ALIGNING R&D TO BUSINESS — A LONGITUDINAL STUDY OF BU CUSTOMER VALUE IN R&D

In large technology-based firms, especially in long life cycle industries, often a tension exists between corporate R&D and the business unit (BU) customers. The long term R&D orientation needed to come to the more radical (even disruptive) innovations for the long term survival of the prospector firm being at odds with the need of the BUs for more incremental "sustaining" innovations for their day-to-day activities. This paper takes a new approach to this problem by analyzing the corporate R&D to business relationship from a customer value perspective by identifying R&D flexibility, R&D communication, strategic alignment and R&D performance as the main attributes of the value map of the BU customers of corporate R&D. We then present the Cusvalin instrument (Customer Value Learning in INnovation) that was constructed to overcome the R&D to business incongruence by providing feedback on the gaps between the value maps of R&D and their BU customers. This instrument has been tested in a longitudinal survey from 1997 through 2002 (696 respondents) in a large technology-based supplier company (±30 000 employees world wide). It is concluded that the Cusvalin model is an effective instrument to monitor the strategic alignment of R&D and the BUs, and ultimately leads to better R&D performance, as perceived by the BU customers. From the longitudinal analysis it is concluded that a system that balances radical innovation (via Technology Board-funding, in which R&D management, headquarters, and BU directors jointly decide on long-term radical R&D projects) and incremental innovation (via BU unit-funding) is effective in providing strategic alignment between R&D and business.