The role of research and development in organizational innovation and competitiveness

¶ … R&D) Department

Most organizations have a R&D department tasked with designing and developing new products and improving the existing products. This is important for enhancing the organization\'s competitive advantage in the marketplace. Indeed, in an increasingly competitive environment, the importance of product innovation cannot be overemphasized (Jain, Triandis & Weick, 2010). Organizations that thrive in such an environment are those that constantly improve their products or introduce new ones. This paper discusses the importance of the R&D department. The paper also provides an analysis of the R&D strategy at the author\'s company up through the first six years of operation.

R&D plays a crucial role in innovation. Innovation is essentially the continuous process of making the existing products better or introducing new or more creative ones (Jain, Triandis & Weick, 2010). Innovation is an important driver of value, competitive advantage, and organizational performance. This is particularly true in an environment with numerous players offering the product and where consumer tastes and preferences keep on changing. In such an environment, an organization must find a way of staying ahead of the competition -- it must produce more unique and creative products that resonate with the prevailing tastes and preferences of the consumer. It must also develop new knowledge, technologies, capabilities, and competencies. This responsibility lies squarely within the R&D docket. The department must constantly develop new products or find ways of making the organization\'s products more innovative by, for example, introducing new features, specifications, and functionalities. This helps the organization overcome challenges relating to product lifecycle maturity as well as market saturation.

Most innovations in existence today are indeed the outcomes of R&D. From pharmaceutical products and automobiles to computers, laptops, smartphones, tablets, MP3 players, dishwashers, washing machines, water filters, mosquito mats, and digital photography, R&D has played a vital role in the invention of these products. These inventions may not have happened in the absence of painstaking and perseverant R&D efforts. This further demonstrates the importance of R&D.

The R&D department is also involved in quality checks (Shiu, Jiang & Tu, 2013). Quality is an important source of competitive advantage in the marketplace. An organization does not just produce a product -- the product must meet the quality expectations of the end consumer. Quality may relate to aspects such as durability, hardiness, functionality, usability, safety, and absence of defects. The R&D function ensures that the organization delivers quality products to the market. It sets and enforces the criteria every product must meet before it is released to the market. This is achieved by advising the production department the materials, technologies, and processes to use in manufacturing the product. Quality is also assured by conducting rigorous tests of the product to ensure conformity with customer expectations and even regulatory requirements.

On the whole, R&D plays an integral role in organizational success. By enhancing the existing products or introducing new ones, the organization constantly fulfils the needs of its customers. This is crucial for satisfying and retaining the existing customers and attracting new ones. A larger customer base and increased customer loyalty can significantly drive top line and bottom line results, resulting in greater market share and organizational growth. This gives the organization an edge over its competitors. When an organization builds a reputation for innovative products, it is better placed to fight competitive pressure. R&D further contributes to organizational success by improving organizational knowledge and intellectual assets. Indeed, without an effective R&D function, an organization may find it quite difficult to thrive in the long-term. Additionally, R&D mistakes or shortcomings can be costly to the organization in the long run. The crucial role of R&D explains why organizations invest a great deal of resources into the function.

Google, Apple, 3M, Sony, Intel, IBM, Hewlett Packard, Samsung, and Toyota are classic examples of organizations whose success can largely be linked to innovation brought about by R&D. These organizations have full-fledged R&D departments to which billions of dollars are allocated every year. Over the years, the organizations have introduced some of the most breakthrough innovations, and they continue to surprise their markets with even more breathtaking offerings. These organizations understand that surviving in a fiercely competitive environment strongly hinges on outstanding R&D performance.

Achieving outstanding R&D performance, however, requires an effective R&D strategy. R&D processes must be informed by the organization\'s overall strategic plan (Matheson & Matheson, 1998). Formulating the R&D strategy also requires consideration of decision making processes (centralized or decentralized), organizational resources and capabilities, winning factors, location of R&D facilities, as well as technologies to be utilized within the facilities. Other important factors relate to the extent of separation between research and development activities and the degree of reliance on external resources (Pisano, 2012). These factors must be carefully weighted to come up with an effective R&D strategy.

At the author\'s organization, a pharmaceutical firm with operations worldwide, the R&D department is one of the most critical departments. The organization particularly recognizes R&D as one of its pillars of growth. Driven by the desire to better humanity, the organization seeks to constantly deliver innovative products. The organization strives to undertake R&D initiatives that attend to unmet medical needs in diverse disciplines ranging from viral diseases to neurology, cardiology, oncology, anesthetics, and rare diseases. Important principles that guide the R&D department include scientific evidence, operational efficiency, and return on investment.

At the beginning, particularly during the first six years of operation, the organization\'s R&D strategy largely embodied centralization. Essentially, the power to make important decisions remained with the management. The management believed R&D was too critical a function to be left entirely to the R&D team. With a centralized structure, the management believed decision making would be faster. Keen on retaining control, the management was also reluctant to take advantage of external resources in spite of several attempts by the R&D team calling upon the management to exploit both internal and external expertise. Furthermore, despite having different product categories, all R&D activities were housed under one roof.