Mar 29, 2012

R&D Management Best Practices

The article An Examination of New Product Development Best Practice from Journal of Product Innovation Management has great best practice AND benchmarking information for all R&D organizations.  The authors of the article conducted a survey of 286 companies across USA and Europe.  The objective was to understand what best practices are implemented, what best practices are not implemented and what practices are understood to be poor (Please note, the article uses NPD for New Product Development):
..it is unclear whether NPD practitioners as a group (not just researchers) are knowledgeable about what represents a NPD best practice. The importance of this is that it offers insight into how NPD practitioners are translating potential NPD knowledge into actual NPD practice. In other words, are practitioners aware of and able to implement NPD best practices designated by noteworthy studies? The answer to this question ascertains a current state of the field toward understanding NPD best practice and the maturity level of various practices. Answering this question further contributes to our understanding of the diffusion of NPD best practices knowledge by NPD professionals, possibly identifying gaps between prescribed and actual practice.
The article divides R&D into seven dimensions and looks into best practices for each.  Let us dig in:

Mar 25, 2012

How to Be More Creative

Wall Street Journal article Jonah Lehrer on How to Be Creative has a list of items that can improve creativity (or innovation).   :
  1. Color Blue: Subjects solved twice as many puzzles when surrounded by blue.
  2. Broaden the scope: Try to find ways to rephrase the problem so the solution space increases.  For example, instead of driving, think of the problem space as transportation or movement.
  3. Think like a child: People who imagine themselves as 7-year-olds are significantly better at divergent problem solving.
  4. Laughing: People who are exposed to short comedy video are 20% better at insight puzzles.
  5. Imagine distance from the puzzle: People are better at solving problems that come from far away.
  6. Work at unusual times: People working at their least alert time of the day are more creative.
  7. Relax: Being relaxed and not focusing too much on the problem improves creativity. As Einstein once declared, "Creativity is the residue of time wasted."
  8. Be persistent: Not every problem can be solved immediately.  Keeping at it is important."All great artists and thinkers are great workers," Nietzsche wrote.
  9. Measure progress: If you are getting close, work harder. If you have hit a wall, take a break.
  10. Work outside the box: People who had a 5'x5' box next to them did better at creativity problems.
  11. Daydream: People who daydream are better at creativity.  
  12. Get diverse experiences: Steve Jobs believed creativity is about making connections.  To make diverse connections, one needs to have a broad set of experiences.
  13. Develop a diverse network: Another Steve Jobs approach to obtaining diverse experiences is to talk to a diverse set of people.
  14. See the world: People exposed to different cultures or who have lived abroad are more creative.
  15. Move to a metropolis:  Moving to a larger city is shown to increase inventions. 

Mar 24, 2012

Beliefs + Experimentation = Success

Another interesting article from MIT Sloan Review discusses how to develop unique strategies and plans.  The article points out that many organizations follow strategic frameworks taught in business schools to formulate their strategies.
...many deploy frameworks and models from the strategist’s toolbox — industry analysis, market segmentation, benchmarking and outsourcing. By jumping straight to generic game plans (such as cost leadership, total quality or product innovation), companies short-circuit the real work of strategy and miss out on finding new insights into the preferences or behaviors of current or potential customers.
If all we do is follow a standard process for developing a strategic plan, we would probably not be able to build a distinct, differentiated business:
In a world of fierce competition and rapid imitation, companies that dare to be different capture our attention and our admiration. Some are globally recognized, such as Apple, Google, Tata, Virgin and Zara; others are less well known, or are niche or local players.
The article points out that a good strategic plan starts from determining what are the organizations fundamental beliefs (or culture, values, points of view, differentiators, etc) that set it apart:
Good strategies start from a distinctive point of view: for example, an insight into evolving customer needs or about how the world is changing. 
However, what are our unique beliefs or viewpoints? It is not easy to figure out what are an organizations true cultural traits that lead to success and what are just approaches that we have developed along the way.

Mar 22, 2012

How to get the best from corporate R&D

MIT Sloan Review has an interesting article about corporate functions (Are CEOs Getting the Best From Corporate Functions?).  Many of the larger organizations I worked with have a central R&D organization that focuses on longer term, disruptive or innovative research.  Some of the lessons in the article are quite useful to these organizations. Overall it appears that most corporate functions feel that they are not tightly coupled in to the business and their performance is rarely evaluated for their true contributions:
In our survey, fewer than one in 10 function heads felt they had received sufficient guidance on how their function should contribute to the company’s overall strategy. Instead, they were expected to develop their own ideas and functional strategies.
The root cause seems to be poor strategic alignment and inadequate guidance from the executive team. The result is that the corporate functions become self serving and are not incentivized to provide practical support to business divisions:
Without sufficient guidance, corporate functions can become — often unintentionally — self-serving. Instead of developing policies and processes to give divisions the practical support they want and need, corporate functions measure themselves against industrywide best practices or implement initiatives that increase their influence or simplify their own work. The result is often a lack of cooperation from operating managers.
Here is my interpretation of the four suggestions from the article to address this situation:

Mar 20, 2012

Globalization Penalty

Ford recently announced it is investing $1B for a new plant in India (U.S. automakers in race for Indian market - The Washington Post). Ford is going to change its strategy for the region and design new products designed specifically for the market:
This new focus on India has required something of a philosophical shift for America’s big auto manufacturers, a post-downturn realization that the old ways of doing business no longer guarantee success, said Michael Dunne, president of Dunne and Co., a Hong-Kong based investment advisory firm specializing in Asia’s car markets.
In the past, U.S. carmakers tended to launch products in emerging markets that were successful in Europe “and anticipate that customers will trade up to the higher price level,” Dunne said."
The article points out that the Indian market is going to grow at more than 12% per year and Ford needs to ensure a share of that market.  The effort to reduce product costs while still delivering reasonable products might even have some benefits to the core business from reverse innovation or frugal engineering.

Mar 19, 2012

Innovation at Bell Labs (The Idea Factory)

A couple of articles in the Oil and Glory blog describe innovation at Bell Labs (Book Review: Jon Gertner's "The Idea Factory" and What Obama could learn from Bell Labs).  Bell Labs, as the article points out, delivered many of the innovations that made modern devices possible:
"The name Bell Labs is synonymous with cutting-edge invention, winning seven Nobel Prizes (including by Energy Secretary Steven Chu) and turning out world-changing inventions like the transistor (pictured above), the silicon photovoltaic solar cell and radio astronomy. 
It is interesting to see that even fifty years back, Bell Labs had a clear understanding that innovation requires new technology and manufacturing processes integrated into a system that provides concrete benefits for the  user:
"It is not just the discovery of new phenomena, nor the development of a new product or manufacturing technique, nor the creation of a new market. Rather the process is all these things acting together in an integrated way toward a common industrial goal," he quotes Jack Morton, a Bell Labs engineer."

Mar 17, 2012

Courier: R&D Planning & Portfolio Management at Microsoft

I have been meaning to write about development and cancellation of Courier, an innovative tablet concept from  Microsoft.  The c|net article on the subject provides quite a bit of useful information - both about innovation management best practices and some opportunities for improvement.  Courier was developed at Microsoft's Skunkworks (Pioneer Studios).  They invested quite a bit of resources in the concept (130 employees and $25M in funding).  The concept was very well received (See Courier: First Details of Microsoft's Secret Tablet in Gizmodo):
It feels like the whole world is holding its breath for the Apple tablet. But maybe we've all been dreaming about the wrong device. This is Courier, Microsoft's astonishing take on the tablet.
However, they had to cancel the product because it did not fit into Microsoft's product portfolio (See Microsoft confirms, kills Courier in one fell swoop -- Engadget):
Well this is depressing. Word has just gone fluttering out of Redmond that work on the Courier project -- a heretofore rumored dual-screen tablet which rightfully set the tech world ablaze -- has been spun down by the company.
It is unclear which, if any, technologies developed as part of the innovation project ever got transitioned into the rest of the portfolio.  The cancellation led to significant organizational strife and hard feelings.  I think R&D managers can learn a lot from this event.
Courier's death also offers a detailed look into Microsoft's Darwinian approach to product development and the balancing act between protecting its old product franchises and creating new ones. The company, with 90,000 employees, has plenty of brilliant minds that can come up with revolutionary approaches to computing. But sometimes, their creativity is stalled by process, subsumed in other products, or even sacrificed to protect the company's Windows and Office empires.
So lets dig in...

Mar 13, 2012

Rethinking knowledge management for R&D teams

As we know, R&D is focused on generating knowledge.  Unlike manufacturing, where the outcome is products, R&D generates knowledge about how to build those products.  Hence R&D workers are all by definition knowledge workers. The article Rethinking knowledge work: A strategic approach from McKinsey Quarterly has a very thorough discussion about IT tools needed to help improve the productivity of knowledge workers.
In the half-century since Peter Drucker coined the term “knowledge workers,” their share of the workforce has steadily grown—and so has the range of technology tools aimed at boosting their productivity. Yet there’s little evidence that massive spending on personal computing, productivity software, knowledge-management systems, and much else has moved the needle. What’s more, a wide variety of recent research has begun suggesting that always-on, multitasking work environments are so distracting that they are sapping productivity.
As we can all relate, what information is provided to R&D teams is far more important than how much.  In fact, we need to reduce the information overload.
It’s time for companies to develop a strategy for knowledge work—one that not only provides a clearer view of the types of information that workers need to do their jobs but also recognizes that the application of technology across the organization must vary considerably, according to the tasks different knowledge workers perform.

Mar 10, 2012

An example of a good R&D plan

As we have discussed in the past, R&D management is challenging because most new products require many technologies to mature simultaneously and many engineering disciplines to work together. The only real answer to effective R&D management is effective R&D plans.  R&D planning remains very hard and we have been discussing some approaches to address them.
  1. Good R&D plans have multiple milestones with clearly defined objectives at System AND Technology level.  These milestones bring constituent technologies together to evaluate / guide integration.  
  2. Good plans drive reuse of development between various development projects to reduce development costs and improve efficiency.  
  3. Good plans have multiple points of insertion from technologies into delivered products - i.e. Different subsystems from different development projects mature at different times and get inserted into delivered products.  These multiple insertion paths reduce long-term risks and improve return on investment.
I have been looking for good examples of effective R&D plans.  The article Mitsubishi Integrates Inverter With EV Motor System from Tech On discusses demonstration of a new product under development:

Mar 9, 2012

The Influence of Prior Industry Affiliation on Framing in Nascent Industries

A very useful paper from the HBS Working Knowledge about The Influence of Prior Industry Affiliation on Framing in Nascent Industries explores the digital camera market to identify some useful trends in firms entering new markets:
New industries sparked by technological change are characterized by high uncertainty. In this paper we explore how a firm's conceptualization of products in this context, as reflected by product feature choices, is influenced by prior industry affiliation. We study digital cameras introduced from 1991 to 2006 by firms from three prior industries.
The paper hypothesizes that firms entering new industries tend to continue to behave like the industry from which they originate. A unique perspective and one that can be useful for all of us to understand because the corporate mindset is critical to how products get launched.
We hypothesize and find first, that prior industry experience shapes a set of shared beliefs resulting in similar and concurrent firm behavior; second, that firms notice and imitate the behaviors of firms from the same prior industry; and third, that as firms gain experience with particular features, the influence of prior industry decreases. This study extends previous research on firm entry into new domains by examining heterogeneity in firms' framing and feature-level entry choices.
Let us dig to see what we can learn...

Mar 6, 2012

CEO says Ford won't back off R&D spending

I have been gathering data about corporate response to difficult market conditions, especially the impact on R&D spending.  Tough times impact every aspect of an organization's operations and they have changed R&D spending as well (reduce focus on long-term R&D).  Even so, organizations tend to fight to maintain R&D spending levels.  We have seen that CEO of companies such as 3M have maintained R&D spending despite the downturn. Here is another data point from the Marketwatch post CEO says Ford won't back off R&D spending:
Ford Motor Co. CEO Alan Mulally said Tuesday at the Geneva Motor Show that the auto maker will focus not on forging further alliances in Europe to help drive growth but on continuing to invest heavily in new products. "We have never backed off, even through this entire recession," he said. "We actually have increased investment in our new vehicles during the toughest of times.
As a background, the European slowdown is likely to lead to a $0.6B loss in Ford's European operations (Ford launches B-Max subcompact - seattlepi.com):
Ford will focus on cost containment to return to profitability until demand is restored, but he declined to speculate on possible measures. Booth said Ford Europe could lose $500 to $600 million dollars this year, after recording losses of $190 million in the last quarter of 2011.
Interestingly, the cost cuts are going to be in manufacturing operations rather than R&D - especially since R&D has probably more flexibility.  Even more importantly, we have discussed many times that how you spend on R&D is far more important than how much.  In fact, many leaders such as CTOs of Texas Instruments and Pfizer have found that R&D cost cuts actually improved results!

Mar 4, 2012

How can R&D Management help exploit Thematic Similarity?

The article In Praise of Dissimilarity from MIT Sloan Management Review has very important implications for R&D management.  The article describes how most managers view similarity based on functionality or product taxonomy (e.g solid state drives and hard drives are similar).  However, another way to look for similarity is based on how different products interact in a scenario or event (e.g. shoes and mp3 players are related through exercise).  This is called thematic similarity.  The article points out that thematic similarity can help focus innovation and provide a competitive advantage.  However, it also raises some important challenges for R&D management.  Lets dig in.

Mar 3, 2012

Apple's R&D portfolio strategy - "Get Rid of the Crappy Stuff" (Continued)

I had been meaning to write about the article For the good of the company? Five Apple products Steve Jobs killed from Ars Technica:
When Steven P. Jobs returned to Apple 1997, he returned to a slew of ill-conceived product lines. Some were excessive, and some were downright silly, but many were ultimately killed off for their poor alignment with consumer needs and wants. Still, even with Jobs’ discerning eye, he wasn’t immune to having to deal with a few bad product decisions. 
We discussed the Jobs' portfolio management methodology here. I had mentioned that it is hard to make the right decision about what is crap.  This prevents some leaders from making any decision at all.  The idea should be to find failures early before a significant investment has been made.  In fact, we should encourage some amount of risk taking in R&D organizations to ensure that we are somewhat pushing the boundaries.  The only way to ensure sufficient risks are taken is to see some projects fail and rewarding failure.  Even Steve Jobs occasionally made bad product decisions.  The only answer is to have a good risk management process in place to catch failures. We also want to make sure we learn something from each failure so we can improve decision making for the future. So, here is an example of a bad product decision by Jobs:

The Power Mac G4 Cube, a computer suspended in a clear plastic box, was designed by Jonathan Ive and released in July 2000. The Cube sported a 450MHz G4 processor, 20GB hard drive, and 64MB of RAM for $1,799, but no PCI slots or conventional audio outputs or inputs, favoring instead a USB amplifier and a set of Harman Kardon speakers. The machine was known in certain circles as Jobs' baby.

While Apple hoped the computer would be a smash hit, few customers could see their way to buying the monitor-less Cube when the all-in-one iMac could be purchased for less, and a full-sized PowerMac G4 introduced a month later with the same specs could be had for $1,599. Apple attempted to re-price and re-spec the Cube in the following months, but Jobs ended up murdering one of his own darlings, suspending production of the model exactly one year after its release. While the Cube's design is still revered (it's part of the MoMA's collection), it proved consumers won't buy a product for its design alone.

Mar 2, 2012

Roadmaps as a foundation for effective R&D management (Part 1)

I am writing a paper on the use of R&D plans as a foundation for effective R&D management.  As a part of the effort, I am collecting prior research on R&D planning and roadmapping.  I plan to summarize some of the interesting papers I find along the way.  The first is from a roadmap seminar given by two MIT professors at Harvard Business School in 2004.  It provides a good background on some work done on longer-term technology planning and touches upon near-term product planning.
Roadmaps provide a framework for thinking about the future. They create a structure for strategic planning and development, for exploring potential development paths, and for ensuring that future goals are met.
One reason for developing roadmaps is to address many sources of uncertainty in the face of complexity:
One must weigh many sources of uncertainty and try to comprehend how a large number of complex and dynamic factors might interrelate and influence development of a process or a technology. ... Roadmapping is not the only tool for this type of strategic planning, but it is practical and straightforward in its approach and gaining increased attention and usage.
The article lays out two types of roadmaps: Exploratory and Target Driven.