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Innovation in 2011: Managing R&D As A Business

As food and beverage (F&B) executives move to strengthen their balance sheets in 2011, most view investments in innovation and research and development (R&D) as being superior alternatives to building cash or acquiring other companies. At the same time, R&D and innovation are now under a microscope as F&B companies closely eye the speed and size of return they see on these investments.

As food and beverage (F&B) executives move to strengthen their balance sheets in 2011, most view investments in innovation and research and development (R&D) as being superior alternatives to building cash or acquiring other companies. At the same time, R&D and innovation are now under a microscope as F&B companies closely eye the speed and size of return they see on these investments. Moreover, R&D leaders are now tasked with ensuring that their projects and teams are aligned with the F&B company’s vision, objectives and strategies—all while providing greater transparency. In short, R&D needs to be managed as a business.

Making this shift within R&D can be a tall order, particularly as the food and beverage industry wrestles with tense global markets, demands for improved speed to market even as budgets and headcount remain flat, and compliance with regulatory standards, including the new US Food Safety Modernization Act (FSMA). However, implementing an R&D management framework can provide the visibility and structure to facilitate this shift, as well as address some of these key F&B industry challenges in the process.

Let’s look closer at the role of the R&D management framework and how the R&D leadership within a major global food and beverage company has used it to identify opportunities and eliminate waste.

The R&D Management Framework

An R&D framework supports the demand for R&D to be managed with transparency and accountability on the same level as every other key functional area within the F&B company. Essentially it provides the necessary infrastructure for R&D executives to assess their functions — including the people, processes, systems, and data necessary to run R&D; diagnose needed changes; and build a strategic roadmap of improvement areas to better align the function with the business strategy and objectives. The beauty of a framework is that it allows organizations to step out of the day-to-day routine to look at what they do, how they do it, and how they can make it better.

In working with F&B companies, we recommend a framework that proportionally develops key dimensions of R&D excellence with balanced strategic and organizational alignment. This framework typically includes:

  • Strategy — aligning R&D goals, budgets, programs, resources, and roadmaps with the business strategy.
  • Innovation — harnessing the creative horsepower inside F&B company and externally with retailers, suppliers and partners to generate more innovative concepts.
  • Portfolio Management — establishing R&D portfolio priorities and allocating resources to deliver on the business strategy.
  • Project Management — effectively managing projects and efficiently aligning resources to deliver on the business strategy.
  • Intellectual Property Management — managing, protecting and leveraging technology and intellectual property to create value.
  • Talent Management — recruiting, developing and retaining high quality human resources and leadership.
  • Sourcing — developing, managing and leveraging performance relationships with suppliers, manufacturing and design.
  • Operations Management — effectively designing, resourcing and managing R&D operations to maximize ROI.
  • Regulatory and Compliance — enabling R&D to design regulatory compliance, quality, sustainability and product safety into products early in the product lifecycle.

Putting it in Practice

The R&D Management Framework starts with an organization assessment and benchmarks performance in each of the management functions. The output is a strategic roadmap of the improvement areas for each of these functions, detailing the process, tools, organization and metrics for each to operate successfully.

For example, we recently worked with the global R&D functional leader of an international F&B company that needed to assess all nine of its regional R&D organizations. The key objectives were to identify where to eliminate duplication, examine areas that needed to be strengthened, and determine how to build global centers of excellence.

The company completed a detailed survey and interviews based on the nine key dimensions of the recommended R&D management framework. The exercise revealed five actions R&D could make in order to better map to the company’s goals for market growth and increased profitability. First was the need to shift resources to three centers that will emerge as the new global centers of excellence. Second was the opportunity to downgrade two other R&D centers to provide support-only services. Third was to evaluate and implement a new product lifecycle management (PLM) solution to foster global collaboration and improve regulatory compliance. Fourth was strengthening the company’s intellectual property practices, and fifth was tapping the company’s global reach to set and meet diversity goals in managing its critical talent pool of product developers.

This client example demonstrates the power of using an R&D framework for identifying specific actions to better align with the overall F&B business and make tangible improvements in productivity and efficiency to maximize the innovation ROI. In this first month of 2011, now is a good time for other R&D leaders to add implementing an R&D framework to their own lists of New Year’s resolutions. F&B executives interested in taking a quiz and benchmarking their organizations against our recommended R&D Management Framework can visit http://kalypso.com/rd.

George Young is a founding partner of management consulting firm Kalypso (www.kalypso.com), which specializes in innovation, and he leads Kalypso’s Consumer Packaged Goods practice. He has more than 20 years of industry experience in executive management consulting roles. He holds four US patents and was named the 1994 Northeast Ohio Inventor of the Year.

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