CHAP 2 R&D STRATEGY

• Case:

• http://www.teijin.com/rd/strategy/
Sub title

2.1 Introduction

2.2 Decision-making

2.3 Analysis tool

 2.1 Introduction

 Implication of R&D Strategy

 Elements of R&D Strategy
 Planning of R&D Strategy
Reason for New Product Development Failure

• According to Robert G. Cooper’s 20 year

long investigation over 2000 R&D projects,
1 out of 7 new product development
succeed. Among 3000 ideas, only 100
become options and 7 can be carried out.
Reason for success Reason for failure
• Good strategy and tactics • Insufficient participation
• Promised resources of the high-level;
• Good process insufficient inputs;
• Too much participation of
the high-level.
 Reason for failure Percentage
Inappropriate market analysis 32%
Flaw of products 23%
High cost 14%
Inappropriate timing 10%
Strike back of rivals 8%
Inappropriate marketing 13%
Considerations about new product
development
1. Do not change people’s customs.—
technology always come from human
nature.
Ex: PDA, E-Book, Telemedicine

2. Easy operating and learning

Ex: Intelligent refrigerator
3. Not too much progress—Unimaginable

4. Meaningless optimizing
Ex ： mousetrap

5. Infrastructure and supporting system

construction
Ex: radio, interactive TV
6. Only part of people get the benefit.
Ex: Genetically Modified Food

7. Ethical issues
Ex: genetic engineering
 1.Implication of R&D Strategy

• Uncertainty & Risk

• Well paid revenue & profit

• According to the demand for technology

acquisition decided by strategy framework
of the nation, district or enterprise, a series
of research projects have been decided and
carried out to realize the technological goal.
• The outcome of making R&D Strategy is a series of
research and development projects need to be carried
out.
• The objective of R&D Strategy is the acquiring and
clustering of technology.(different ways to get access to
technology)
• Technology acquired don’t need to be the best but must
be useful for nation and enterprises that can help them
achieve their goals. Hence the making of R&D Strategy
need to be consistent with the integrated developing
strategy of the nation or enterprise.
• R&D Strategy objective:
 Technology leading
 Technology catching up
 Technology imitating

• R&D Strategy level:

 Macro
 Intermediate
 Micro
 2.Elements of R&D Strategy

• Statement of customer demand

 Different type of R&D has different customer demand
statement. For basic research, it’s technological
development and national strategy. For applied research,
it’s the technological demand for the application of basic
research outcomes. For technological development, it’s
the marketization of technology.
• Market status
 Basic: possible application prospect of outcomes;
competition from other country or research institution.
 Applied: potential market status, application and market
competition.
 Development: potential market scale and grow rate;
customer demand changing trend; possible price, new
products; expecting market share; competition in product
and service, price, market share, new products.
• Nature and combination of R&D projects
 Basic/ applied/technological development;
 process modification/new product development;
 incremental/breakthrough/systematic
• Resource requirement
 preliminary resource allocation
• Internal and external interface confirmation
 Interface means contact with other organization.
 Coordination
 Internal: R&D department vs. other department; among
R&D teams.
 External: stakeholders, users, other organizaitons.
Concerns:

• Communication between R&D department

and Marketing department;
• Potential customer management
• Short term vs. Long term coordination
 3.Planning of R&D Strategy

Procedural strategy decision making concerns timely

monitoring of environment, organization capability
and overall strategy to control status divergence and
modify strategy.
(1)Integration of R&D Strategy and
organization developing strategy
• R&D Strategy is an important component of
organization's overall strategy that influence
its development and achievement. They are
closely related.
• Different stages in PLC calls for different
R&D Strategy.
• R&D Strategy formulation is dynamic,
considering long term development as well
as developing stage of organization.
Product Product Cost Renovate
innovation; improvement; down
market Maintain
leadership. competitive
position. Abandon
(2)Coordination of R&D strategy
and operational strategy
• R&D is one of the most important sources
of firm’s vitality and competitiveness. It
needs the cooperation from other
functional departments and also from
external organizations and users.
 competitors
competitors Final
Final users
users
1,2,3

1,2 1,3
Marketing/sales
Marketing/sales

R&D 1,2,3
R&D activity
activity policy/laws
policy/laws
External,
External,
e.g..
e.g.. Research
Research 2,4 2,3,4
institutes
institutes Other 2,3,4
1,2,3 Other functions
functions

suppliers
suppliers

Information flow of R&D system

• Based on current capability and resources
• Long term development projects vs. short
term profitable projects
• Specific objective and plan for each
project
(3)R&D scale and R&D expenditure

• R&D scale refers to the number of

technological workers involved in R&D
projects in the organization, or the
percentage.
• According to “Main Science and
Technology” by OECD(Organization for
Economic Co-operation and
Development), the R&D expenditure of
major 38 countries constitute 95% of the
R&D investment all over the world.
 U.S.-Canada
EU
Japan-Korea
China

Major countries in R&D

investment
In most of the developed countries, R&D expenditure
intensity is over 2%. Israel invest more than 4% of its
GDP in R&D.
High R&D investment intensity guaranteed their
innovation capability.
Basic research/total R&D investment
China 4.70%
Most of developed countries 20%
Japan 10%
Russia 15%
(4)R&D organizational structure
• Key to the implementation of R&D strategy.

Strategic R&D size Investment organizational

objective structure

Technology Big High Concentrated;

leadership more research
workers;

Technology Medium Medium

catching up

Technology Small Low Dispersed; more

imitation engineers;
(5) Influential factors

Objective of R&D

Methods of R&D

•Environment change
•Maturity of technology and market
•Technology base
2.2 Decision-making

 Elements of R&D Strategy decision-making

 Model of R&D Strategy decision-making
 Pattern of R&D Strategy decision-making
1.Elements of R&D Strategy decision-
making
• A – Area

• B – Balance(or Blend)

• C – Control: standard, information,

supervision, rectification
2.Model of R&D Strategy decision-making

• The decision-making of R&D strategy is

essentially the dynamic planning process
of analyzing and integrating resources to
develop the strong points and avoid the
weak points.
 Overcome weakness

Enhanced
Transform/reduce resources
Internal Detach Vertical integration
and
resource clear Joint diversification
capability
allocation through
Concentrate
Market development acquisition
Product development Concentric diversification or merging
Innovation Joint Venture

Developing strength

Strategic choices matrix of SME’S R&D

 3.Pattern of R&D Strategy decision-making
Direction and competitive
position
Infrastructure and shared
key technology

Time order

Implementatio
n

Product strategy framework

(1)Product development vision
Begin of R&D strategy and planning.
Provide a clear background and direction
for product development.
Describe what the objective is, how to
achieve it and why it can be achieved.
(2)Product platform strategy
Collection of core technology in a series of
products that determined the cost, character
and capability of products.
(3)Product line strategy
Determine the order for product R&D for
the product line
(4)Roadmap planning of product
development
Roadmap planning(time, information,
resource)
New product development
• New product development
a) Imitation
b) First mover
c) Fashion
d) Reverse innovation
e) Series developing
f) Analogy (principle, technology, raw material)
g) Borrow
h) Customization(philosophy, database, Flexible Manufacturing
System, FMS)
i) Differentiation
 2.3 Analysis tool

 Technological life cycle

 Technology prediction
 Technology Portfolio analysis
 Technology audit
 Technology road mapping
• IPD
Thanks!