Answer: Of all the business functions, investment in research and development often introduces the most spectacular results. Examples include Xerox’s twenty-five of the domination of the photocopier market after the company’s initial development of the innovation.
- Matching of R& D strategy with R&D skill.
- Matching of R&D strategy with the strategy of product life cycle.
Research and development strategy:
- Product innovation: Product innovations require the most skills. The company must be able to carry out basic research, exploit the results of that research to develop new products, screen new products to select only those that have the greatest probability of success, ensure that it has the ability to manufacture these products and make certain that there is a market for them and/or that they meet market requirements. Given the cost of establishing all these skills, only the largest companies in an industry tend to pursue a new product innovation strategy on a continual basis.
- Product development: A product development strategy characteristically involves lower risks. The company is not introducing a totally new product but rather refining an existing one with a known demand.
The above figure shows, a product development strategy places significantly lower requirements on the company; it does not have to undertake basic research nor need it develop skills to exploit new scientific knowledge and technologies. Instead, the company takes an existing technology and refines or extends the products associated with it. Such companies classified as imitators. In the Japanese electronics industry, for example, Sony has been the traditional innovator, while Matsushita Electric Industrial Co, Ltd with its Panasonic brand, and Sharp Electronics Corporations have been major or imitators.
- Process innovation: The motive for process innovation differs from the motive for product innovation and development strategies. In the latter cases, market expansion is normally the goal, while in the format cost reduction and/or an increase in product quality is the strategic aim. Although process innovation does not usually require basic technological and scientific research, it does demand skills to exploit new scientific and technological know how. Because the goal is related to manufacturing efficiency, close integration between manufacturing and R&D is also called for, Caterpillar’s PWAF project, cited in the Opening Incident, is one example of a cost-motivated process innovation. IBM’s development of a low-cost assembly line to turn out its PS/2 personal computers is another.
Skill of R&D:
a. Skills in basic scientific & technological research.
b. Skills in exploiting new scientific & technological knowledge;
c. Skills in project management (selection and evaluation).
d. Skills in prototype design and development.
e. Skills in integrating R&D with manufacturing.
f. Skills in integrating R&D with marketing.
Procession of these skills constitutes strength in Research and Development. For innovation the new product all skills are required but for the product development number one is not important.