Organizing R&D for the Future

Though it’s vital to their futures, the art of collaboration is one that many research and development organizations have yet to master.

Executives from around the world agree that research and development is a global effort requiring collaboration. Yet many say their organizations must improve in this area — evolving from the predominantly centralized approach that’s prevalent today — to meet strategic goals. In other words, for today’s R&D organizations, there is a significant gap between knowing what to do and actually doing it. In a 2012 McKinsey survey on R&D, we surveyed 1,283 executives representing a range of regions, industries, functional specialties, tenures and company sizes. (Note: To adjust for differences in response rates in different countries, the data were weighted by the contribution of each respondent’s nation to global GDP.) A vast majority of the executives surveyed — 80% — believed that the best way organizations can position themselves to meet goals is by establishing satellite units that operate — and collaborate — as a network. But only 63% of respondents said that their R&D organizations already include satellites. Executives’ responses on the current state of R&D depict an increasingly global reality that is at odds with today’s organizational structures. Specifically, a plurality of respondents — 37% — said their current R&D organizations consist of a central function in a single location. To meet their collaborative goals in the next three to five years, more than half of respondents acknowledged that their organizations should employ a more decentralized model. This overall preference for moving away from centralization reflects the reality on the ground: 38% of executives said their companies plan to increase offshoring of their global R&D activities. While there has been much recent discussion of companies bringing manufacturing activities and processes closer to home (to increase operating flexibility, for example), our results suggest that for many R&D organizations, the offshoring trend continues. In fact, just 18% of respondents said their companies’ “onshoring” of global R&D functions and processes will increase in the next three to five years, and only 24% said the same about “nearshoring” (bringing functions and processes closer to the company’s home base).

The Value — and Challenge — of Collaboration

Nevertheless, for the time being, collaboration is an art that many R&D organizations have yet to master. Of the executives responding to this question, less than half said their central functions and satellites collaborate very or extremely effectively.

Read the Full Article:

Sign in, buy as a PDF or create an account.