Strategic R&D is Key to a Company's Long-Term Survival

WHITE PLAINS, N.Y., June 22, 2011 /PRNewswire/ -- A new paper offering insight on how to optimize research and development efficiency through strategic operational excellence by Yair Holtzman, a tax director at WTP Advisors, could impact the way many R&D companies plan for new product development.

The article, "Strategic research and development: it is more than just getting the next product to market," appears in the Volume 30 issue 1 (2011) of the Journal of Management Development.

Hailed by the publisher for its creativity in linking operational excellence and operations management themes with developing new products and services and the work of R&D, this article stemmed from interviews and discussions with CEOs, vice presidents, and director level engineers and scientists over the past several years who demonstrated great interest in understanding why their companies' R&D efforts fall short of target so many times.

Holtzman, who is also a leader in WTP's Business Advisory Services division, concludes that companies must embrace a new philosophy in developing a new product: they must weed out engineering inefficiencies in research and development from the onset, and add value early in the R&D process in order to succeed in the current economic climate.

This pivots sharply from current industry norms. Typically, in their ongoing desire to become more efficient, many R&D organizations largely focus on reducing administrative inefficiencies such as burdensome approval processes, lack of information, and meetings that are unproductive or unnecessary. Yet they tend to overlook the bigger issue of engineering inefficiencies, which is caused by problems such as shifting design requirements, poor integration of design components, and post-production design changes.

"Although engineering and R&D inefficiencies consume substantial time and resources – and have a much bigger impact on the bottom line – they are often ignored because they are more complex and challenging to address. And in some cases, are not even recognized as a problem," says Holtzman.

Additionally, many R&D organizations do not view manageable inefficiency as a waste, but as a value-added activity necessary to get the design right. However, Holtzman's experience with companies around the world has found that excessive engineering effort is a clear indicator of inefficiency and can be sharply reduced without an adverse effect on design outcomes. For example, poorly defined requirements early in the design cycle can cause excessive low value adding effort in later phases, which ultimately increases costs and slows things down.

Common causes of manageable excessive engineering effort, he writes, include lack of integration, poor synchronization across design groups, design by committee, and  lack of cross-functional integration. For example, failure to get the manufacturing organization involved can lead to inadequate tools and shop floor processes. Similarly, failure to involve the after-market service organization can create costly support problems for the company and its customers.

"The best design in the world is useless if it cannot be built and properly supported," says Holtzman, "Identifying and reducing engineering churn can enable a company to redirect wasted resources to activities that create value for the business and improve its overall competitiveness in the marketplace."

Both the speed and scale of market and technology changes have increased substantially over the past several years. Added to which there is a greater understanding of how closely connected are the processes by which products and services are developed and the outcomes from these processes.

"Strategic R&D can serve as a sustaining advantage of companies in the near term and secure an organization's long term survival," Holtzman says.

WTP Advisors is a leader in tax and business advisory services for a global marketplace. Our highly skilled professionals equipped with years of industry experience, coupled with our cutting-edge technologies, make substantive and long-term differences to an organization's profitability. WTP Advisors is headquartered in White Plains, New York, with offices across North America, Asia and Europe.

SOURCE WTP Advisors