The Research and Development (R&D) functions of organizations play a significant role in the formulation and implementation of business strategy. The R&D personnel are responsible for the development of new products and the enhancement of the company’s old products in line with the successful implementation of the organization’s strategy.
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The R&D function is responsible for the transfer of complex technology, adjustment of processes to suit local markets, modification of processes in line with local raw materials, and adjustment of company products to specific tastes and requirements. Organizational strategies targeting product development, diversification and infiltration of new markets demand that company products be improved, and new products created to fit the expected changes. This paper looks at the three major R&D approaches for implementing strategies.
Major R&D Approaches for Implementing Organizational Strategy
Most successful organizations employ R&D strategies that link the available external opportunities to the company’s strength and objectives. What this means is that a properly formulated R&D policy must connect the available market potential to internal organizational capabilities. A company can use any of the following R&D approaches for the implementation of strategies.
The first approach the organization can adopt is to be the first company that promotes new technological products. Though this approach seems attractive and exciting, it is fairly dangerous since the company is likely to delve into untested products. It is also significantly more costly.
This approach has a high rate of failure since companies are testing new products and processes. Nevertheless, this approach can offer the company a temporary monopoly of certain products that the organization can exploit to maintain competitive advantage. If a company fails, other companies can seize the initiative and learn from the mistakes made by the initiating company.
The second approach requires that the organization becomes an innovative imitator of certain successful products and processes from other companies. This approach offers the benefit of a reduction in costs often associated with start-up and program initiation. The company can also benefit from reduced risk of failure since the products have already been successfully adopted.
The company allows pioneer organizations to develop new products and establish the marketability of the product. The company then follows suit and develops a similar but improved product. The success of this strategy relies extensively on the abilities of the R&D personnel and the marketing department of the organization.
The final R&D approach is for the company to adopt the production of a low-cost product that is similar to the one already in the market. The company can achieve lower-cost production by embarking on mass production of recently produced products.
The success of this approach relies on the fact that once a product has been accepted by consumers, the issue of pricing becomes central in determining sales of the product. Unlike the previous strategic R&D approaches, this approach requires less expenditure in R&D, but significant plant and equipment investment for mass production.
The success of any of these approaches requires effective communication between R&D departments and other functions of the organization that are instrumental in executing various forms of generic organizational strategies. Conflict between any of the concerned functions (such as marketing, information technology, R&D, and finance) can be controlled by clearly outlining policies and company objectives.
Research and development function of an organization is important in ensuring organizational growth and in obtaining and maintaining a competitive advantage. Strategic R&D should be aligned with organizational objectives. The three approaches can be used by the organization in implementing a strategic business plan that is well-informed.