The two featured speakers at the Center for Operational Excellence’s upcoming quarterly seminar might be from two wildly different industries, but they’re both bringing stories that illustrate a stark truth about the world today: The rules of the game are changing, and standing still isn’t an option.
In the greater Columbus area, AEP and Abbott each rank among its 50 largest employers, with a combined local payroll of nearly 6,000, according to research from Columbus Business First.
While both companies have well-deserved reputations as leaders in their respective industries, they also share common ground in facing serious external headwinds in recent years .
For AEP, it’s national and state-level energy policies that can have far-reaching implications for the company’s short- and long-term growth strategies and generation profile. Just in the last half-decade, AEP has seen its home state – where its AEP Ohio subsidiary lights up nearly 1.5 million customers – decisively shift toward electricity deregulation, leaving behind the days of a more predictable fixed-rate structure.
As the purveyor of products ranging from Similac to Ensure, Abbott Nutrition not only is at the mercy of changing customer tastes but shifting demographics – namely longer-living seniors. At the turn of the new century, people ages 65 and older in the U.S. represented about one in eight Americans. The U.S. Department of Health and Human Services estimates they’ll represent one in five just 15 years from now.
On a day-to-day level, these changes to the business environment have spurred each company to action in different ways. For AEP, this has taken the form of a still-young but promising lean transformation that grew out of the company’s generation facilities, closely linked to traditional “shop floor” applications of its principles, and has steadily made its way to more “invisible” processes across the organization, namely information technology. Abbott, meanwhile, has mounted an organizational transformation of its people and processes within its research and development function as it fills its innovation pipeline and drives growth.
Don’t miss the chance to hear from McCullough and Roberts on what they’ve learned along the way and what the future holds for their organizations.
At a glance
Date: Friday, Feb. 13, 2015
Time: 10:30 a.m. to 2:30 p.m. (networking lunch included)
Location: The Blackwell, 2110 Tuttle Park Place, Columbus, OH
Since the 2008 recession, organizations are pushing their research and development departments to the brink, seeking the same, or greater, levels of innovation at the same, or lower, amounts of funding. At the same time, an unprecedented level of connection across the global supply chain has brought competition to a frenzied peak, pushing companies to the brink and forcing them to efficiently work with global teams.
In this “new normal” for R&D, how can managers meet the demands of top-rung leadership and the market itself?
The Center for Operational Excellence is partnering with the Fisher College of Business Department of Managing Sciences to host award-winning Prof. Aravind Chandrasekaran (right) on Wednesday, Oct. 29, for an “Innovation Day” workshop. Prof. Chandrasekaran will share the results of his years of collaboration with top global innovators in a range of industries, presenting original research that answers critical R&D questions, chiefly:
How can I best manage R&D teams and align incentives to achieve the type of innovation I’m pursuing?
How do I know when to involve suppliers and other non-internal partners innovation, and when can that hurt, rather than help?
What are the challenges involved in working with partners based around the globe, and how can I manage them?
This members-only Innovation Day event includes the exclusive workshop with Prof. Chandrasekaran, catered lunch, discussion panel and guided online simulation that sheds light on how to manage disruptive innovation with finite resources. This session is limited to 40 total attendees with a maximum of five registrants per COE member company.
Make it a two-day experience at Goodyear’s HQ
COE is thrilled to offer an optional second-day event to the innovation workshop: An exclusive presentation and tour at Goodyear Tire & Rubber Co.’s Akron headquarters on Thursday, Oct. 30. In the morning, Goodyear Senior Master Black Belt Norbert Majerus will share how the company has embedded lean product development principles throughout its R&D operation. Following lunch, attendees will embark on a tour of the company’s Akron campus, Operations Management Center, and Knowledge and Project Management division.
At the Operations Management Center, attendees will get an inside look at how Goodyear has implemented visual management as it works to develop and turn out a staggering 1,500 tire SKUs a year. In the Knowledge and Project Management division, attendees will see how the company has created standard work for projects. The company’s new campus, meanwhile, highlights how a continued drive to be collaborative and focus on the customer have influenced a multimillion-dollar construction project.
This tour, limited to 20 participants, requires attendees to provide their own transportation to and from the Goodyear campus but includes a catered lunch.
To register your company for the Innovation Day session and/or the Goodyear tour, click here.
Agenda (subject to minor changes):
Wednesday, Oct. 29
9:30 a.m.: Registration / Continental breakfast
10 – 11:30 a.m.: Presentation, Prof. Aravind Chandrasekaran
11:30 a.m. – 12:30 p.m.: Networking lunch
12:30 – 2:30 p.m.: Back Bay Battery Simulation
2:30 – 4 p.m.: Discussion panel
4-5:30 p.m.: Cocktail reception
Thursday, Oct. 30
10:15 a.m.: Check-in in Goodyear lobby
10:30 to noon: “Lean Product Development Principles at Goodyear,” Norbert Majerus
A new study from a Fisher College of Business professor suggests research and development teams could use some more outside-the-box thinking in how they structure and manage their own innovation projects.
Forthcoming in the Production and Operations Management journal is “The Role of Project and Organization Context in Managing High-Tech R& D Projects.” This study, which employs both qualitative case data and survey data from more than 100 R&D projects at nearly three-dozen high-tech organizations, is authored by Aravind Chandrasekaran, an assistant professor of management sciences at Fisher.
In his research, Chandrasekaran found that companies are making a very common mistake in managing their R&D projects, and the consequences can range from an internal preference towards cut-and-dry, quick-turnaround innovation projects to loss of market share and competitive edge.
Context is key
At the root of this increasingly troubling trend among R&D teams is a common villain: The tried-and-true approach, backed by decades of research and results. Projects typically are categorized and managed by the extent of change in the product, process, technology and market dimensions. A routine iPhone upgrade from a 3G to a 3GS, for example, falls at one end of a continuum as a so-called incremental innovation project.
“If you’re going from a CD player to an iPhone, though, that’s radical innovation,” Prof. Chandrasekaran said.
This research posits that R&D project management shouldn’t be determined on a sliding scale of eventual change, big or small. Rather, it should be driven by project goals, whether they’re to explore a new technology or to exploit opportunities for efficiencies, cost savings or faster time to market, Prof. Chandrasekaran said.
The research found that incremental and radical innovation projects thrive under two entirely different sets of so-called project and organizational contexts. Incremental projects need diligent, transactional leaders at the helm, low levels of team-member autonomy and well-defined goals that are tied to outcome-driven incentives. Radical innovation projects, meanwhile, need a leader who’s willing to promote risk-taking and experimentation, give team members more latitude and reward them at milestones, not just the finish line.
Crossing these wires, the research found, can be deadly for project success. Put a rigid, transactional leader in front of a radical project team and the creative juices stop flowing. Give incremental project teams more autonomy and a hands-off approach and deadlines are missed.
A one-size-fits-all approach to project tracking, all too common in the companies surveyed, spells trouble, too. Teams juggling a mixed bag of projects, all with the same metrics and reporting structure will develop a Pavlovian affinity for the fast and predictable incremental ones and leave the long-term radical ones on the to-do list.
Here’s the nuance that even the savviest high-tech companies miss in their ongoing R&D project management efforts: Some projects in these environments are driven by goals typically associated with radical innovation and incremental innovation, but existing research doesn’t offer much help on how to deal with them, Prof. Chandrasekaran found.
These so-called “hybrid projects” aren’t new to post-recession R&D departments, but they’re making more appearances as companies are asked to do more with less or – at best – the same.
“In this day and age, budget cuts are more and more visible in R&D environments, and companies are being asked to make big leaps in projects, pushing up deadlines without giving additional resources,” he said.
The growing stakes of maintaining competitive edge are outpacing overall R&D spending, too. An annual Battelle report on R&D expenditures found U.S. spending is set to grow about 2.5 percent this year, on par with the growth in the national Gross Domestic Product but slower than the global growth rate of 3.4 percent.
The key to nurturing these hybrid projects, Prof. Chandrasekaran found, is first not to let them get incorrectly classified as radical innovation projects, the most frequent mistake. Key red flags to look out for include the addition of deadline or cost pressure to an otherwise radical innovation project.
“In practice, organizations are pretty good at making changes between radical and incremental projects,” he said. “They often fail to make that change for hybrid projects.”
What these projects need, according to the study, is a so-called “ambidextrous leader” who knows when to shift between hands-off management during bursts of team creativity to taking the reins and steering the project on time and on budget.
“These are leaders who know when to push and when to pull,” Prof. Chandrasekaran said. “Unfortunately, they are in short supply, but this quality can be nurtured with the proper training.”
Not just for tech
Tapping into high-tech companies for this study, Prof. Chandrasekaran said, wasn’t an act of random selection. The tech sector remains the R&D industry’s most fertile ground for growth, but that doesn’t mean this research is valuable only to them.
Any company investing in R&D should take notice of the opportunities they’re missing as they organize and deploy project teams, he said.
“This research shows management has to make key changes,” Prof. Chandrasekaran said, with the following questions: “How do you reward these people? How do you lead these teams? When do you give them decision – making autonomy? When do you take back the same decision-making autonomy?”
In short, effective senior management support in R&D doesn’t stop after signing off on a budget. That’s just the beginning.