28May

Do CEOs really know what they want from R&D?

28 May 2010 Sandeep Mehta
Results of another industry survey – this one from Diamond – are actually the opposite of the IBM survey (CEOs want more creativity).  This survey shows that as the economy tumbled, companies were more focused on gaining market share rather than exploring white spaces and coming up with innovative products.

Looking for ways to recover from the recession, 57% of the companies surveyed by Diamond Management & Technology Consultants, Inc. plan to pursue a market penetration strategy that risks driving price competition and threatening profitability.

Innovation, often promoted as a panacea for surviving a downturn, is cited as a primary objective of only 16% of the respondents. And despite the economic climate, few companies (15%) see cost reduction (15%) and margin improvement (9%) as their primary objectives.

The other interesting finding of this study was that beyond the workforce there was little agreement amongst executives on what made them competitive!

Senior executives were asked what they believe are their companies’ top strengths and weaknesses. Most see their people as their major competitive strength–61% rated it first or second. But beyond that, there was surprisingly little consensus about what capabilities keep their companies competitive. Only 14% cited the “ability to deliver” on corporate programs and other initiatives as a top strength. Furthermore, customer understanding (10%) and market understanding (10%) ranked unexpectedly low as major strengths, given all the money companies invest in customer research and data analytics. 

 The press release then goes on to talk about Diamond’s service offerings and their value.  The lesson for me was about how little do these high level surveys actually produce.  In my experience, both innovation and incremental development are required.  Companies need to penetrate markets and enter new white spaces.  The actual task of achieving that requires hard work by R&D managers.  It is very difficult to get to that level of detail in a survey.

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