A View from insead

Strategic Research and Development

When ‘R’ and ‘D’ spells strategy

Professor Jürgen Mihm

Professor Jürgen Mihm
Programme Director of the Strategic R&D Management programme
November 2011

Professor Jürgen Mihm, Programme Director, of the Strategic R&D Management programme, shares his insights about the challenges of 21st century R&D – and how to address them.

What is the main challenge facing managers of R&D departments today?

Despite the twin advances of technology and globalisation, the fundamental issue is the same as it always was. It’s basically about making R&D work in the context of the individual organisation. And in most organisations, that means balancing the expectations of the general managers (who are looking to see a return on the money they have invested in innovation) with the expectations of the R&D managers (who are looking to see a return on the effort they have invested in developing new products).

So is it simply a communication issue?

Better communication is part of the solution. But the issue is a deeper one. It’s about taking a strategic approach to R&D. A lot of people look at the R&D function as a self-contained department or a collection of individual projects. But INSEAD encourages R&D managers to take a more high-level view. Instead of telling you how to create a new product, our programme shows you how to create a new product organisation.

What does a new product organisation look like?

Well, about 50% of Intel’s products are less than two years old. And 50% of Toyota’s are younger than four years. But realistically, it will depend on the industry you’re in and your organisational culture. It’s more about a state of mind than statistics.

How can you teach people to create a new-product organisation in just one week on campus?

One week is plenty of time to teach highly intelligent engineers (and a few others, such as finance professionals, lawyers and high-ranking civil servants) to reformulate what they are doing in business terms – rather than technical specs. The tougher challenge is to change mindsets, which is what I’m really aiming at, in order for R&D to start driving the business. But it’s also important that participants get back to work quickly to put everything they’ve learned into practice. So, all things considered, one week is perfect.

Isn’t R&D very different from one industry to the next, though?

Well, developing new potato chips is very different from developing new microchips, that’s for sure! But at the strategic level, it becomes possible to generalise much more. It’s where pharmaceutical firms, oil companies and automobile manufacturers find common ground. After all, you’ll always need a portfolio of new products and a strategy, whatever business you’re in.

Can you really change mindsets in a classroom?

In fact, it’s having participants from different industries (and countries) in the classroom together that gets people to question their assumptions – which is the first step. We always tell participants that half the learning will come from their peers rather than the professors. As for the other half, although we have one or two traditional classes, we would never try to teach by lecturing people. We use discussions, case studies and increasingly innovative techniques such as simulations and roleplays. At the end of it all participants really do seem to see R&D differently.

What about the twin advances of technology and globalisation that you mentioned earlier?

They have certainly changed the way that people work. Today, R&D is an activity that operates across borders, time zones and even organisations. Some departments are dispersed across the entire globe, which is a management challenge in itself. Collaborations are another major trend – and even harder to handle. It’s easy to subcontract plumbing work when you’re building an office block, but how do you go about inventing a new product with another organisation? Standard knowledge just doesn’t apply. That’s why we’ve introduced two new sessions into the programme, one on working in virtual teams and another on R&D alliances. But in the end, both of these issues come back to openness and reaching out to other people – seeing R&D “from the other side”… which is where we started.

Finally, how do you personally manage to see both sides of the R&D divide?

My secret is that I started out as a double major in business and engineering. Then I trained as an engineer… and became a business professor. That – and six years of involvement with this programme – enable me to speak for both sides. But what really makes me happy is passing that skill on to executives.

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