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A good R&D structure is one that meets the expectations placed upon it

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Production Planning & Control Becoming an R&D-driven organisation

Jan 29, 2018

For India to become a robust manufacturing sector in the future, it is crucial for manufacturing companies and enterprises to invest and strengthen their R&D activities. The viewpoint section explores the approaches that can be taken by organisations in order to strengthen their R&D activities & investments and become an R&D-driven organisation. Excerpts…

"We are in a new era driven by innovation. Truly innovative companies are able to deliver consistent market successes via innovative products, technology and services that continuously translate into economic value, which enhances competitive advantage and accelerates growth. This maximises the returns of invested resources. Newly introduced products are measured with Net Sales ratio (NSR), which is high on innovative companies that ensure ROI. To strengthen the R&D function, some of the important activities include matured ideation process, identifying and prioritising external trends and competitors, managing the technology platform and processing for knowledge-sharing and collaboration.

Effective collaboration between R&D, marketing & production determines the success of the company in the long run, with a major focus on ideation, industralisation & commercialisation. R&D organisations have to be nimble & flexible to adapt quick changes with an innovation culture that will support knowledge management and idea generation platform. The technology roadmap has to have technology intelligence as an input and it must plan to address the strategical capability gaps along with managing talent. In marketing driven companies, the R&D function must become reactive and less creative as they are followed by marketing on what products to develop & deliver."

Asis A Mitra, Sr GM—R&D, Seco Tools India

"Henkel’s vision statement, ‘Leading with our innovations, brands and technologies’ indicates the importance innovation holds for us. A case in point is the innovation strategy for Henkel’s Adhesive Technologies business, which sets out programs, processes and people initiatives. These initiatives support the business in achieving its targets and delivering powerful innovations. The overall target of the business is to contribute around 400 million euros in incremental sales each year with innovative products younger than five years.

The innovation drivers of this strategy include creating more value for our customers through top innovation programs, which ensure expertise and resources, thus targeting the most attractive markets; steering resource allocation more effectively by consolidating over 250 small projects into eight large programs; and focusing research activities on breakthrough technologies that solve customer’s key challenges and drive business growth.

We have also developed a globally harmonised process for strengthening the way we manage innovation activities. It is called the Adhesives Development Process. The process focuses on strengthening collaboration. It leads to superior innovations that reach markets faster and ensure things are done in time and in the right manner. The processes have been so designed that they support our people to manage the innovation portfolio and assess the existing technologies to make sure our innovation portfolio is aligned with the business strategy. The talent development plan instituted for our innovation team members focuses on training them and developing career paths that open exciting new opportunities for them.

The business offers its customers cutting-edge technology development and comprehensive design and application support. A global network of research and development centers combined with the local development and technology laboratories enable customers to access innovations in a wide range of applications. Thus, strategic global innovation programs effectively drive future growth."

Dr Emilie Barriau, Head – Global Product & Application Development, Transport & Metal, Henkel

"The challenge related to the R&D spend is the rising expectations of end-users for a reasonable return of investment (ROI) provided by a high number of new molecular entities (NMEs) launched in the markets. In the last few years, R&D companies have realised that their R&D ecosystems need major changes. Since the 2007 financial crisis, merger & acquisitions have become increasingly important for companies to compensate revenue losses of blockbuster patent expirations, access strategically important intellectual property (IP), exploit technology-based innovations, develop new core competencies, or fill R&D pipeline gaps. Most of the research-based companies widened the breadth of their portfolio by accessing research projects from external sources to supplement their in-house pipeline and to meet at least part of their growth objectives by product innovation. Today, 50% of the R&D pipelines of multinational companies come from external sources.

A good R&D structure is one that meets the expectations placed upon it. There is a need to define those expectations. Companies should focus on R&D structure, such as globally benchmarking products and services; tying up the funding requirements to ensure that there is no strain on the regular cash flow; embracing systems engineering and consulting, which can become a solution provider for the customer; intellectual property protection by way of patents, copy rights, trademarks on drawings, design or methods or products and processes; certifications to ensure standardisation; optimising and innovating in processes and offering modular packages of products and services; embracing diversification and encouraging multiple business units and hybrid R&D structures and creating global growth avenues; outsourcing the non-core area of operation, thus, enabling focused time into optimisation of core area; cost reduction in services by funding for R&D either via VC, crowd funding, applying to government registered services, taking rebates for development under various schemes; data analytics and software-mapped organisational operation mapping; and creating collaborative work spaces & mutually beneficial partnerships."

Arundhati, Managing Director, Plazma Technologies

"Manufacturing sector is increasingly looking at innovation to ensure productivity and growth. It is the key driver for growth and can be broadly divided into technology-driven innovation, market-driven innovation— disruptive markets, and operations or process-driven innovation. R&D functions are being pushed hard so as to increase the pace of innovation. It can help companies deliver innovative products, new technologies and operational improvements, which enhance productivity. R&D must serve the purposes of research, development, innovation and support.

A well-managed R&D can provide sustained growth. However, it must be optimal and flexible in structure and organically developed R&D needs to restructure itself with systematic thoughts based on organisational needs. It should also look outside of its organisation for solutions.

Broadly, organisations can be identified as technology-driven or market-driven. Technology-driven organisations are product-focused whereas market-driven organisations are customer-focused. In technology-driven companies, innovations are fast, such as the smartphone industry. However, marketing becomes down –stream and in marketing-driven companies, R&D becomes less innovative i.e. slow and incremental. Both approaches drive businesses and evolve company strategies. However, innovation must include the contribution of marketing and R&D, i.e. a collaborative approach. Only collaborative approach will find appropriate market solutions on meeting perceivable and unperceivable demands and needs of the market.

Further, R&D must balance conflicts of short-term goals verses long-term strategic focus. It’s reorganisation must be future-flexible and responsive to rapid changes. It must have an interface with other functions, such as product development, marketing, engineering, manufacturing, service, etc. It must be structured correctly, taking into consideration the R&D strategy, resources within the organisation and outside the organisation, culture and information-flow within the organisation and the R&D performance management."

BP Poddar, Vice President — Sales & Marketing, Femco India

Image Gallery

  • Asis A Mitra, Sr GM—R&D, Seco Tools India

    Image: Seco Tools

  • Dr Emilie Barriau, Head – Global Product & Application Development, Transport & Metal, Henkel

    Image: Henkel

  • Arundhati, Managing Director, Plazma Technologies

    Image: Plazma Technologies

  • BP Poddar, Vice President — Sales & Marketing, Femco India

    Image: FEMCO

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