Innovation, Research and Development Management

Patrick Gilbert, Natalia Bobadilla, Lise Gastaldi, Martine Le Boulaire, Olga Lelebina, Patrick Gibert

• Publisher: Wiley-ISTE
• Year: 2018
• Print ISBN: 9781786303004
• eBook ISBN: 9781119551003
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

Innovation, Research and Development Management

In today's business environment, as organizations constantly seek to growth and develop through the optimization of their innovative and creative potential, understanding the critical issues and management practices in R & D is essential. This book provides a critical revaluation of the state of the art issues and concepts in R&D management. The views expressed are those of leading French researchers and professionals in this field, fed by empirical studies in national and international firms.

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R&D and New Competitive Challenges: Between Intensive Innovation Strategy and Internationalization

R&D activity has always occupied a central place in the strategy of large enterprises and in the competitive performance of states. Recently, with a significant change in the competitive environment of companies (such as, for example, competition with new emerging countries, intensive innovation policies, changes in customers’ expectations and transformation of business models) innovation and R&D have become essential for both company and national competitiveness.

In this chapter, we first present the relationship between R&D and company strategy and the different generations of R&D and their characteristics, which are currently possible to identify over a long period of time. We then identify and describe the main factors that influence R&D strategy in companies, emphasizing their impacts on the construction of new R&D models. Finally, it provides a practical illustration of the latest developments in the R&D sphere through the presentation of policies that Western companies have implemented in their Chinese subsidiaries.

1.1. Strategy and R&D

The place of R&D in the company is closely linked to technological innovation, particularly in its strategy. It is important to note that innovation is not simply an invention, but it is the result of a design process that a market has endorsed. Ultimately, it is about successfully bringing to market profitable requests (products or services), for which the company undertakes a reshuffle of knowledge and existing skills in order to offer new products or services. The place of R&D also depends on the sector, competitive strategies and the nature of the company’s markets.

1.1.1. R&D’s place in business strategies

R&D plays a special role both in companies’ strategies and in the international arena. Research and development projects not only provide a competitive edge for businesses, but are also vital for the economic competitiveness of countries in their struggles for power and international influence.

1.1.1.1. R&D responsible for its very unique place in company strategy

The place of R&D in company strategy depends, first, on the business sector, the nature of the markets and the company’s competitive positioning and, second, on its degree of globalization. Therefore, the high-technology companies belonging to the “innovation-driven” sectors (as well as pharmacy, aeronautics, energy, electronic, etc.) [GIR 96] make huge investments in R&D, whereas the businesses in mass distribution invest little or no funds in R&D. The nature of the markets also affects the position of R&D in company strategy. For consumer products manufacturers, the R&D strategy will consist of manufacturing better and cheaper than the competitors, by offering either innovative products that better meet consumer expectations or products with new and highly attractive features (e.g. the new digital applications via smartphones or social networks) or by adding a service to the product (such as integrated remote maintenance with the purchase of a printer). For these companies, R&D activity has long been closely linked to decision-making. When dealing with the B2B sector, that is, those geared toward the sale of products to industry, a large part of R&D is performed close to industrial entities, where the industry is located [LEN 02], in order to respond to the needs of cost reduction and to support innovation efforts. This is done by providing “solutions”, on the one hand, and by creating innovative concepts capable of introducing breakthroughs in industrial performance on the other. This is the case, for example, with R&D centers of the cement industry being located near production plants.

The strategy of localizing a company’s R&D activity close to its customers is illustrated by the example of Usinor, now known as ArcelorMittal.

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Box 1.1. Design differentiation approach in the R&D of Usinor (source: Lenfle and Midler [LEN 12])

Usinor (ArcelorMittal, from 2006) is a company producing raw material (steel), involved in the upstream of industrial clusters, particularly the automobile industry. The innovation strategy, which operates in the automotive market, is also reflected within this upstream company, which is forced to find innovative technical solutions, which are at odds with its dominant position on the market.

Here, the proximity, not only geographical but also organizational and institutional, between the R&D of the upstream company and car manufacturers is a prerequisite to its success. Organizational proximity involves putting in place coordination and cooperation arrangements between R&D players of the iron and steel group and those of the car manufacturers such as shared research projects allowing the exchange of information and knowledge. In contrast, institutional proximity involves creation of common areas of co-exploration for interactive learning required for innovation.

Besides the traditional strategic aspects like the domination by the costs and benefits of global “solutions” for the client, this company’s R&D strategy has always been about developing and proposing innovative product proposal (IPP) projects in the field of hydroforming, in which:

• – the result of the design project is not linked to a specific object designed directly for the customer;
• – the project is likely to shake up the mainstream R&D representation of the company and its customer;
• – uncertainty about the customer accepting the innovation is the norm.

These innovative product proposal projects lead to a situation of new cooperation with customers referred to as “co-exploration”, in which the two partners explore together, without certainty as to outcome, the concepts likely or unlikely to lead to the creation of added value.

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The place of R&D in company strategy also depends on the globalization of the business activity. In order to compete, some companies had no other choice but to globalize. The analysis of globalization provided by the economist Pierre-Noel Giraud [GIR 12] serves as essential reading that helps us understand its effects on the breakdown of the value chain and, in particular, on R&D’s place in globalized enterprises. The Giraud model is based on the division of the world economy into territories separated by borders. It is based on a distinction between “nomadic firms” and “sedentary firms” and on a differentiation between the jobs of a territory that produce goods and services subject to international competition and those producing goods and services protected from this international competition.

Within each territory, protected by borders, people, capital and goods circulate freely, but not always between territories. This concerns human resources in particular. The nomad firms produce and circulate economic objects between territories. They make territories compete in their comparative advantages to make profit, and their decisions on FDI (foreign direct investment) destabilize or stimulate the territory’s economic activities. This is particularly the case with R&D investments. The sedentary enterprises only produce or trade at the national level. Employees competing for the nomadic firms will also be described as nomads. They only compete on a territory if they are competitive, otherwise they are transferred elsewhere. Sedentary or protected employees only compete with one another for the production of goods and services for local use. Thus, the global firm “locates sedentary activities where they must be”, and the nomadic activities “in the territories that offer the best conditions”: low labor costs with high labor intensity and availability of highly qualified scientific staff for research laboratories.

By repeating Giraud’s paradigm, it is clear that R&D’s position is of crucial importance for companies from overseas or nomads, that is, those exposed to global competition, that are on the front line of innovation and product renewal; it is less crucial for “domestic” companies or those on the protected market like mass distribution.

1.1.2. Different generations of R&D

The governance of R&D is strongly impacted by the level of importance that the company attributes to innovation. Other factors are included in the connection between the development and creation of scientific and technical knowledge and value proposition for customers.

Management literature has highlighted five generations of R&D management [ROT 94], which are described as follows.

The technology push model was the first dominant generation during most of the 20th Century; it is very visible in the policies of R&D enterprises as well as in those of states through large research organizations, such as the CNRS and the CEA in France or NASA in the United States. According to this model, innovation is primarily dependent on the industrial and scientific policies of companies or states according to a top-down view (Schumpeter). Scientific and technological progress guides innovation. The main participants are the researchers and engineers in R&D departments of large companies or scientific organizations. This does not mean it is a closed model. While public–private exchanges are not a particularly recent tendency, openness and networking continue to play major roles in the world of science and technology.

This approach, also referred to as the “producer’s model” [VON 01], has been of major importance in the development of areas such as telecommunications, aerospace, nuclear science and robotics through government policies. In enterprises, new products and services are designed and developed by the R&D team and then promoted and sold through the marketing department to be ultimately purchased by the consumer. Innovations can be incremental (i.e. small scale that build on what already exists) or radical (large scale or breakthrough, i.e. they offer solutions that did not previously exist). This model has also been described as an “Emitter innovation model” model [BAD 13] in reference to the fact that, based on a technological determinism, innovation is designed and released to the company or the markets in a linear and mechanical way with a top-down view.

The market pull generation emerged toward the end of the 1960s. Building on the consideration that the consumer is essential in defining needs, it combines the logic of supply in R&D based on technology and the logic of demand resulting from the increase in consumer expectations. We start from market needs and expectations to adapt the technology accord...

Table of contents

• Cover
• Table of Contents
• Foreword
• General Introduction
• 1 R&D and New Competitive Challenges: Between Intensive Innovation Strategy and Internationalization
• 2 Work in R&D and its Transformations
• 3 Rationalization and Creativity: R&D under Pressure
• 4 Managing R&D Professionals: HRM Practices and Current Challenges
• 5 Collective Expertise: Forms and Methods of Management
• 6 Performance Management in R&D
• Bibliography
• Index
• End User License Agreement