I.1. Managing R&D and innovation: current and critical issues

The current phase is marked by the increasingly strategic nature of innovation, particularly technological innovation, which has become central for developing not only competitive advantage of the company but also a crucial condition for the survival of businesses. Companies must continuously innovate, often and more quickly. Innovation results in new products that are completely different from the previous ones, and allows to offer a wide range of products to customers. One of the main reasons to innovate is to meet the expectations of customer renewal and to cope with the rapid outdating of products due to technological progress and competitors’ strategies. It is important to both innovate more quickly and consume less resources so as to ensure certain profitability of innovations despite the simultaneous rise of design prices and the growing risk of technological obsolescence. Chrono-competition and the time to market have become key dimensions today in business competitiveness, which strongly influence innovation process management.

In industries based on science and technology, where product and process innovations are technological in nature, the R&D function is a major player in the innovation process. In the current context marked by competition through intensive innovation [LEM 06], R&D is thus placed very high on the agenda of science and technology firms.

Indeed, the purpose of R&D is to develop new scientific and technical knowledge and to use it in the design of technological innovations, which may consist of new processes, products or services that bring added value compared to existing solutions and offers. R&D enables the opening of research avenues and for one to pursue them internally for harnessing the available product knowledge; it comes up with new technical solutions; proposes company product and process improvements and technically assures and coordinates their development. This function can be distributed throughout the company or be incorporated in a specific area. In the first case, it is led by different experts, engineers and scientists who work in the production services or in technical support. In the second case, the company creates a specialized unit dedicated entirely to R&D activities, which consists of diverse specialist teams. In any case, R&D plays a major role in not only driving but also initiating technological innovation, and, as such, it holds a privileged position in strategy definition, alongside marketing, production, procurement and so on. In 2015, companies in France invested 31.8 billion euros and employed 251,444 people in the equivalent full-time in R&D.

While innovation has become a key competitive advantage in a number of business activity sectors, the role of R&D in innovation processes varies considerably depending on the sector: people services, the world of fashion and clothing, the motor industry, the aeronautical industry and so on. For high-technology industries, R&D is essential in the innovation process and it can be considered as a standard support function. Similarly, in the domains of health and biotechnology, the spatial domain, electronics, the semi-conductor industry, informatics or communication technologies, R&D is the core of a company and is directly linked to its ability to renew business proposals and conduct its strategic activities. In industries of lower technological intensity, R&D is less directly related to the actual capacity to produce a business proposal, but it contributes to competitiveness by bringing differentiation elements/unique selling points to the products in order to compete nationally and internationally¹.

However, although technological innovation and R&D functions are more strategic than ever, R&D is losing stability at present due to difficulties associated with the acceleration of innovation processes in a changing and openly competitive world. R&D finds itself in a difficult situation and is more and more questioned by managers and company directors. How does one define and measure the performance and therefore profitability (particularly for the shareholders) of investments in R&D? Could it be possible to increase efficiency and effectiveness by streamlining working methods and, consequently, enable a reduction in R&D expenditure while increasing their contribution to innovation processes? Is it really necessary to keep the R&D centers on national territory when the markets and strategies are becoming international and when localizing R&D in the “emerging” countries combines the advantages of proximity to the growth markets and low wage costs of scientists and well-trained R&D engineers? Do we really need to continue the R&D activities ourselves in-house, despite recent trends toward open innovation and offshoring, which aims to capitalize on resources in terms of ideas, knowledge and skills from a myriad of very different players (start-ups, customers, experts, consultants, etc.) everywhere in the world? R&D is trapped in these critical and global changes in the governance models and is in permanent search for new organizational arrangements allowing us to tackle the diverse managerial issues and handle the ever-changing professional identities.

However, management, both as a discipline and as a set of practices, is almost helpless when it comes to managing activities characterized by uncertainty, the creativity issues, specifics of the professionals that have more loyalty and attachment toward their profession than their organization and so on. The management techniques developed to manage and control the more repetitive tasks of production and operation often appear inadequate in the context of R&D. It is thus necessary to have specific knowledge on the management methods within these organizations, the thorough apprehension of their activities and the understanding of the specificity of R&D professionals.

Although all of the political, economic and academic players agree to recognize the fundamental role of the R&D function in the innovation process and in the growth of the company, more knowledge needs to be produced to better understand the complex processes and organizational issues that lie behind R&D activities.

This ambition was a starting point that motivated the creation of this book. All the authors are management scholars and practitioners who have similar interests for the world of R&D and technological innovation. For many years, they have been sharing the results of their research and management experiences both between themselves and with the senior management of companies (technical and R&D managers, experts, scientific directors, HR) guiding them in their strategic choices and managerial queries. The authors intended to spread this accumulated knowledge to a wider audience and to raise some questions that could be considered “off the radar”.

I.2. A book on R&D management of large industrial enterprises

This book seeks to reveal the critical issues and practices of modern R&D management in companies and addresses its current numerous challenges and confusions. It is a broad subject and we had to make some choices.

First, we must ensure that the central subject of this book is R&D and its management methods, analyzed in combination with the current issues in innovation. It is not a book on innovation management per se. The innovations addressed in the following chapters are mostly technological, which is only one type of innovation among many (marketing, commercial, organizational, managerial, etc.), and even with regard to technological innovations, we do not cover all the questions related to their management. Thus, the financing of innovation, market analysis, the marketing of innovative products and spin-offs do not fall within the scope of this book, which focuses on R&D management as one of the major contributors to the process of innovation.

In terms of the companies that we have taken into consideration, the focus has been placed principally on large industrial companies. There are, however, three limitations. The first is the exclusion of academic research activities carried out in institutions of higher education and research centers (universities, Grandes Écoles, engineering colleges, research laboratories, research foundations), whether public or private. We focus on the R&D of companies that design, produce and market goods and services destined for customers in competitive markets, both oligopolistic and monopolistic. This being said, we consider the connection between the R&D of these companies and the world of academic research, often referred to as science–industry links.

The second limitation of our analysis concerns the size of the companies that we have included in our study. Indeed, we focus on large and often multinational corporations as they conduct the majority of R&D activities, as evident from statistics. Data from the French Ministry of Higher Education and Research shows how in 2014 companies with less than 500 employees (therefore including companies of a significant size) represent 94% of French companies and only 41% of the R&D workforce and 33% of R&D expenditure. Only 6% of the total number of companies have more than 500 employees, but they provide 67% of the total expenditure on R&D. Within these, companies with more than 5,000 employees are very few (0% in the statistics due to rounding!), yet they account for 25% of the workforce and constitute 31% of R&D expenditure.

The choice to focus on large businesses rather than on more modest-sized enterprises is also because R&D units are created first in large organizations. These companies can therefore invest large amounts in activities with uncertain and often delayed profitability, which is more difficult for smaller businesses that have fewer resources available (especially before they could benefit from supportive instruments such as start-up funds, business angels and venture capital). These are also the companies that have already experienced difficulties with R&D management and have come up with possible solutions. Therefore, these companies build on practices that are long-standing, sophisticated, detailed and formalized.

As a result, they have also been analyzed more by the researchers and consultants and are now part of an extensive and stable knowledge base.

These data do not mean that there is no R&D in small and medium-sized enterprises (SMEs). Indeed, even very small enterprises can conduct R&D activities and experience difficulty in both the daily management of such activities and the implementation of creative policies. The impressive development of start-ups in recent years has really shifted the focus toward small, technology-intensive companies basing their innovation on R&D capacities. In this book, although we choose not to focus on the latter, we will still deal with start-ups and their specific characteristics. It is also worth noting that large and small companies have a reciprocal interest and mutual inspiration practices, even though the latter will inevitably be somewhat different due to the disparity in their size, structure, economic and financial model, the available resources and so on.

The third and final limitation of this study involves the choice we made to concentrate on large companies that operate in the industrial sector. Indeed, even if a vibrant R&D can exist in other sectors (especially in business services), the major design activities are concentrated in the industrial sector (or industrial sectors considering their great diversity)². We must note, however, how rankings and boundaries become blurred and penetrable. The field of IT and communications is emblematic of this trend as it crosses the secondary and tertiary sectors, designing, using and building on infrastructure, products and services. We can observe this trend, to a lesser degree, in many other sectors. The motor industry, for example, demonstrates the fact that at present, in addition to manufactured and marketed products, a variety of services are offered to clients (communication technologies, banking, insurance, after-sales service, etc.). If this book is biased by focusing on industry (motor, chemical, pharmaceutical, electronics, IT and communications, energy, etc.), then it is worth mentioning that the boundaries of the latter are already and will be even more transparent over time.

Within this defined framework, we have tried, however, to deal with the subject considering the entire array of activities, which are covered by the acronym and which vary dramatically based on whether it is research or development. We also tried to include the analysis of diverse activity sectors and technological fields. The boundaries between what could be considered as R&D (and what could not) are blurred and depend heavily on the choices that companies make in terms of their internal organization. This is reflected in the work of Frascati, prepared by the OECD, which sets out the criteria to decide what statisticians should consider being within the perimeter of R&D. It stipulates that R&D (experimental research and development) encompasses work that is done systematically in an effort to increase the knowledge base, including knowledge of people, knowledge of culture and knowledge of society, as well as the potential interest of this knowledge base for new uses. This excludes from the scope of R&D other activities such as the production and marketing of innovations, as well as scientific and technical activities that differ from R&D despite their close connection, such as education, training or patent-related legal work.

Thus, in our analysis, we provide a vision of R&D in its entirety and its diversity, by trying to avoid the pitfall that could be observed in a number of research works and which treat R&D as a homogeneous entity. Therefore, we consider that business logic, professional identities, the purpose and nature of business activities as well as the types of management could vary significantly between research and development. We believe that both have different meanings and practices depending on the scientific domain (exact and natural sciences, technological and engineering sciences, medical sciences, agricultural sciences, etc.).

I.3. A descriptive and analytical book aimed at a wide audience

As the objective of this study is challenged by numerous issues and boundaries, it is helpful to define the context in which we will situate our analysis. Without claiming to cover the full range of practices, we wanted to capture the reality and the diversity of the latter. This diversity relates both, as was noted earlier, to the variety of activities regrouped under the terms R&D and innovation, and to the variety of business sectors. It relates also to the specific characteristics in each type of business, which leads to choices in terms of governance, structure, individual and team management and so on, which could differ even within the same business sector. We will illustrate our theoretical and practical developments through testimonies and case studies. The content is based on our knowledge, available public data and collaborative research carried out in various R&D organizations.

These illustrative examples will sometimes be accompanied by critical comments: all practices, even those that are commonly used and very far-reaching, may not necessarily need to be applied and promoted. On the one hand, certain practices have shown their limitations and we will discuss these, requiring the invention of new R&D management methods. On the other hand, we are convinced of the need to contextualize company responses to the difficulties and challenges of R&D and innovation management. Not only do the problems but also the contexts in which these problems occur differ from one company to another – this requires a varied set of answers adapted to each particular situation. Therefore, the objective of this book is not to propose predefined solutions, but rather analytical frameworks and examples, which could serve as inspiration and should not be simply copy-pasted.

This book – Innovation, Research and Development Management – will be useful for all those willing to deepen their knowledge of the subject, whether in the academic or professional arena.

In the academic sphere, this book is aimed at students as well as lecturers and researchers. We hope that Master’s and Doctorate students in universities as well as in business and engineering schools will find the content interesting and useful. This book could also be of particular interest to those who consider pursuing a career in R&D: R&D engineers, managers, project managers, HR professionals working within R&D units and so on. Finally, this book is also aimed at lecturers and researchers who wish to have an overview of the field through specialized articles on the major key topics of R&D management and technological innovation. Taking into account the issues developed in this book, it may also be of interest to researchers working on similar subjects, such as the management of creative activities and project management.

Furthermore, this book could be useful to professionals, whether they are R&D researchers and engineers, R&D managers (whether in operations or heads of specific R&D programs) or managers of various support functions working with R&D (HR, accounting and finance, etc.). It provides the essentials on the specific characteristics of R&D, the challenges and difficulties of its management, examples of practices and critical issues to be taken into consideration.

At the intersection of public and academic audiences, this book can serve as training material destined for employees and R&D managers, as only few studies have been published so far in this area.

Also, because modern companies are operating in a knowledge-based economy, this book could be of potential interest to all those concerned with the management methods of knowledge-intensive organizations that employ knowledge workers.

Finally, we hope that it will attract the attention of public policy makers who, being anxious to promote and accelerate innovation as a major condition of national competitiveness (through instruments such as competitive clusters and future investments), seek to better understand the innovation process and the R&D activities.

I.4. Structure of the book

This book contains six chapters offering a wide overview of the key aspects of R&D management, even if we are not claiming to be exhaustive. Indeed, we have not devoted any chapter to R&D information systems, the management of industrial property or the subject of the CSR (corporate social responsibility) in R&D.

Chapter 1 concerns the environment and strategy and lays the foundation. It focuses especially on the emerging issues in R&D that are highly influenced by globalization. We learn that ongoing transformations are instigated by a combination of factors: increased technological changes, pressures exerted by the market and the evolution of R&D strategies. The result of these influences is a strong tension between the need for innovation and the need to control costs in the context of R&D globalization. This chapter also shows how influential geostrategic logics in R&D (traditionally a Western domination) are currently on the way to being reversed. We will go into this question in greater depth by studying the problems that result from R&D internationalization in major multinational companies.

Chapter 2 focuses on the specific characteristics and the transformations in R&D work. Although the latter may be distinguishable from the activities of the other major functions of the company, it is influenced by profound changes that have emerged since the 1990s and that are far from being terminated. This chapter identifies both the factors and consequences of these transformations. Therefore, beyond the developments in R&D work that came along with scientific progress and technical expertise, competition through innovation (which has currently become the golden rule in many technology sectors) influences R&D activities. More precisely, it is a combination of events that modify and destabilize research and development work, including the rise of project management, pressure to reduce the time-to-market ratios, rationalization of the innovation process, user-centered design, open innovation, internationalization of R&D activities and digital revolution. This, in turn, has an important impact on the positioning of R&D in the organization, its role in strategic decision-making, the objectives and expectations from this function, the time frame of the work, the degree of autonomy attributed to the R&D researchers and engineers, the working conditions, the competencies required in R&D and so on. This chapter raises a number of questions about the future of R&D’s work and, in addition, the future of the R&D function in modern organizations.

Chapter 3 focuses on rationalization strategies in R&D and their effects on creativity, while highlighting the notion of slack. It outlines the main factors involved in innovation and the creative process at the heart of R&D organizations. Then, the chapter describes the different types of slack reduction strategies and how rationalization of R&D resources (human, financial, time, space) affects the creativity of professionals and teams. With drawing on the case of R&D organizations being the subject of important rationalizations over time, this chapter highlights the elements involved (procedural, relational, emotional, cognitive, etc.) and how these elements influence the creative process (generation of ideas, sharing ideas, intrinsic motivation) of individuals and teams.

Chapter 4 deals with current practices and challenges in the area of human resources management in R&D. In the new millennium, management of R&D professionals has been the subject of ever-increasing interest, both empirically – with R&D organizations being engaged in important projects in the field of human resources management (HRM) – and theoretically. This chapter focuses on the analysis of HRM practices in R&D and their evolution in relation to major changes in work organization. The objective is thus twofold. First, we highlight these practices, their emergence and their concrete modalities. Second, our objective is to question their functionality as follows. What are the advantages and limitations of these new HRM and R&D practices? Do they meet the constraints and the challenges that R&D organizations are facing today? What are the points of vigilance where it is important to engage R&D professionals whether they are technical managers or HR managers?

Chapter 5 focuses on collective expertise, in a way that can be seen as contrasting to Chapter 4. In fact, although the majority of studies consider knowledge as an individual attribute, here, we explore the collective aspects of knowledge and its different forms of structuring. This chapter first presents transversal expertise communities (troubleshooting teams, research projects, panels of experts) and discusses the prospects and challenges for a collective endeavor by R&D professionals within these communities. The willingness to pass across the boundaries (of expertise domains, functions, departments, etc.) is currently a major preoccupation of large corporations. However, we emphasize that too much of such a multidisciplinary approach may bring the risk to the preservation and development of specialized knowledge and result in an “organizational forgetting” of the crucial information. To address this risk, we draw attention to the need to analyze and manage the dynamics of knowledge and the interplay of roles of R&D professionals working within the same expertise domain. Finally, we highlight the importance for companies to distinguish as well as structure these two forms of organizational expertise (transversal and domain-specific).

The last chapter, Chapter 6, describes and questions both the notion of R&D performance and its governance. It is a tricky subject for many reasons. Some are linked to the “status” of R&D and are similar to various support functions: these include difficulties regarding performance measurement and the adjustment between the resources used and the economic performance. Other factors are intrinsic to the field of R&D and innovation: this applies mostly to the particular nature of innovation processes and to the uncertainty in the research activity results. However, the financial crisis has deepened the focus on the control of R&D performance and, consequently, specialists have attempted to find both quantitative and qualitative indicators of such performance. This chapter presents and analyzes the different existing management performance practices, while proposing guidelines to choose the correct performance indicators in the area of R&D.

The book concludes with an abundant bibliography that guides interested readers through a number of relevant and recent references in the field of R&D management and technological innovation. Finally, this is followed by an index identifying the key concepts discussed in the various chapters, as well as the names of the companies that serve as examples throughout.