Can IT enhance integration between R&D and Marketing?

There in an interesting paper The Role of Information Technologies in Enhancing R&D–Marketing Integration: An Empirical Investigation in Journal of Product Innovation Management. We have discussed role of IT in enhancing R&D management before. This is a new take on the subject.

The effective integration of research and development (R&D) and marketing contributes to the development of successful new products. Barriers such as physical separation of R&D and marketing, goal incongruity, and cultural differences hamper the cross-functional cooperation. However, it may not be either possible or desirable to eliminate the cross-functional integration barriers in practice.

The first take away is that two types of IT support systems – communication and decision-aiding – both enhance integration:

Previous research findings suggest that information technology (IT) can be used to reduce the negative impact of the barriers. This paper examines the moderating role of communication technologies (ITc) and decision-aiding technologies (ITd) in improving the R&D–marketing integration in new product development. The empirical findings from analyzing data on 171 new product development projects suggest that both IT systems can be used to reduce the negative impact of physical separation, goal incongruity, and cultural differences on R&D–marketing integration”

The overall finding is very intuitive: Need communications technology when the organizations are dispersed and decision-aiding technology when goals and objectives are disconnected between the two organizations.

However, effectiveness of the two types of IT differs. While ITcappears to be more effective than ITd in overcoming the constraint of physical separation, ITd is more effective than ITc in reducing the negative impact of goal incongruity and cultural differences. ITc is found to have the strongest effect on reducing the negative relationship of physical separation and integration, a less strong effect on cultural differences, and a weak effect on goal incongruity. Conversely, ITd is found to have a strong effect on goal incongruity.

Hopefully, the decision-aiding tools can also increase team satisfaction!

Tatas learn to innovate

I really enjoyed this article in the Business Standard on innovation management in India –Tatas learn to innovate:

While this is aimed to lift the inhibitions that failure can cause, TGIF realised that several employees are afraid to question conventional wisdom. Thus in the works is a series of seminars called Courage to be Curious and Question. “The Tata Management Training Centre is working on it. This is to tell people how to ask questions without being intrusive and offensive. We will do the pilot in the next two or three months,” says Gopalakrishnan.

I guess this is an important problem in most corporate cultures – lack of questioning or open debate. But I found India to have a tendency towards top-down management cultures. I do believe that the culture is changing. I talked with the CEO of a large Indian conglomerate and was very impressed with his approach to make sure decisions are as much bottom-up as top down. It will be interesting to see how Tata achieves the change in culture…

Below was another impressive paragraph. Tata attempted to define Innovation and baseline initial level of innovation before proceeding with change.

Before any effort to boost innovation, it is essential to know the state of innovation in the company. The treatment will emanate from this. After much deliberation, TGIF has adopted the Innometer developed by Julian Birkinshaw of the London Business School. It measures the innovation process and culture on a scale of zero to five, and can be run on the whole company, a unit or even a small team. So far, about ten Tata Group companies have gone through it. The scores, of course, are confidential. “We are medium to upper-medium. We are not on top. It’s a 5-point scale, and I haven’t seen a 4.9 score. But I have seen scores between 3.6 and 4.3,” says Gopalakrishnan.

This was another impressive paragraph. I am not familiar with the Innometer, but I hope to check it out soon and post about it. Unfortunately, Prof. Birkinshaw’s website does not appear to have any material on it.The only page with information I find is from Tata itself.

Another barrier to innovation was that the various Tata companies wouldn’t talk to each other. There was always scope for collaboration, but seldom was it exploited. This was because large group companies like Tata Steel, Tata Chemicals and Indian Hotels Company were run like independent fiefdoms. Ratan Tata, when he became chairman in the early 1990s, eased out powerful chieftains like Rusi Modi, Ajit Kerkar and Darbari Seth. A cohesive group identity was forged, but collaboration still did not happen. So, TGIF decided to set up InnoClusters — groups of companies that could work together in different areas. There are four such clusters: Nanotechnology, plastics & composites, information technology and water. At the moment, the biggest cluster, of ten companies, is around nanotechnology.

Finally, TGIF has setup an innovation market place and they seem to have a good plan for staged implementation…

TGIF has come out with a web-based open innovation initiative called InnoVerse. Employees can post a problem on the intranet, to which anybody can provide a solution. People can bet on ideas with the 1,000 karma points they get. If the idea is accepted, your pile of points goes up. More than that, this will show which solutions are popular. A pilot is being run at the moment. Can all 300,000-odd Tata Group employees access it? “Not all, but most can,” says Tata Quality Management Services Vice-president Ravi Arora. “You must remember that a large chunk of these employees (almost 40 per cent) are from TCS, who are all net-savvy.

Impact of IT on R&D management

MIT Sloan Review has an article on “The Four Ways IT Is Revolutionizing Innovation.” The factors according to the article are:

Measurement, experimentation, sharing and replication.

Of these factors, sharing and replication are clearly universal drivers enabled by IT. Most industries are benefiting from improved sharing and replication of information across R&D organizations. The impact of other two is not universal.

The examples given in the article are mainly Internet and networking companies. Clearly, they have the luxury of using IT for measurement and experimentation. A lot of their data is easily available and IT can really support experimentation.

In many other industries (high-tech, electronics, bio-tech, aerospace and automotive, etc.), IT does not actually measure R&D results or aid experimentation. In fact, a lot of the challenges in managing R&D stem from the difficulty in measuring R&D results and finding ways to experiment with R&D processes/tools to improve efficiency. Any thoughts?

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Making cost cuts stick

According to one recent study, 90% of the organizations fail to sustain cost savings beyond two years. McKinsey quarterly has an interesting check-list to ensure cost cuts stick:

Assign accountability at the right level

Focus on how to cut, not just how much

Don’t let P&L accounting data get in the way of cost reduction

Clearly articulate the link between cost management and strategy

Treat cost management as an ongoing exercise

All very interesting points. I think the first two are quite relevant in an R&D environment. However, several are very difficult to implement in R&D. I remember an old boss talking to me about his problems predicting R&D costs. He remarked that when he went to get his car serviced, they had a pretty good handle on what different services would cost and how long they would take. Why could we not do the same for R&D?

Predictability normally comes with repeatability. Unfortunately, finding repeatability in R&D is pretty tough – as R&D always involves developing something new. In fact, it is more developing knowledge that can be used to produce that new item. Without repeatability and associated cost data, it becomes very difficult to understand what things should cost to develop in the first place. How do we define how much cost to save? As we get to more and more complex devices, this will likely become even more difficult…

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Pitfalls of Project Portfolio Management implementation

Computer World has an interesting IT Project Portfolio Management (PPM) article that is equally applicable to R&D management – just read R&D when they write IT :-). They point out three dangerous myths of portfolio management:

PPM is IT’s lookout

Right tools drive PPM success

The best starting place is PPM Best Practice

In my experience, even the organizations that do PPM on R&D portfolios, often fall into some of these traps (I am not certain what fraction of companies have formalized PPM. May be we will do a poll on this soon). PPM is sometimes delegated to CTO or Engineering. This has a negative impact on R&D team members because there is no clear customer for what they are developing.

Another key problem is too much focus on tools and best practices. I myself fell into this trap at one PPM implementation. I was unaware of how little the organization new about their project portfolio (most were legacy R&D projects that had gone on for many years). It was not wise to even attempt to implement PPM when there was no clear portfolio to begin with!

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