Is it time to review your R&D strategy?

When a recession hits, it may be tempting to slash departments and costs seen as nonessential.

Marketing comes to mind. So do research and development. After all, who knows if your R&D investments will ever pay off once they do make it to market?

R&D Activity Increasing

R&D investments by U.S. companies experienced a slight downturn in 2009 but are growing again, according to the National Science Foundation. In 2012, businesses are expected to spend more than $280 billion, an increase of 3.7 percent over 2011.

R&D StrategyPharmaceuticals, transportation equipment, food technology, and consumer goods remain the leading industries for R&D. Service industries also account for 30 percent of R&D activity.

It’s apparent that savvy companies aren’t shelving new product and service rollouts despite the continued weak economy. R&D departments undergo the same rigorous review and adjustment other functions are experiencing as companies strive to operate in a frugal and efficient manner.

Opportunities for New Development

Even during a downturn, there are opportunities to create a successful new product or service. R&D Magazine reports in the 2012 Global R&D Funding Forecast by the Battelle research group that key global issues are impacting R&D focus. For example, climate change is influencing the energy, materials, communications and automotive industries.

Sustainable development concerns are affecting agriculture and food manufacturing. Terrorism has shifted the direction of the aerospace, defense and security industries. Market intelligence about your end-users is vital right now to understand long-term as well as short-term trends.

The recession highlighted the cost savings and efficiency aspects of the green movement, and attitudes aren’t likely to shift back easily to one of disregarding fuel and energy costs. The advantage will be to make new technologies affordable and integrated into everyday products and lifestyles.

Steps in the Process

In light of existing market conditions then, the first step to maximizing your R&D efforts is a stringent review of projects, both for completion status and continued viability.

Now is the time to prune your portfolio to only the best and strongest projects. Freeing up resources will allow you to accelerate time to market or reinvest in a new and more promising project.

Some companies find it worthwhile to allocate a portion of R&D time to revamping, updating or finding new applications for their existing product or service line.

Next, look at your entire innovation process with an eye to “leaning” systems and procedures. Such tools as value stream mapping can be used to identify bottlenecks and redundancies.

Critical steps of the process will be evident, and anything extraneous can be eliminated.

Operating a lean R&D department will save money and make innovation more effective. Employee productivity and teamwork are other areas to review for maximum performance.

The Funding Forecast also reports a new focus on collaboration to leverage R&D activity. According to Battelle’s research, 81 percent of manufacturing companies are involved in joint R&D with academic institutions, federal laboratories, other U.S. companies or foreign enterprises.

Knowledge sharing, access to technology and shortening the development cycle are key collaboration drivers. Rather than do it all in-house, strategic partnerships might fill gaps and let you leapfrog to a new level.

Remaining competitive, taking advantage of tax breaks and positioning your company for the future are all good reasons to review your R&D plan.

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