WORLD: WHEN R&D GOES GLOBAL. - How companies manage research and development from afar.

Last Updated: 31 Aug 2010

How companies manage research and development from afar.

'Globalisation' proceeds apace. All over the developed world major companies have been reorganising their manufacturing, marketing and logistics operations the better to serve world markets. They have established centres of excellence in different countries or continents, granting them worldwide responsibility for particular product lines. And in some instances this has caused head office functions to become similarly dispersed.

But what about research and development? Historically, R&D departments have been closely associated with head office, even if they were geographically separate. They were also highly compact, and with good reason. R&D calls for intensive communication and close informal collaboration between colleagues whose aims need to be held constantly in focus. Duplications must be avoided.

Nevertheless corporate R&D is following the same widespread trend towards dispersal. In 1986 American business spent a collective $4.6 billion on R&D outside the US; by 1992 the figure had jumped to $10.1 billion. Other nations invest an even higher percentage of their R&D expenditures abroad. In the early 1990s more than half the UK companies responding to a survey of international practice spent more than a fifth of their R&D budgets overseas. The figures are quoted in a recent report, The Changing Global Role of the Research and Development Function, published by the The Conference Board, the New York-based management organisation.

The migration of R&D out of Japan has been more dramatic still.

A survey conducted earlier this year by Japan's External Trade Organisation (JETRO) found 292 Japanese firms with R&D facilities in Europe alone. That's more than a four-fold increase since 1990. But R&D has long been notoriously tricky to manage. How can companies hope to manage it effectively when it spans an international network of research centres rather than a single domestic facility?

Advances in communications technology contain a large part of the answer. Sony, for example, uses a proprietary video-conferencing system to link its engineers in Tokyo with colleagues in Stuttgart, Basingstoke and Bridgend. Richard Jones, engineering director at the company's consumer electronics research facility near Bridgend, reports that video-conferencing has cut his visits to Tokyo from one every three or four weeks to one every two or three months. Nevertheless, Jones cautions, 'You must know the people you are dealing with at the other end, and you must have met them at least once or twice.' Otherwise it's hard to reach a rapport.

Or, he might have added, an understanding. The Conference Board report quotes Craig Tedmon, ABB's director of research on the dangers that arise when different nationals are using a second language at long range: 'There is a wonderful opportunity to be misunderstood.' Indeed, it's all too to easy to imagine. 'Send reinforcements, we're going to advance.'.

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