A recent article in the September issue of the Journal of Product Innovation Management provides some perspectives on the integration of R&D and Marketing and the relationship to NPD success. The author defines integration as “the magnitude of interaction and communication, the level of information sharing, the degree of coordination, and the extent to which marketing and R&D have a common vision and collective goals during a NPD project.”
The question of how much integration is required for NPD success is important as it has management implications. For instance, what organizational structure is in place to support the integration? Are the right incentives in place to insure that both functions are rewarded for NPD success? How does the organization define NPD success? In my experience, how well Marketing and R&D are aligned is a key factor in project success, but there is a natural cultural divide that has to be overcome. Marketing will not always realize that what they are asking for is not feasible, at least in the timeframe necessary to complete the project, and R&D will be focused on the technical aspects of the project and not always sensitive to the competitive landscape and customer needs. The classic John Gray book “Men are from Mars, Women are from Venus” comes to mind.
The author points out that during the NPD process, projects can include two aspects of innovation competence: technological or market. Technological competence is defined as the knowledge necessary to design, engineer, and manufacture a product. Market competence is the knowledge of the customer needs and preferences. Extending that concept further, a company can either leverage existing knowledge or create new knowledge. That leads to four fundamental project choices:
1) Pure Exploration: new marketing and technological competence
2) Pure Exploitation: existing marketing and technological competence
3) Exploit Technical Competence: new market competence
4) Exploit Market Competence: new technological competence
The author concludes that projects based on “Pure Exploration” and those that “Exploit Market Competence” (but require new technical competence), require high levels of integration for market success, but at the expense of the process. Process in this context is defined as meeting the schedule. While low levels of integration can lead to projects that meet the schedule, they do not necessarily lead to market success. Market success I would contend is really what we are after.
For projects that “Exploit Technical Competence” (but require new market competence) high levels of integration are required for both process and market success. For projects that are “Pure Exploitation”, low levels of integration are necessary for both process and market success. Presumably in this case, since the firm has all the knowledge they need to complete the project, it is best that R&D be left alone to drive the project as fast as possible.
The author makes a final remark that any company’s management should take note of: “…managers face a trade-off in NPD involving new technological competence: They can either focus on the efficiency of the process or sacrifice the process performance for market success. The latter seems more important overall, so we suggest that managers of these projects emphasize strong integration but prepare for some inefficiency during the process.”
This last statement really gets to an important point of how a company measures NPD success. If project success is based solely on satisfying the “triple constraint” (Performance, Project Cost, Schedule), a company will miss an opportunity to create lasting competitive advantage and growth in revenue and earnings.
What is your experience with integrating Marketing and R&D? How do the two functions work together? Is it contentious or collaborative? How does your company measure NPD success?
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