Innovation of Business

and the
Business of Innovation™
 
Innovating R&D

Lessons for any Internal Business

By definition, R&D doesn’t innovate.


Innovation is the sum of invention, productization, and commercial launch.  Invention organizes around research projects and seeks to change what is possible.  Productization organizes around development projects and seeks to turn inventions into practical reality.  Launch organizes around markets and seeks to create wealth for the company.

 

R&D is invention, so R&D, by itself, doesn’t innovate.  Right?...


Innovation happens in value chains, stages of development, from ideation through various proofs of concept, manufacturing, and launch.  It takes a complete value chain to serve end customers with an ongoing stream of winning products.  R&D is often seen as a fuzzy front end to the value chain.  Many R&D projects lay foundations for future R&D projects.  In spite of quality of science and rigor of internal reviews, few R&D results transfer into a product pipeline.


Then we agree.  R&D doesn’t innovate.


R&D develops knowledge, so moving R&Dresults into productization is always about moving knowledge.  That makes transfer to productization a learning process, not an event.  Indeed, when R&D results do enter the pipeline, the process can be compared to a launch.  On one side are previous “owners” who understand the research inside out.  On the other side are cautious, cost-conscious “customers for knowledge” who must first justify acquisition and then learn enough to use the potential product in their own environment.


Hmmm… …  R&D has “customers?”


Let’s call those customers “adopters.”  Adopters are those in the next step of the value chain, and R&D serves a wide variety of value chains.  (Academic and government R&D often transfer to adopters in industry.)


Adopters are typically not “funders” – those stakeholders who provide resources ($, facilities, etc.).  Funders measure the value of R&D in quantity and quality of return on investment – the sum of benefits received less the costs of gaining those benefits.  Say… total revenues from an R&D-derived product in a market less the costs of completing the product, launching it, and serving that market with that product over time.  Requirements for prototype products can seem daunting, yet if R&D never delivers knowledge to appropriate adopters, funding will cease, and R&D will die.


Hmmm… Sounds a lot like the profit focus of companies serving end users.

 

Innovated R&D

Innovation takes a whole business.  Thus far, we’ve equated a business to a “commercial company.”  Now think about R&D as a whole business.  It has income (funding), produces outcomes (science, technology), and must deliver enough perceived value through outcomes to sustain its income.  Its “adopters” (value-chain partners) rarely pay for funding, yet perceived needs for R&D plus adopter satisfaction drive funding by investors.


Since R&D is a business, it must innovate.  How do we evolve R&D into an innovator?  I’ll explain with brief, perhaps overstated contrasts.
Normal R&D is a department.  Innovated R&D is a business.  Normal R&D gets funding.  Innovated R&D acts as if it earns revenues.  Normal R&D does science and engineering.  Innovated R&D changes what is possible by adding new value every day.  Normal R&D serves management.  Innovated R&D partners with management to serve adopters, funders, and other stakeholders.


Normal R&D does technical collaboration.  Innovated R&D extends collaboration to teaming with product development and marketing.  (Academic and federal labs collaborate with industry.)  Normal R&D employs scientists and engineers.  Innovated R&D looks for agents of change.  Normal R&D completes projects.  Innovated R&D knows it’s job is not done until its knowledge (science and technology) has been moved to and used by target adopters.


We can innovate the business of R&D.  Rather than being a fuzzy front end to innovation, R&D can become a crystal clear source of new knowledge moved into use by adopters serving well defined markets, whether within the same organization or across corporate boundaries.

 

Innovating R&D

Innovating R&D enhances the positive impact of science and technology and grows the market of adopters.  Leadership can innovate R&D in at least six distinct ways that apply broadly to any business.  I’ll continue to emphasize via overstated contrasts.

•    Innovate focus – create a vision
•    Innovate image – develop and leverage brands
•    Innovate projects – become value driven
•    Innovate movement – transfer science and technology
•    Innovate communications – develop an adopter center
•    Innovate people – foster agents of change

Innovating Focus:  Normal R&D is a research organization that does science and engineering to create new knowledge.  Innovated R&D is a business that delivers value to adopters in exchange for funding and new opportunities.  The difference is the lab’s vision.  Normal labs see only part of their potential.  Innovated labs know they can have much greater impact.
A complete R&D business vision has three components:  Strategic Identity™ – Who the lab

is and wants to be.  Integrated Strategy™ – Where they want to go and how they intend to get there.  Strategic Culture™ – How they want to behave.  Developing the vision speeds a culture change in the visioning team.  Turning the rest of the lab into innovators requires a culture-change strategy.


Innovating Image:  Normal R&D settles for image defined by others (often “geeky”).  Innovated R&D consciously chooses its image.  Normal R&D doesn’t mind gaps between themselves and their company.  Innovated R&D wants no barriers to its ability to create positive impact.


To manage perceptions, an innovated Lab decides how it wants to be perceived, then manages everything it says and does to reinforce those perceptions.  Innovators use brands to focus image development.  The lab brand includes a true name (ex: Bell Labs) with an unique value promise.  (Team and technology brands are similar.)  Branding then makes both name and promise visible, and makes the Lab and its team accountable for living up to the promise.


Image lives in minds, not on paper.  Brands are owned by markets, not by organizations.  Image strategy includes building durable relationships with adopters and influencers.


Innovating Projects:  Normal R&D does research.  Innovated R&D enables better business decisions.  Think about that!  What a huge difference!  Normal R&D focuses on science.  Innovated R&D focuses on the value of the science.


Value, of course, differs by adopter and stakeholder.  Industrial adopters of R&D include at least management, product developers, marketers, and other scientists inside the company.  (Academic and government labs serve those same markets.)  Normal R&D designs projects to, e.g., test hypotheses.  Innovated R&D tests hypotheses to enable delivery of needed value to targeted adopters.  This isn’t biasing of science.  It is early recognition of the potential value of science, then designing to optimize utility.


Innovating Movement – Normal R&D creates knowledge.  Innovated R&D creates impact!  Impact demands that the knowledge be adopted.  That is, knowledge must move from the lab into the minds and actions of others.  Face it.  Neither science nor technology has any value if not put to use.


Innovation of movement includes:  Defining research “products,” defining potential impact of products, identifying adopters, clarifying how adopters will use products, perceiving paths to adopters, and using available resources to move products toward adopters and ensure their full ownership.  Normal R&D doesn’t think in this language.


Innovating Communications – Normal R&D writes professional papers.  Innovated R&D builds relationships with audiences.  Normal R&D starts with what has been done.  Innovated R&D starts with why it was done.  Normal R&D speaks to technical peers.  Innovated R&D speaks to a broader audience of stakeholders.


The difference is the center.  Communications from normal R&D center on (e.g.) the science.  Innovated R&D centers on the audience.  Self-centered communications speak about what the authors care about.  Audience centered communications increase impact by justifying interest in the science, then satisfying that interest with full scientific rigor.


Innovating People:  Normal R&D hires scientists and expects them to do science.  Innovated R&D hires agents of change and expects them to change what is possible.  Change agents know, instinctively or by training, how to innovate focus, image, projects, movement, and communications.


R&D’s best change agents are top scientists and engineers with an innovation mindset and a few key tools added to their professional tool kits.  Change agents are often leaders with abilities to choose and clarify visions, develop support, remove barriers, and initiate change.  Motivations include desires for impact, consistent funding, and opportunities to do meaningful research.

 

The Real Power of R&D

Most R&D labs are powerhouses of potential.  Few realize that potential because of limited vision of who they can be and how to manage their efforts for maximum impact.  Innovation processes resolve that myopia.  The lessons here apply broadly to any business, including internal technical services and a wide range of other corporate functions.


Agents of change drive innovation of businesses.  Change agents may be managers, team leaders, researchers, or outside influencers.  Management can direct innovation, yet they need buy in of staff.  Staff can be innovative, yet must persuade management.  Teams may choose to innovate themselves as small businesses, becoming provocative examples.  None of these culture changes are trivial.  Overall, innovating R&D or any other business requires strategic thinking, with all classes of adopters and stakeholders considered.


Innovation increases value, impact, and return on investment.  The time for innovation is now, and it always will be.

 


 

60. The leaders say: "Let's be more innovative." The staff says: "Bravo. When do we start?" The mid-level managers say: "Wait a minute, let's think about that. What about… and …? Have you REALLY thought it through? Does this mean I have to change?" (Claude Legrand)

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