Unit 10 TECHNOLOGY AND R&D

Objectives
After reading this unit, you should be able to:
•• highlight the importance of technology and R&D to the
competitiveness of a firm;
•• describe the features of technology and acquisition of technology;
•• understand technology search strategy and challenges of technology
audit;
•• assess the contribution of R&D activities to the competitive strategies
of the firm;
•• discuss the steps involved in developing R&D Strategies; and
•• state the reasons for limited progress made by firms in R&D Strategy.
Structure
10.1 Introduction
10.2 Technology and R&D in Organisations
10.3 Features of Technology Package
10.4 Competitive Strategy and Competitiveness
10.5 Competitive Advantage and R&D
10.6 Value Chain and Value Chain Analysis
10.7 Development of R&D Strategy
10.8 Steps Involved in Developing R&D Strategy
10.9 Progress of R&D Organizations in Strategy Development
10.10 Summary
10.11 Key Words
10.12 Self-Assessment Questions
10.13 References/Further Readings

10.1 INTRODUCTION
Technology has a strategic connotation. The technological strategy and
its proper management enhance the competitive advantage. Technology
helps in building of knowledge and skill. Technology can be studied in the
following forms. There are three types of technology. Product technology
refers to the various features of the product. The knowledge needed for
processing or manufacturing a product is the process technology. The
skills required to run a business is management of technology. Prior to
development or acquisition of technology it becomes necessary to identify
the technological gaps and technological competence to fill the gap.
An essential component of competitive strategy is recognizing the role that
Research and Development (R&D) plays in the competitive success of a firm,
and acting to ensure that technology decisions and policies contribute to the
177
Strategic Enablers firm’s competitive advantage. This unit provides a framework, which can be
used to analyze and understand the importance of technology development,
acquisition of technology, technology audit, the linkages between R&D and
competitive strategy and/or competitive advantage of a firm.

10.2 Technology and R&D in

Organisations
Technology development includes both R&D and development aspect.
Technology generation and development is often synonymous with the
term research and development (R&D). However, technology generation
involves R&D efforts while technology development involves further
stages of translating R&D efforts into marketable products, processes and
services. Recognition of a need for innovation is one of the motivations for
R&D. “Research” on existing knowledge for satisfying identified need helps
in idea generation – this is the “need push”. The other primary motivation
for R&D is to find potential applications for advances in knowledge.
“Research” on existing activity for introducing new knowledge also helps
in idea generation – this is the “technology-push”. “Development” includes
engineering (creation, design and production) and marketing (first use and
diffusion) of the generated ideas. Through the entire process it is ideas and
knowledge which are being pursued, and the process is not complete until
the new idea is converted into a marketable product or service (a hardware
or software intensive technology).
Technology is generated in R&D organizations. Goals, surroundings,
criteria and resource allocation are some of the inputs to R&D, the output
of which is technology. The input resources into R&D organizations are the
traditional inputs such as money, materials, facilities, energy, labour and
management, and the intelligence based inputs such as science, knowledge,
skills, information and existing technologies. The effectiveness of any R&D
is determined in terms of the ‘usefulness’ of the technologies it produces with
respect to the overall objectives of the corporation. The R&D or technology
generation involves many other aspects such as, monitoring and evaluation
of R&D projects, funding of R&D, training and development of resource
personnel, interactions at all levels, management policies and support,
the availability of support structures and incentives at government level,
timely collection and interpretation of technical and other information, etc.
Thus technology development should be cost effective and fulfil consumer
preferences.

10.3 Features of Technology Package

The technology package consists of three principal elements namely,
product design, production technique and management systems.
Product design may range from simple items to highly complex (e.g.,
automotive) parts. Production techniques and plant layout include
blueprints and flowcharts, formulas and recipes, process sheets, fabrication
instructions, tools and fixture designs, operational procedures and material
specifications. Management Systems consist of various plans, layouts
and technical control systems (along with related marketing and financial
178
controls). Included are plant design and layout, quality control and testing, Technology and R&D
material procurement, inventory control, equipment maintenance and repair
and machine loading techniques.
The three principal categories of technical information or know-how inherent
in technological systems are general knowledge, system-specific and firm-
specific knowledge. These various categories of knowledge may be in the
form of written materials or may be embodied in technical assistance, on-
the-job training or built into fabricating or processing equipment.
The concept of technology absorption differs from country to country, and
even from firm to firm. In India, absorption is generally considered as the
capability to reproduce or manufacture products according to the “know-
how” supplied by the licensor of technology. The need for technology
absorption at the firm level in India, and the measures being taken to
encourage absorption efforts are to be highlighted.
Adoption
Adoption of a technology is a process under which the various features
of the technology which is the subject of transfer are suitably modified,
changed or altered keeping in view the needs of the buyer.
Adaptation
Adaptation of technology is a phase that takes place after a technology has
been adopted and put to use in production activities/facilities.
Absorption
Technology is said to be absorbed if it is fully understood, so that it is in
a position to be further optimized and upgraded. Technology absorption
involves ‘know-why’ exercises, basic investigations into the product and/or
process and/or systems.
Acquisition of Technology
Technology can be acquired through purchase or developed through research
and development.
Optimization
After understanding the relevant features of technology, further exercise
in ‘removing rough edges’ through R&D and value engineering to effect
savings in the use of material and energy consumption, etc. both in product
and processes constitute ‘optimization’ of technology.
Improvement and Upgradation
Capability in technology absorption and optimization can lead to further
exercises in improving the existing products and processes by R&D efforts
of industry and other associated research organizations. This will enable
industry to meet the changes in technology of the product or processes.
Technology upgradation exercises lead to industry’s efforts in extending
its know-why capability to a higher range of products or in upscaling the
existing process/production technology or manufacturing equipment.
Technology Evaluation
Technology evaluation as a formal tool has not been applied or used in
most cases of technology acquisition in India. For exports not only product
179
Strategic Enablers specifications and quality but also manufacturing practices and facilities
would need certification and accreditation. This would require that the
entrepreneurs carefully select the technology to be adopted.
Protection of Technology
The innovated technology needs to be protected in order to protect the
competitive edge. Patent and trade marks are two such methods. Temporary
monopoly rights are provided through patents while trademark is the unique
work of the product which gives the product a distinct identity and provides
protection from similar products of a rival firm.
The above measures needs to be adopted to formulate a technological
strategy and avoid rivalry thus safeguarding the uniqueness of the product.
Technology Search Strategy
A company, big or small, may at one time or other, require transferring
technology or import of technology from outside. The process of transferring
technology either ‘in’ or ‘out’ is subject to both managerial and other resource
limitations. Technology search strategy has to be undertaken by the unit to
identify suitable technology within the enterprise or import of technology
from outside to maintain growth and profitability of the company.
The market conditions in any country are dynamic and can operate in a
very ad-hoc manner. It should be a major concern for companies to
undertake search strategy to identify suitable projects or components for
sustained growth. An effort to find a suitable new product and knowledge
of the potential licensor of that product may lead to an early decision and
successful implementation of the project.
It is useful to define why new products are required, the type of product that
is required, its stage of development and whether this product will fit the
existing skills and resources within the firm. The success of seeking a new
product will also depend on, among other factors, their technology search
strategy and whether the relevant factors are defined and employed at the
outset.
Technology audit caters to three broad areas. Firstly, the risk related to use
and acceptance of technology and the duration of relevance of a particular
technology. Secondly, it is the firm’s competence to develop or acquire the
relevant technology and the ability to commercialize the technology. Thirdly,
every technology requires research and development. The challenge with
technology audit is to identify the amount of investment that will be needed
in the development of technology.

10.4 Competitive Strategy and

Competitiveness
The conventional approach to strategy has emphasized setting goals and
developing the means to achieve them by matching the resources of the firm
(strengths and weaknesses) with opportunities and threats in the external
environment, which includes, especially, customers and competitors,
and deciding which industries, businesses, or product-market segments
to compete in. At the highest corporate level, there is the multi industry-
180
business firm, conglomerate or the diversified firm, such as Reliance Group, Technology and R&D
Tata Group, etc. At this level, corporate strategy addresses issues like as
choosing a balance among the industries or businesses chosen, and -in the
case of a firm- achieving synergy among the industries or businesses chosen.
Moving down a notch, there is the single industry-business firm such as --
cement, or the division of the multi industry-business firm such as Aditya
Birla Group. At this level, the issue of which business or industry to be in
is important and the only issue is how to enter or exit from a business or
industry. This is the level at which competitive strategy operates. Developing
a competitive strategy essentially involves building a broad framework for
a firm on how it is going to compete, what its goals should be, and what
policies will be needed to carry out those goals. Moving down to the next
level, there are the functions of the firm-- the engineering, manufacturing
and production, marketing, sales, service, personnel, human resources,
purchasing, accounting, finance, planning, etc. The term ‘functional strategy’
is widely used at this level. The important point to note is that functional
strategies must all support, reinforce, and contribute to the competitive
strategy of the firm in order for the firm to effectively compete.
In a free-market economy, the generic goal of any firm is to enhance its
competitiveness, which can be defined as the ability of a firm to get customers
to choose its product or service over competing alternatives on a sustainable
basis. Competitiveness is measured by market share trends over time, and
can be described in terms such as increasing, decreasing, or stable. There
means an important stipulation contained in the definition described above,
however, which is that competitiveness must be built on a sustainable basis.
It is possible, in the short run, for a firm to get customers to buy its products
or services over competing alternatives on an unsustainable basis by, for
example, mortgaging its assets and using the proceeds to subsidize and
lower prices, thus attracting customers until the earnings run out and the
firm collapses.

10.5 Competitive Advantage and R&D

A firm can enjoy competitive advantage in several ways. For instance, a
firm may gain competitive advantage because:
•• The price of its product is lower.
•• The quality of its product is higher.
•• Availability of its product is sooner, or more dependably just in time.
•• Customer service is better.
•• Attractiveness of its product is greater.
•• Awareness of its product is greater.
•• Other social, psychological, and ideological factors.
In practice, customers shop around amongst competitive alternatives by
setting parameters for some of these advantages and then making the final
choice on the basis of the key or critical advantage. Customers today
expect high reliability and low prices and these are mutually reinforcing
attributes that a supplier is expected to achieve just to be in the competition.
181
Strategic Enablers But these are not often enough. The winning competitor must have
both the lowest price and highest reliability or achieve one of the other
competitive advantages that customers value. A firm, which has a strong
R&D programme, can influence all these factors positively and contribute
to the competitive advantage of a firm. Competitive advantage views R&D
activities as a way of improving a process, thus reducing costs, or providing
customers with the best-of-class benefits.
Porter defined and discussed three types of generic strategies: cost
leadership, differentiation, and focus. Low cost leadership means essentially
what it says ; achieving the lowest-cost position possible in each operation
of the firm, not just manufacturing, through such means as vigorous cost
reduction programmes, strict cost and overhead controls, economies of
scale, and learning curve efficiencies. Differentiation refers to unique
feature of a product or service as perceived by a customer, which directs
the customer to prefer it over competing alternatives. A differentiating
uniqueness is typically achieved through such means as design features,
establishing a brand-name identity, or offering superior customer service.
The linkage between the earlier list of competitive advantages and Porter’s
strategies should be obvious; low-cost leadership corresponds to a potential
competitive advantage; differentiation corresponds to uniqueness in terms
of quality, sooner availability, better customer service, etc.

10.6 Value Chain and Value Chain

Analysis
Till now the unit has dealt with competitive strategy by emphasizing
customers and their ultimate role in determining competitiveness by
collectively choosing to buy the products or services of one firm over
competing alternatives. In this section the focus shifts to firms and what
firms do to achieve competitive advantage in implementing their competitive
strategies. To address this set of issues, the value chain analysis, a tool
developed by Michael E. Porter is utilized. According to Porter, the value
chain is “a systematic way of examining all the activities a firm performs
and how they interact for analyzing the sources of competitive advantage.”
The value chain can be used to organize all the activities of a firm into
categories of primary and support activities. Value Chain Activities are
processes or things that are done in a firm. In order to be identified and
categorized, they must be distinct; they must have a beginning and an
end, which distinguishes them from other activities or operations. Primary
activities constitute the processes by which firms receive inputs (in-bound
logistics), convert those inputs into outputs (operations), get those outputs
to customers (out-bound logistics), persuade customers to buy the outputs
(marketing and sales), and support customers in using the outputs (service).
Support activities are processes which provide support to the primary
activities and to each other in terms of purchasing inputs (procurement);
improving existing products or developing new products (research and
development); dealing with personnel (human resource management);
and general management, accounting, finance, and other activities which
support the entire organization rather than individual activities (firm’s
infrastructure).
182
Using the value chain and focusing on categories of activities enables one to Technology and R&D
see the firm as a collection of activities rather than as an organization chart
and administrative units such as the purchasing department, the R&D, the
manufacturing division, and the personnel department. This is important
because the value chain activities be analysed much more effectively by
using the value-chain analysis, firms can then create competitive advantage
in the following three ways:
1) By placing greater or lesser emphasis (allocation of resources,
management time and attention) on specific activities than competitors
do.
2) By performing specific activities better (better management, more
highly trained people, better-maintained equipment) or differently
(using an alternative-- presumably new or improved-- technology)
than competitors do.
3) By managing linkages among activities better than competitors do.
R&D and Competitive Advantage
On the basis of the previous discussion, the choice of which value chain
activity should a firm focus on should be governed by the competitive
advantage(s) that the firm is pursuing in implementing its competitive
strategy. In other words, if low cost-low price is the strategy, then low-cost
technologies should be used, consistent with maintaining acceptable levels
of quality, availability, attractiveness, and so forth. (Obviously, technology
choice interacts with other strategic variables. For example, low unit costs
are often achieved through economies of scale which in the past have
depended on mass-production technologies and large customer markets
demanding standardized products and services.) Similarly, if differentiation
is the strategy, then activities such as R&D which maximize the specific
competitive advantage in terms of providing products capable of higher
performance, innovative products, etc, should be used, consistent with the
price premium customers are willing to pay for the uniqueness.
Activity 1
Think of an organization of your choice and apply the value chain analysis by
categorizing the organization into primary and secondary support activities.
........................................................................................................................
........................................................................................................................
........................................................................................................................
........................................................................................................................
........................................................................................................................

10.7 Development of R&D Strategy

One standard definition of R&D states that research is an undirected basic
science or a directed or applied science where development in research can
result in innovative products and processes from either of these sources.
Research differs from development of a product in that it is an exploration
of ideas rather than a tangible output to be marketed. There is no guarantee
that a new idea will be successful. R&D must provide a high degree of
183
Strategic Enablers insurance so that future gaps can be closed to meet corporate goals, such
as profitability. Therefore, many innovations are necessary and should be
allowed to flourish to assure the achievement of these goals. Invention is
an idea that must be converted to practice, i.e., one must show that the
technical idea is feasible and can be demonstrated. The payoff of a timely
invention can make a firm gain a market edge by lowering price, even with
a strategy that places it below production cost. The belief is that increased
sales would ensure future cost reductions from increased volume of output
due to increased sales.
The selection of R&D projects is the most important of all the R&D
management activities. Unless an R&D department is working on the right
R&D projects, all its efforts could come to zero. Consequently, most R&D
organizations spend a great deal of time trying to select the right projects.
What is rarely seen in these efforts to select the right R&D projects, however,
is the value of having an overall R&D strategy before selecting R&D
projects. A R&D strategy is important because it helps a R&D organization
select projects in terms of a broader outlook rather than just bit by bit. When
a R&D department has an overall strategy and has some strategic goals, it
will more likely select projects that are in tune with its technical strengths, the
capabilities of the company, and the demands of the marketplace. In order to
develop a sound R&D strategy, certain prerequisites must be in place.
Pre-conditions for Effective Development of an R&D Strategy
In order to develop a R&D strategy, a R&D organization first must make
sure that certain conditions are in place. There are seven pre-requisites for
developing a R&D strategy:
1) A belief that a R&D strategy can solve problems.
2) Creation of a planning staff within a large R&D department or the
establishment of a strong commitment by the R&D line managers
in a small R&D organisation to devote enough effort to doing R&D
strategic planning.
3) A method of linking R&D strategic planning to R&D operations.
4) A mode of getting strategic marketing done.
5) The active support from senior management.
6) Prior efforts to develop a R&D strategy.
7) A series of substantial and solid efforts that produce tangible results
on their own, but allow R&D people to get better at R&D strategic
planning.

10.8 Steps Involved in Developing R&D

Strategy
1) Belief that R&D Strategy solves Problems
Although the idea of developing a R&D strategy may be accepted,
usually development of an R&D strategy will not come about unless
a R&D strategy is used for solving a problem; which means, the effort
that goes into developing a R&D and the conflicts that may occur
about how R&D resources should be allocated are so great that unless
184
 a R&D organization has a clear R&D strategy it rarely will make the Technology and R&D
effort or face the conflicts. On the whole, R&D organizations require
a strategy when they wish to use new technologies for future products.
If, on the other hand, a R&D organization relies solely on utilizing
existing technology to develop new products, then it may not need a
R&D strategy.
Usually, R&D managers recognize that a R&D strategy will help them
when they have doubts about how R&D resources are being used.
For instance, the R&D managers of a FMCG company perceived the
need for R&D strategy when they were forced to consolidate all R&D
on coffee that previously was carried out in several laboratories. To
accomplish this task, they recognized that they had to have a R&D
strategy to prioritise and coordinate and all R&D being done on
coffee. Later they perceived the need to develop a R&D strategy
related to R&D being done on beverages in a few laboratories. In
short, although developing a R&D strategy is a nice idea, this idea
will not be put into practice unless R&D managers perceive that a
R&D strategy can solve a problem.
2) Creating Planning Staff within a R&D Organization
Creating a planning staff or establishing a strong commitment by the
R&D managers in a small R&D organization to devote enough effort
to R&D strategic planning is necessary. Although line managers within
a large R&D organization by themselves can develop a R&D strategy,
in practice, if there is no planning staff to facilitate the development
of a R&D strategy, there will never be a R&D strategy.
Although some companies have a R&D strategy, it was not easy
to develop one. The R&D planners normally run into two types of
problems: analytical and organizational problems. The analytical
problems surface when the R&D planners first attempt to facilitate the
development of a R&D strategy. They find that there is no accepted
methodology for developing a R&D strategy. Although R&D
managers in some companies, consultants, and academicians all had
their opinions on what a R&D strategy should be and on how it should
be formulated, almost none of them have a complete picture of the
process. In addition, the opinions of these various R&D managers,
consultants, and academicians often were in conflict with each other
or were irreconcilable. Thus, the R&D planners have to develop their
own methodology. In addition, R&D planners also find that members
of the R&D staff are generally not interested in developing a R&D
strategy. Because of this, R&D planners have to spend majority of
their time during the first few years persuading the R&D staff to do
R&D strategic planning and then educating them with regard to how
a R&D strategy can be developed.
The experiences of these R&D planners are typical. Someone usually
has to develop the methodology to be used in doing R&D strategic
planning. Someone also has to be the champion of R&D strategic
planning, or it will not get done. In theory, R&D managers in a large
R&D organization can handle these responsibilities. In practice, R&D
185
Strategic Enablers line managers in a large R&D organization normally have so many
other responsibilities that they neglect R&D strategic planning. Thus,
a R&D planning group usually proves to be necessary to getting R&D
strategic planning done.
In a small R&D organization, on the other hand, R&D line managers
are the only ones who can develop an R&D strategy because staff
positions rarely exist. Thus, to get R&D strategic planning done,
the R&D line managers in a small R&D organization must add
the responsibilities of an R&D planning group to their normal
responsibilities. These R&D managers usually will not be able to
devote much time to developing a planning methodology. On the other
hand, because they have responsibility for managing the R&D groups,
if the R&D managers in a small R&D organization do develop an
R&D strategy, they should have less difficulty in getting this strategy
accepted and implemented. The key to planning in either situation is
that the doers, not the planners, must do the planning. The role of the
planners is to facilitate the planning process, which is an important,
although seldom appreciated, role.
3) Connecting R&D Strategic Planning to R&D Operations
To get a R&D staff to develop a R&D strategy, R&D planners (or R&D
line managers) have to find ways to relate R&D strategic planning to
R&D operations. This connection between R&D strategic planning
and R&D operations has two aspects.
Members of the R&D staff have to be able to see that their interests
are served through developing a R&D strategy. Thus, R&D planners
must find a mechanism that involves R&D strategic planning and at
the same time the R&D staff. One of the primary purposes of such
forums is to get these R&D people to talk with each other. This cross
disciplinary forum can turn out to be a useful mechanism not only
for improving communication, but also for getting R&D strategic
planning accepted. Once involved in interdisciplinary forum, these
R&D people can get interested in technical activities as well.
The R&D projects that are actually selected and the R&D strategy need
to be meaningful. In other words, a R&D strategy is not meaningful
if it does not influence which R&D projects are selected and carried
out. A R&D organization in a household products company addressed
viewing the development of a R&D strategy as involving two phases.
In the first phase the senior R&D managers defined the overall
direction of the R&D strategy. During the second phase, middle-level
R&D managers defined the R&D strategy through the projects they
selected and carried out.
4) Linking R&D Efforts/Strategy to Customers’ Needs
Although it is important for a R&D organization to link its strategic
operations, this is not enough. For a R&D organization’s strategic
plans, this strategic plan must be clearly linked to customers’ future
needs. Therefore, besides doing R&D strategic planning, a R&D
organization must also get marketing done in its company. Two of the
hard questions that must be addressed in a strategic marketing are:
186
 i) Who will the company’s customers be in the future? Technology and R&D

ii) What will those customers need in the future?

In answering these questions well, one must understand economic,
regulatory, geographic, and social trends and opportunities.
5) Active Support of the Senior Management
To get its R&D strategy integrated with business plans, an R&D
organization must have the active support of senior business
managers. To gain the active support of senior business managers,
an R&D organization must explain the value of R&D in business
terms- for example, with regard to how R&D will help the company
a) satisfy customers’ needs, b) cut costs, c) expand into new markets,
or d) minimize distribution problems.
Those R&D organizations that have been able to gain the active
support of senior business managers for their R&D strategy were
helped by organizational factors. For example, in a chemical
company the R&D organization was able to gain the active support
of senior business managers because the chief executive officer is
one of the major proponents of R&D in the company. As opposed
to most of the other senior business managers in this company, this
chief executive previously managed the division of the company that
sells to industrial customers. Because the customers of this division
are more knowledgeable about what R&D can contribute, this CEO
realized how valuable R&D can be and thus has not only supported
R&D strategic planning but also has actually encouraged the R&D
organization to do it.
6) In another company, a key factor that allowed the R&D organization
to first gain and then maintain the support of senior business managers
was leadership among senior business managers. Stability and
continuity in leadership was important because it took a few years for
the senior business managers of having a R&D strategy. By learning
year after year what the R&D was trying to accomplish with a R&D
strategy, the senior management was able to appreciate the benefits.
The R&D department, in turn, could build progress that it had made
with these senior business managers in previous years.
The key to taking each of the steps discussed above is picking a
problem that the R&D organization is facing that also calls for a more
systematic analysis of the use of R&D resources. The value of carrying
out a series of concrete steps is that together they serve as stepping-
stones to improve R&D strategic planning. Moreover, because they
produce tangible results along the way, they also help elicit support
for the R&D strategic planning process.
7) One way in which a R&D organization can maintain the vitality of
planning process is through carrying out a series of concrete efforts
that produce tangible results on their own, but also allow R&D
people to improve planning expertise. A second method involves
benchmarking studies in which the R&D people compare the
strengths and weaknesses of their company’s technologies in relation
187
Strategic Enablers to the strengths and weaknesses of their competitors’ technologies.
The R&D people can gain two things through this effort: 1) they gain
a much better understanding of how their company stands in relation
to competitors and 2) they learn how to analyze their technologies.
For example, they learn how to think more precisely about how their
technical work could improve the performance of the company’s
products. A third effort that the R&D organization can consider
involves using the techniques of portfolio management to evaluate
the potential and payoffs of various technologies.

10.9 Progress of R&D Organizations in

Strategy Development
Few R&D organizations in India have a R&D strategy or have established
the conditions required for developing a R&D strategy. For example, few
R&D organisations have perceived a R&D strategy as a way to solve a
problem. Many large R&D organisations do not have a R&D planning
group, and organizations do not do R&D strategic planning. Also, few
R&D organisations found a way to get strategic marketing done. Finally, in
most companies R&D strategic planning does not have the active support
of senior management.
In addition, if one looks closely at the strategic goals of those R&D that
have them, one also finds that many of these goals were arrived analytically.
That is, many of the strategic goals of such R&D organisations have
are intuitively obvious. For example, most of the strategic goals that
organizations have formulated are similar and quite predictable - 1) to ward
out fundamental threats to the company’s businesses, 2) to comply with
government regulations.
Few R&D organizations have conducted benchmarking their technologies
to competitors’ technologies. Few R&D organizations carry out technology
forecasting studies aimed at understanding 1) what technological changes
may be occurring in the next 5 to 10 years and 2) what those technological
changes may mean. Even those R&D organizations that have made
significant progress in an R&D strategy admit that they still have much to
do to improve the planning process. For example, the R&D organization
may have a R&D strategy, but the top management does not accept this
R&D strategy. Many R&D departments develop a R&D strategy, but they
do not find a way to integrate their R&D strategy with the marketing and
manufacturing strategies in the companies. In addition, the R&D strategy
can be altered at the whim of anyone who at a later date becomes involved
in the planning process without necessarily informing any one else about
the changes in the plans.
In summary, some R&D organizations have made significant progress in
developing an R&D strategy. Most R&D organizations, however, have
barely started developing an R&D strategy. The immediate challenge facing
most R&D organizations, therefore, has to do with first establishing the
pre-conditions required for developing an R&D strategy. After doing this,
they will then be able to meaningfully deal with issues as to what the R&D
priorities should be and how R&D resources should be allocated.
188
Activity 2 Technology and R&D

Give examples of any five firms (in the Indian context), which have adopted
R&D strategy as a part of their competitive strategy.
........................................................................................................................
........................................................................................................................
........................................................................................................................
........................................................................................................................
......................................................................................................................

10.10 SUMMARY
An essential component of competitive strategy is recognizing the role
that R&D plays in the competitive success of a firm, and acting to ensure
that technology decisions and policies contribute to the firm’s competitive
advantage. A firm, which has a strong R&D programme, can influence all
these factors positively and contribute to the competitive advantage of a
firm. Competitive advantage views R&D activities as a way of improving a
process, thus reducing costs, or providing customers with the best-of-class
benefit.
The selection of R&D projects is the most important of all the R&D
management activities. Unless an R&D department is working on the
right R&D projects, all its efforts could come to naught. A R&D strategy
is important because it helps an R&D organization select projects in terms
of a broader outlook rather than just bit by bit. When a R&D department
has an overall strategy and has some strategic goals, it will more likely
select projects that are in tune with its technical strengths, the capabilities
of the company, and the demands of the marketplace. In order to develop
a R&D strategy, certain pre-requisites must be in place such as belief in
R&D strategy as a tool to solve problems, establishing a dedicated strategic
planning group within the R&D department and the top management’s
commitment to the R&D strategy.
Some companies in India have made significant progress in developing a
R&D strategy. Most companies, however, have barely started developing a
R&D strategy. The immediate challenge facing most firms, therefore, has
to do with first establishing the pre-conditions required for developing an
R&D strategy. After doing this, they will then be able to meaningfully deal
with issues as to what the R&D priorities should be and how R&D resources
should be allocated.

10.11 KEY WORDS

Value Chain: It is a systematic way of examining all the activities of a firm
performs and how they interact for analysing the sources of competitive
advantage.
Competitive Advantage: Competitive advantage refers to factors that
allow a company to produce goods or services better or more cheaply than
its rivals.

189
Strategic Enablers R&D Strategy: Includes activities that companies undertake to innovate
and introduce new products and services. It is often the first stage in the
development process.

10.12 Self-Assessment Questions

1. Explain the importance of R&D strategy in enhancing the
competitiveness of a firm.
2. Describe the features of technology package.
3. How does R&D Strategy support the Porter’s generic competitive
strategies?
4. Discuss the various steps involved in development of R&D strategy.
5. Give reasons for R&D strategies not taking root in the Indian context.

10.13 REFERENCES/FURTHER READINGS

Allio, Robert J. & Desmond Sheehan (1984), “Allocating R & D Research
Effectively,” Research Management, (July-Aug.), 14-20.
Bachman, Paul W. (1972), “The Value of R&D in Relation to Company
Profits,” Research Management,15, (May),58-63.
Bitando, Domenic and Alan L. Frohman (1981), “Linking Technological
and Business Planning,” Research Management, (Nov.), 19-23.
Boer, John Seely (1991), “Research that Reinvents the Corporation,”
Harvard Business Review, (Jan-Feb), 102-111.
Chester, Arthur N. (1994), “Aligning Technology with Business Strategy,”
Research Technology Management, (Jan-Feb), 25-32.
Cohen. W. M. And D.A. Levinthal (1989), “Innovation and Learning: The
Two Faces of R&D,” Economic Journal.
Menke, Michael M. (1994), “Improving R&D Decisions and Execution,
“Research Technology Management, (Sept-Oct), 25-32.
Mitchell, Graham R. And William F. Hamilton (1988), “Managing R&D as
a Strategic Option,’’ Research Technology Management, (May-June), 15-
22.
Porter, E. Michael, (1985), Competitive Advantage—Creating and
Sustaining Superior Performance, The Free Press. Option,” Research
Technology Management, (May-June), 15-22.
Porter, E. Michael. (1985). Competitive Advantage – Creating and
Sustaining Superior Performance. The free press.

190