and might even influence the focal issue itself. Once the focal issue has been established, brainstorming begins. The objective of brainstorming is to identify driving forces and key trends in various contexts (i.e. economics, political, social, technological and environmental). For the activity to be productive, no idea should be immediately rejected. After the team has openly brainstormed, the next step is to evaluate the issues and ideas raised. The team must distinguish between forces that are predetermined or inevitable or unlikely to change significantly and trends that are important but uncertain and thus likely to change the nature of the scenarios.  Inevitable forces must be reflected in each scenario while uncertain forces must accounted in the different alternative scenarios (i.e. one scenario could assume/consider the consequences of a particular force if it goes one way while another scenario could assume/consider the consequences if it goes the other way). There two general approaches to reach a consensus on which of the different forces are most critically uncertain: the inductive and the deductive approach. The inductive approach has two variants. One variant starts on emblematic events and spin stories around them. The other starts with a so-called “official future” (i.e. the future that decision makers believe is the most likely to occur) and then looks for ways that the future could deviate from that path. A key to this approach is the identification of the driving forces behind the official future and considering the consequences of changes in these driving forces. The deductive approach relies on the prioritization of a long list of key factors and developing a scenario matrix (usually 2x2) out of the highest priority factors. These allow the team to see the various scenarios that might arise from a number of combinations of these factors. Once the basic premise of the scenarios (i.e. skeletal scenarios) have been developed, there are several tools for fleshing them out. The Systems Thinking approach relies on exploring patterns underlying events to gain an understanding of the entire system and how its parts interact. The team can then build narratives to weave together the various plot points. Another helpful tool is to populate the scenario with characters to highlight the magnitude and direction of a trend or the nature a specific environment (e.g. political climate). It is also helpful to be familiar of typical plot lines that arise over and over again such as winners and losers (based on the concept of a zero-sum game), crisis and response (related to the idea that crisis presents opportunities), bad news / good news and evolutionary change (based on the idea that “over time growth or decline occurs in all systems”). Finally, it is also useful to include wild card scenarios (i.e. “surprises that have the power to completely change” the game) to reinforce the importance of out of the box thinking.

(Reaction) Undoubtedly, having a systematic process aids in the development of scenarios. However, the success of such an activity depends more on the expertise and creativity of the team members than on the process itself. It is therefore critically important to have the right people collaborate and interact and the right environment to encourage them to do so.

B. “Technology Roadmapping: Linking Technology Resources to Business Objectives”

(Summary) Technology management involves effective acquisition and use of technological resources to achieve business objectives.  Technology roadmapping (TRM) supports technology management and has been widely adopted in industry. However, there are key challenges to effective application of TRM. These include the multiplicity of roadmapping forms, which needs to be tailored to the specific context of the firm and lack of practical support and guidance to firms applying TRM. For TRM to be successful, business needs must be clearly articulated, there must be genuine desire to develop and improve processes, the right people must be involved and the senior management must be committed. TRM has many uses falling into 8 broad classifications, which are as follows: product planning, service / capability planning, strategic planning, long-range planning, knowledge asset planning, programme planning, process planning and integration planning. It also has 8 main formats, which are: multiple layers, bars, tables, graphs, pictorial representations, flow charts, single layer and text. A process, called T-Plan, has been developed to “support rapid initiation of roadmapping in the business”. It is composed of two parts: standard approach and customized approach. The standard approach is broken down into planning, workshops and implementation stages. The workshop stage comprises of “four facilitated workshops”: market, product, technology and charting. The final workshop (i.e. charting) brings together, on a time-basis, the layers produced in the first three. The customized approach involves adapting the different dimensions of the multi-layer roadmap produced in the standard approach to the specific business aims, context and organizational culture of the firm. The different dimensions are time (can adapted in terms of time horizons, scale and intervals), layers (must adapted to the issues being addressed), and annotation (additional information such as linkages between layers, etc. can be presented) and process (steps to complete the roadmap).

(Reaction) Forsighting, in general, provides strategic advantage to organizations by encouraging collaborative, interactive and visionary thinking. Technology roadmapping, in particular, enables organizations to anticipate the risks and opportunities that may arise from emerging technologies and thus allows them to plan and position themselves accordingly. For instance by anticipating the maturation timeline of certain emerging technologies, organizations can phase product development in a way that takes advantage of the technologies as they mature. In this sense, technology roadmapping can be thought of as means to develop a preemptive response.