Making R&D investments deliver more

The recent global economic crisis appears to have served as a much-needed wake-up call. There has been a decisive shift of focus from the gimmickry of market valuations to the need to create real value. This recognition has catapulted R&D and innovation into an unprecedented high in terms of organisational priority. R&D, for long seen as a desirable activity that could lead to long-term strategic advantage, is now being viewed as vital even for near-term sustenance.

However, here is the catch. How can organisations justify larger R&D spends during times when every possible means of cost-cutting needs to be pursued? How do companies balance the apparently dichotomous objectives of the need to create real value quickly and the operational necessity of keeping spends under control? The answer lies not in increasing R&D budgets but in making existing budgets work smarter. An Open Innovation Strategy lends itself as a potential solution for achieving the seemingly impossible.

Traditionally R&D has had several implicit connotations such as secrecy, limited to a select few and involving long time-lines. Therefore, organisations have often believed that the primary mechanism for increasing their focus on new product development or innovation is by increasing the number of people deployed in these functions and increasing the budgetary allocations. Clearly this is not going to work, given the current circumstances. The time for open research and innovation networks has arrived.

Collaborative research

In recent years collaborative research and innovation, is being actively explored by many. These could be collaborations between companies, with customers, between an organisation and academia or government-sponsored research collaborations across multiple institutions. A number of these efforts have yielded significant benefits to all stakeholders within shorter time-spans resulting in products and outputs that might have been difficult to contemplate had these been executed by a single organisation.

Sony, Toshiba and IBM worked collaboratively to create a radical new chip, optimised for rich media and intensive computing workloads with exponentially more powerful graphics, action and simulation capability. Closer home, TCS through its co-innovation network initiative, works with academic institutions, strategic alliances and clients to propel innovation.

Advantages

Such collaborative efforts that bring together multiple institutions, people and resources to pursue common research and innovation agendas can loosely be termed as an Open Innovation Strategy. There are several advantages of such a strategy. Firstly an organisation has access to the domain expertise of people who are not their own employees. Secondly, infrastructure such as labs, libraries and other facilities can be accessed at a minuscule cost. Thirdly and most importantly, there is a complementarity of skill sets across institutions. Collaborating with other organisations and institutions with complementary skill sets and a common research agenda could be a win-win for all concerned.

Research Parks

Open innovation has been seen to thrive in university-driven Research Parks. Such Research Parks provide an ecosystem of like-minded researchers and innovators and an ambience that is conducive to creativity. The most obvious of these is between industry researchers and faculty. Two other dimensions of collaboration that emerge that are not recognized adequately are those between established companies and start-ups within the same ecosystem as also companies in the same value-chain who often have a shared destiny in terms of their research agendas.

(The author is Chief Executive Officer, IITMadras Research Park, Chennai)

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