How Collaboration Can Enhance R&D

Source: http://hbswk.hbs.edu/item/5750.html

Alan MacCormarck, a professor in the Harvard School of Business, conducted research with a team on how collaboration is changing the way Research and Development takes place in today’s businesses. He explains to readers that while traditionally companies gained competitive advantages through internal research and patented intellectual property, global collaboration and partnered development is becoming a more effective means of gaining those oh-so desired competitive advantages.

MacCormack points out that one reason for collaboration is product complexity. Cars now send maintenance data to dealerships and sneakers have microchips in them. His point being that it’s just too hard for one firm to master all these technologies under one roof. From an economic perspective one can easily see that what’s going on here is specialization. Rather than trying to do everything, firms are now partnering and each focuses on what it does best. Brilliant!

While this seems like such a logical way to operate in a flattened world, businesses struggle to collaborate effectively. This stems primarily from an ideology that innovation collaboration is about lowering costs. MacCormack explains that many firms adopt what is called a “production outsourcing” mindset to collaboration. In other words, firms choose to focus on lowering costs and forgo other potential opportunities. “Production and innovation are different activities. While the former seeks to replicate an existing product at lower costs, the latter seeks to discover something entirely new and valuable.” However, if done properly, the cost benefits to innovation collaboration can be huge. Researchers were quick to note it is one of the main benefits.

There are other benefits that go beyond cost reduction. “Collaboration can help to shorten development lead times and increase capacity; it can facilitate access to skills, capabilities, and intellectual property that a firm does not possess internally; and it can allow a firm to acquire relationships and knowledge in a part of the world where it has no experience,” MacCormack says.

Innovation collaboration is a big transition for most businesses, but companies like Boeing and Microsoft are having great success at it. What you get out of innovation collaboration is efficiency and savings, but it’s important to note the irony that those most concerned with saving money often have a hard time actually doing it. Letting the cost savings come as an added benefit is the key to success at this method. It's interesting because we can see how the variables in the globalization equation are interacting. With the vast amounts of technology available, along with increasingly complicated business models and legal systems, it’s insanely difficult for a firm to develop every facet of a complex product and the world is adjusting to that by understanding we have to work together to continue to be successful.

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