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Developing a Strategy for Global R&D and Innovation Centers
Posted on January 6th, 2017 by Stephen Toton in Chemical R&D
In today’s complex global business structures, we sometimes find ourselves with a proliferation of R&D sites and Application Centers. This may be caused by several reasons: legacy business centric R&D laboratories, regional expansion, or by a series of acquisitions and/or divestitures. In either case, without a Global strategy on R&D Facilities, Innovation Centers, and Customer Applications, there will be redundancy, conflict and counterproductive innovation.
In my experience within global corporations, it’s imperative to have a global strategy for these facilities in a way that maximizes innovation, talent acquisition, intellectual property generation and competency development. Also, it must meet regional customer needs and be integrated with the overall innovation strategy of the corporation.
To me, there are four types of R&D and Innovation Centers: R&D Foundation, Business Unit R&D, Innovation, and Customer Application.
The R&D Foundation Center
These R&D facilities are the anchor for Intellectual Property generation of new science and technology. They’re usually located in developed regions and countries such as the United States, Canada, Western Europe, South America, Asia, Australia and the Middle East (Israel), where there is access to universities and Ph.D, MS talent that will enable growth in key competencies. In many cases, these R&D Foundation Centers will support multiple business units in developing IP and be integrated in the global commercialization process. Because of local tax incentives, sometimes these Foundation Centers will be located in Industrial Centers supporting other corporations. This creates a university look and feel, to attract and maintain talent.
As we all know there are certain countries where IP generation is not protected by the local government and the culture hasn’t developed a respect for intellectual property rights. If that’s the case, I would limit the work to application development only.
R&D Foundation Centers are a critical for the corporation and business units to create new products and technology for growth in the regions and globally. Recognize new technology platforms will be global, but products can be tailored to meet regional customer needs. Therefore, having physical presence in key regions allows access to diversity of talent and the “Voice of the Customer.”
It’s important to have a dedicated leader for the R&D Foundation Centers in each region. Sometimes the corporation assigns an ex-patriot to get started. In either case, the Leader needs to develop a competency and talent acquisition strategy that is aligned with the corporation global business units. In many cases the corporation may provide seed money for a few years to get the facility and talent acquisition started. The leader for the R&D Foundation Center needs to work diligently with the business units to establish the innovation best practices and processes that will generate new ideas and products. Remember – this is all about leveraging competencies to improve innovation productivity.
Having the critical mass of scientists and engineers in an R&D Foundation Center allows them to feel there’s a diversity of opportunities across businesses. This is important. Without the opportunity for career growth and advancement, retention of key talent becomes a big problem – especially in high growth regions.
Time zones and language barriers may be an initial hurdle, but with the right processes, leadership and telecommunication technology, it’s something that can be overcome. Just think, with leveraging talent across the globe you can use gain productivity in your technology project.
The Business Unit R&D Center
In some cases, it may be impractical to leverage the competency of a R&D Foundation Center. I can think of a few examples where the R&D competency needs to be close to the industry the products are being developed for. A good example is the electronics industry where your key customers are in Japan, Taiwan, or Korea. If a business unit can obtain the talent and critical mass to justify its own R&D Center, then maybe it makes sense to do so. The benefit can be better VOC and faster cycle time for new products.
I’ve also seen examples where R&D Centers are located close to a manufacturing facility. However, without the appropriate critical mass and career opportunities these scientist and engineers often feel outside the R&D community and miss opportunities to grow. Usually these manufacturing based R&D Centers get prioritized into supporting production improvement processes and generate little or no intellectual property.
The Innovation Center
This is a concept that has caught on in the last 10 years. The idea is to have facilities located in key regions or close to key industries where customers can interact with application engineers to explore current or future customer needs. Usually these are smaller facilities (5K to 25K square feet) where products are showcased and conference rooms are available for customer meetings. Generally, new applications can be generated within 3 to 12 months. However, with the right front-end process, VOC can be developed for future products.
The most successful Innovation Centers are ones that have an industry theme, such as Automotive, Electronics, Aerospace, etc. However, when showing presence in an emerging region (Eastern Europe, Africa, etc.), it may be best to start small with a multi-business Innovation center showcasing multiple products.
And be sure to use metrics to measure the productivity of these centers. Measure the pipeline from # of customer interactions through # of new applications or new products generated.
The Customer Application Centers
Just like R&D Centers may be specific, the same goes for Customer Application Centers. I can think of a number of examples where the customer needs training on new product applications. The facility may include special equipment or instrumentation to educate the customer on the benefits of a new product. The facility may also be leveraged by application and service engineers to diagnose a product problem with a customer. In either case, the facility should be justified by the business unit itself and is usually not leveraged across the corporate R&D community.
I’m sure there are other types of R&D and Innovation facilities that I left out, but these are the ones I am most familiar with. Regardless, you should start with taking an inventory of the number, location, R&D headcount, and the competencies you have across the globe, and ask yourself “Are you effectively leveraging talent and innovating across the globe?”
All opinions shared in this post are the author’s own.
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