A Dangerous Trend in R&D

Sometime ago, I read that a new technology officer of a leading computer manufacturing company has discontinued R&D projects that go beyond 2-3 years. The top 20 or so projects were retained for generating short term revenue. Leadership in other companies have adopted the similar strategy to productize R&D. To an extent I believe R&D must become more business focused, efficient and productive, however, I do not believe R&D should be required to generate revenue in the short term. Instead, R&D organizations must become a source of profitable revenue growth, not only in short term but also in long term. There is a difference between revenue growth and revenue generation

For the sake of next quarter, corporations are forsaking future. First no R&D has been so efficient that it can produce additional revenue in just one or even two quarters. Secondly, their designs have been marginal at best for reproducibility. To accommodate design marginalities manufacturing organizations generally struggle for sometime resulting in wastage of precious time and losing potential competitive advantage. Thirdly, even if the new products are released due to reprioritization, early launchers in most cases cut sales of their own profitable products and causes operating loss due to poor initial profit margin. Hence, the R&D projects prioritized for short-term gain are very unlikely to produce desired results.

While no one would undermine the value of immediate cash flow, we need to continue to invest for long term sustenance. Every major firm must continue to invest in R&D for short term as well as long term. Real challenge is the sensible allocation of R&D investment. The R&D must take a 15 or 20-year perspective, and define a portfolio that would include some research on fundamental (F) discoveries, platform (P) development, derivative (D) products, and create plug-in opportunities for partners to innovate variation solutions (V) on their platform and derivative products. The timeline for F, P, D, V innovations vary from longer term 15 years to on demand in real time. Such breakdown of innovations would allow a sensible allocation of R&D resources. Just totally shutting down the long term research is a very short-sighted strategy, or senseless act. Such acts leave no room for survival, killing any chance for long term competitive advantage. Short term acts are no strategy.

What do my readers think? Any comments, please?


  1. Posted June 30, 2009 at 12:24 pm | Permalink

    R&D is a priority but not the top priority in North American manufacturing. The existing supply chain model cannot support the demands of the global marketplace. Cost and value are inversely proportional. The cost of quality is driven by performance.

    Manufacturers must provide value beyond performance and create value streams between provider and user from design to delivery. Total quality management the results in dock-to-stock dependability is the only sustainable model.

    Regarding R&D, anybody pursuing optical interconnections on PCBs?

  2. Posted July 2, 2009 at 6:51 pm | Permalink

    Hi Stephen,

    Thanks for participating in A Dangerous Trends in R&D discussion. I agree with you that businesses are more focused on cost. I enjoyed your comment about the cost and value relationship. I believe that cost and value are inversely proportional using conventional methods. That’s where innovation comes into play to deliver value innovatively without adversely affecting the cost.

    Here is the link about optical connections in the PCB industry: http://www.opera2015.org/deliverables/D_4_3_CD-ROM_Wroclaw_Nieuw/6_Proceedings/54_Peter_Van_Daele.pdf

    Your comments about Optical Interconnections reminded me about the Photonic Switching work at Bell Labs that did not go very far due to interface and transmission constraints. I am sure that optical interconnections would experience successful practical applications.

  3. Posted July 6, 2009 at 12:23 pm | Permalink

    Quality and performance are no longer differentiators in printed circuit boards – they are a given! Innovation must begin with establishing dock-to-stock level of dependability. Qualification for PCB is achieved using IPC 6011 and maintained by SPC. This opens the door for creating value streams within supply chain event management. Lower cost of quality, lower cost of inventory, lower cost of life-cycle management. Standardization of these events empowers improvement by removing variation inherent in todays electronics supply chain.

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