…are you in danger that your thinking will get boxed in?
Or, to put it a bit differently, consider the old saying:
- “A man who chops his own wood is warmed twice.”
In part, these issues come to mind because of the recent attention that has been showered on the justifiably-heralded new Boeing 787 Dreamliner, which embraced a paradigm-busting approach that included the outsourcing of many aspects of the design and R&D of the new plane.
More specifically, Boeing officials estimate that the new process cut “one-third to one-half of the time out, and perhaps 50 percent out of development cost versus historical methods.” A key part of their strategy involved having Boeing subcontractors around the world take responsibility for the development and design of many components that, in the past, would have been handled by Boeing internally.
And, more generally, there has been a flurry of recent reports that underscore that Boeing is not alone in outsourcing and offshoring its R&D. For example,
- Global executives surveyed by the Economist Intelligence Unit (EIU) predicted that their firms would markedly increase the proportion of R&D that will be carried out by external partners and overseas. Already, 65% of the 300 surveyed reported that their organizations already were performing at least some of their R&D offshore…and 84% were expecting that they would be by 2010, according to findings which are presented in the EIU’s “Sharing the Idea – The Emergence of Global Innovation Networks” report.
- A report on “Next Generation Offshoring -The Globalization of Innovation” from the Fuqua School of Business at Duke and the Booz Allen Hamilton consulting firm found that, from 2005 to 2006, offshoring of product-development projects increased by close to 50 percent from an already significant base, and, over the next eighteen to thirty-six months, growth in offshoring of product-development projects is forecast to increase by 65 percent for R&D and by more than 80 percent for engineering services and product-design projects.
- The “Outsourcing of R&D Becomes More Strategic” cover story in the June issue of R&D Magazine presented data from its own readership surveys that further documented the continuing growth in the outsourcing of R&D, as well as providing an excellent discussion of findings of the Booz-Fuqua and EIU reports.
In combination, these reports provide valuable insights into the compelling factors that are driving the growth in the outsourcing and offshoring of R&D…and they give us glimpses into the new management challenges that these trends are triggering.
And, some of the most important of these new challenges stem from the distinctively innovative nature of R&D that makes the management of the outsourcing of R&D much more complex and challenging than the management of the outsourcing of more prosaic functions like payroll, or finance, or accounting, or procurement.
There is an unpredictability that is inherent to R&D, and there also are subtle, not-always-explicit benefits that accrue from R&D that often are hard to quantify…and that can be hard to “manage.”
Which brings to mind a comment made many years ago by the members of the team that were managing the renowned Fermilab research laboratory just outside of Chicago.
In the course of a long and fascinating conversation about reasons behind Fermilab’s success as a research center, they told me how its founder and its first director, Robert R. Wilson, also had played a central role in the design of the facility…and that he particularly had made sure that a number of features were built into the building that would facilitate serendipitous interaction among the large team of researchers who would be using the facility.
For example, Wilson insisted on an “open design” for the first floor of the building that made it possible for a person waiting at the main elevators to be able to see anyone else on the first floor…and vice versa.
The idea was that this improved visibility would boost the opportunities for the sharing and cross-fertilization of ideas among the scientists.
And it is precisely these types of small, subtle aspects of the R&D process that seem likely to play key roles in helping an organization to be “warmed twice” from its investments in innovation efforts.
Already, you can see an array of sophisticated online tools and strategies that address the “subtle” R&D challenges that have begun to emerge…and it seems likely that an organization’s ability to “manage” these challenges effectively will be a critical factor for producing the unexpected sparks that often ignite the “hot” new ideas and products needed to succeed in today’s hyper-competitive business arena.
For those who are interested, here is a link to an excellent article in CIO Insight, Boeing: New Jet, New Way of Doing Business by Edward Cone, which provides a detailed, in-depth discussion of Boeing’s new approach to R&D, with a special emphasis on the underlying computer systems that played a crucial role.
