Organizational designs for R&D

Abstract

Executive OverviewResearch and development is becoming increasingly business-oriented, and corporate reliance on new technology and innovation is greater than ever. How can R&D activities be organized to yield the greatest value for the enterprise? A study of 14 leading technology-intensive companies in six industries illustrates how three organizational designs are being used to manage distributed, flexible R&D organizations: (1) decentralized, (2) networked, and (3) integrated. Decentralized designs limit the role of a central R&D group; they direct R&D resources more toward products and markets rather than basic scientific activities. Networked designs push the boundaries of R&D outside the confines of a central R&D group and the firm as a whole. Integrated models use sophisticated communication linkages to tie centralized, science-based activities with the business needs of the corporation. Within the three design approaches, there are design variants, each with its positive and negative tradeoffs. We show how some designs for R&D are more effective than others and provide suggestions for how companies in search of an ideal organization design for R&D can select among possible configurations to promote adaptive, value-oriented R&D organizations.