- Email: [email protected]
Co-Operation of Marketing and R&TD Departments
Copyright to IFAC Automated Systems Based on Human Skill, Kranjska gora, Slovenia, 1997
CO-OPERATION OF MARKETING AND R&TD DEPARTMENTS
Bnmo Zavrsnik
School of Business and Economics Maribor Razlagova 20 2000 MARlBOR E-mail: [email protected]
Abstract: To succeed in today's marketplace, most companies must engender co-operation between the marketing and R&TD functions . Marketing and R&TD share responsibilities for setting new technology and product goals, identifying opportunities for the next generation of technology and product improvement, resolving engineering design and understanding customer needs. Formal and informal integration (co-operation) between marketing and R&TD is not sufficient guaranty for a successful new technology and product development and introduction into the market. Senior management must have the ability to develop a vision statement for building a visionary company. Copyright © 1998 IFAC Keywords: integration, innovation, management systems, product strategy, uncertainty, vision.
1. INTRODUCTION 2. COMPANY VISION One of the most significant causes for new technology and product failure is the lack of integration (co-operation) of R&TD and marketing early in the innovation process. A high degree of marketing and R&TD integration is a rare phenomenon in many organisations that depend on successful development of new technology, products and services. In fact. the idea of integrating is itself a new idea for many finns (Gupta and Rogers, 1991). The idea of integrating has become more important in recent years, because of increased competition, more unpredictable envirorunent, faster technology development. more sophisticated customers, shorter product life cycles, increasing need for quick product development, changes in the global marketplace. etc.
Top management is ultimately accountable for the new technology and product success record. They cannot simply ask the new product manager to come up with great ideas. New product development requires top management to define the vision, business domains and product strategy that the company wants to emphasise. Vision statement creates a picture of the firm ' s future aspirations based on its beliefs about how to win in the marketplace. Vision should become the conceptual framework for managing the business. The vision statement can also provide emotional and intellectual focus to the employees who will be responsible for making the vision a reality (Osborne, 1996). The visionary companies displayed a remarkable ability to achieve even their most audacious goals.
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Many executives thrash about with mission statement and vision statement. Unfortunately most of those statements turn out to be a muddled stew of values, goals, purposes, philosophies, beliefs, aspirations, norms, strategies, practices and description. Even more problematic, seldom do these statements have a direct link to the fundamental dynamic of visionary companies: preserve the core and stimulate progress. That dynamic, not vision or mission statements is the primary engine of enduring companies. Vision simply provides the context for bringing this dynamic to life. Building a visionary company requires 1% vision and 99% alignment. Top management must establish specific criteria for acceptance of new product ideas. For example: the product can be introduced within five years; the product has a market potential of at least $20 million and a 15% growth rate: the product will provide at least 30% return on sales and 40% on investment: and the product will achieve technical or market leadership (Kotler, 1994).
Figure 1: Factors of innovative uncertainty (Source: Sounder and Monaert, 1992).
4. INTEGRATING MARKETING AND R&TD In today's highly competItIve business environment, a company's ability to generate new product ideas that result in successfully commercialised products tells a great deal about the viability of the firm as an entrant in an industry. Companies today must realise that the length of time a product can remain as a profitable part of the firm ' s portfolio is shorter than even before. Shorter product life cycle is multifaceted and includes the rate at which technology is advancing, and the speed at which foreign competition moves in as a low-cost alternative once an innovative product demonstrates some success in the marketplace. The interface between R&TD department and marketing department must fuse the company 's technological capabilities with the benefits consumers are seeking from a product (Lucas and Bush, 1988 ). Effective marketing will require the commitment of scientist and engineers, whose professional practices are, at best, problematic related to the demands of the marketplace (McNulty, 1992). As market information will often be unavailable within the R&TD department, the particular general sources for such information will be the marketing department for market information, and R&TD department for technological information. These types of information must be exchanged throughout the innovation process, because high levels of R&Dmarketing integration facilitate the interfunctional transfer of information (Parry, and Song, 1993). Marketing and R&TD both provide input to many tasks (Hall, 1989). Integration means strategic linkage of specialised groups, each group keeps its individual orientation (Lapierre. and Henault, 1996). The decision to integrate marketing and R&TD efforts is made on several levels within an organization. Top management that establishes the overall corporate culture, strategic direction and vision for a company need to be convinced that technology alone will not lead to successful new products. Technological advances must be market driven. Creating such integration requires general acceptance of the idea and support from the entire organization including top management, R&TD and marketing department heads, and individual members in both departments (figure 2).
3. INNOVATION AND UNCERTAINTY There are exist four major determinants of innovative uncertainty: consumer, technological, competitive and resource uncertainty. An innovating firm must reduce all of these uncertainties in order to be successful. The two most important sources of uncertainty relate to consumer uncertainty and technological uncertainty, as these components have a positive effect on the other two components. The more the organisation reduces its uncertainty about user needs, technology, competition, and the required resources, the higher the like hood that the new product innovation will be a business success (figure 1).
98
the top, it cannot be achieved by executive fiat (Griffin and Hauser, 1996). Good co-ordination is unavoidable and primary a matter of getting individuals to collaborate well with one another. This is more likely to be attained by: • Exercising leadership, which emphasises the common task and the need for everyone to work well together. Visionary leaders have the gift of setting what is called supper-ordinate goals and gaining commitment and enthusiasm to achieving them. • Team-building activities which help people to work together more effectively. Team building can be developed through training courses, which get groups to analyse how well, or poor the team 's function and practise methods of improving cohesion and co-operation. • Effective communication system which ensure that both vertical and lateral channels of communication function well (Armstrong. 1990).
JCIlVE
i HR'El'IN.7 S IRXE IN lKIl.C'
I ~
Figure 2: Preconditions for integration of R&TD
6. CONCLUSION
5 SENIOR MANAGEMENT AND MARKETING &R&TD
Marketing and R&TD are responsibility to reducing the customer, technological. competitive and resources uncertainty. For the success in reducing uncertainty requires integration and cooperation between marketing and R&TD department. Co-operation between these departments must be supported by senior management within formal and informal management system (process).
One of the most important senior management roles is to create a climate promoting interfunctional co-operation by implementing the right organizational practices. One such practice may be to promote the need for R&TD-marketing integration during new product development. This can be achieved by visible support for integration, corporate policies, job rotations, promoting joint visits to key customers by the R&TD and marketing staff. implementing joint reward system for R&TD and marketing, and by encouraging seminars and workshops where both groups can share their ideas. Management can help marketing managers by supporting the role of marketing in the company: in some technology-driven companies there can be a tendency to ignore the importance of marketing during the new technology and product development process (Sounder, 1988). A corporate culture that supports, encourages and rewards the development and marketing of a steady stream of innovative new products is perhaps the most important key to success. If you don't have one in your company, than the establishment of such a culture is your top priority.
REFERENCES Annstrong, M . (1990). Management Processes and Functions Management Studies Series, London. Griffin, A and Hauser, J.R. (1996).Integrating R&D and Marketing: A Review and Analysis of the Literature. The Journal of Product Innovation Management Volume 13, 191216. Gupta, AK. and Rogers, E.M. (l991).Internal marketing: Integrating R&D and Marketing within the Organization. The Journal of Consumer Marketing, Volume 8,5-18. Hall, A.J. (1989). Bringing New Products to Market, AMACON, N.J. Kotler, P. (1994). Marketing Management. Prentice Hall, N.J. Lapierre, 1. and Henault, B. (1996). Bidirectional Informational Transfer: An Imperative for Network and Marketing Co-operation in a
Changing a corporate culture is a long, slow, painful process. While the change must come from
99
Canadian Telecommunication Firm. The Journal of Product Innovation Management. Volume 13, 152-167. Lucas, G.H. and Bush, A.J. (1988). The Marketing-R&D Interface: Do personality Factors Have an Impact? The Journal of Product Innovation Management , Volume 5, 257-269. McNulty. T (1992) .Putting the Marketing into R&D. Marketing Intelligence & Planning, Volume 10, 17-21. Osborne. R.L. (1996). Strategic Values: The Corporate Performance Engine. Business Horizons. September-October,41-46. Parry. M.E. and Song, XM. (1993). Determinants of R&D Marketing Co-operation in HighTech Japanese Firms, The Journal of Product Innovation Management, Volume 14, 35-48 . Sounder. W.E. and Monaert. R.K. (1992). Integrating Marketing and R&D Project Personnel within Innovation Projects, Journal ofManagement Studies, July, 485-516. Sounder. W.E. (1988). Managing Relations Between R&D and Marketing in New Product Development Projects. The Journal of Product Innovation Management. Volume 5, 6-20.
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CO-OPERATION OF MARKETING AND R&TD DEPARTMENTS
Bnmo Zavrsnik
School of Business and Economics Maribor Razlagova 20 2000 MARlBOR E-mail: [email protected]
Abstract: To succeed in today's marketplace, most companies must engender co-operation between the marketing and R&TD functions . Marketing and R&TD share responsibilities for setting new technology and product goals, identifying opportunities for the next generation of technology and product improvement, resolving engineering design and understanding customer needs. Formal and informal integration (co-operation) between marketing and R&TD is not sufficient guaranty for a successful new technology and product development and introduction into the market. Senior management must have the ability to develop a vision statement for building a visionary company. Copyright © 1998 IFAC Keywords: integration, innovation, management systems, product strategy, uncertainty, vision.
1. INTRODUCTION 2. COMPANY VISION One of the most significant causes for new technology and product failure is the lack of integration (co-operation) of R&TD and marketing early in the innovation process. A high degree of marketing and R&TD integration is a rare phenomenon in many organisations that depend on successful development of new technology, products and services. In fact. the idea of integrating is itself a new idea for many finns (Gupta and Rogers, 1991). The idea of integrating has become more important in recent years, because of increased competition, more unpredictable envirorunent, faster technology development. more sophisticated customers, shorter product life cycles, increasing need for quick product development, changes in the global marketplace. etc.
Top management is ultimately accountable for the new technology and product success record. They cannot simply ask the new product manager to come up with great ideas. New product development requires top management to define the vision, business domains and product strategy that the company wants to emphasise. Vision statement creates a picture of the firm ' s future aspirations based on its beliefs about how to win in the marketplace. Vision should become the conceptual framework for managing the business. The vision statement can also provide emotional and intellectual focus to the employees who will be responsible for making the vision a reality (Osborne, 1996). The visionary companies displayed a remarkable ability to achieve even their most audacious goals.
97
Many executives thrash about with mission statement and vision statement. Unfortunately most of those statements turn out to be a muddled stew of values, goals, purposes, philosophies, beliefs, aspirations, norms, strategies, practices and description. Even more problematic, seldom do these statements have a direct link to the fundamental dynamic of visionary companies: preserve the core and stimulate progress. That dynamic, not vision or mission statements is the primary engine of enduring companies. Vision simply provides the context for bringing this dynamic to life. Building a visionary company requires 1% vision and 99% alignment. Top management must establish specific criteria for acceptance of new product ideas. For example: the product can be introduced within five years; the product has a market potential of at least $20 million and a 15% growth rate: the product will provide at least 30% return on sales and 40% on investment: and the product will achieve technical or market leadership (Kotler, 1994).
Figure 1: Factors of innovative uncertainty (Source: Sounder and Monaert, 1992).
4. INTEGRATING MARKETING AND R&TD In today's highly competItIve business environment, a company's ability to generate new product ideas that result in successfully commercialised products tells a great deal about the viability of the firm as an entrant in an industry. Companies today must realise that the length of time a product can remain as a profitable part of the firm ' s portfolio is shorter than even before. Shorter product life cycle is multifaceted and includes the rate at which technology is advancing, and the speed at which foreign competition moves in as a low-cost alternative once an innovative product demonstrates some success in the marketplace. The interface between R&TD department and marketing department must fuse the company 's technological capabilities with the benefits consumers are seeking from a product (Lucas and Bush, 1988 ). Effective marketing will require the commitment of scientist and engineers, whose professional practices are, at best, problematic related to the demands of the marketplace (McNulty, 1992). As market information will often be unavailable within the R&TD department, the particular general sources for such information will be the marketing department for market information, and R&TD department for technological information. These types of information must be exchanged throughout the innovation process, because high levels of R&Dmarketing integration facilitate the interfunctional transfer of information (Parry, and Song, 1993). Marketing and R&TD both provide input to many tasks (Hall, 1989). Integration means strategic linkage of specialised groups, each group keeps its individual orientation (Lapierre. and Henault, 1996). The decision to integrate marketing and R&TD efforts is made on several levels within an organization. Top management that establishes the overall corporate culture, strategic direction and vision for a company need to be convinced that technology alone will not lead to successful new products. Technological advances must be market driven. Creating such integration requires general acceptance of the idea and support from the entire organization including top management, R&TD and marketing department heads, and individual members in both departments (figure 2).
3. INNOVATION AND UNCERTAINTY There are exist four major determinants of innovative uncertainty: consumer, technological, competitive and resource uncertainty. An innovating firm must reduce all of these uncertainties in order to be successful. The two most important sources of uncertainty relate to consumer uncertainty and technological uncertainty, as these components have a positive effect on the other two components. The more the organisation reduces its uncertainty about user needs, technology, competition, and the required resources, the higher the like hood that the new product innovation will be a business success (figure 1).
98
the top, it cannot be achieved by executive fiat (Griffin and Hauser, 1996). Good co-ordination is unavoidable and primary a matter of getting individuals to collaborate well with one another. This is more likely to be attained by: • Exercising leadership, which emphasises the common task and the need for everyone to work well together. Visionary leaders have the gift of setting what is called supper-ordinate goals and gaining commitment and enthusiasm to achieving them. • Team-building activities which help people to work together more effectively. Team building can be developed through training courses, which get groups to analyse how well, or poor the team 's function and practise methods of improving cohesion and co-operation. • Effective communication system which ensure that both vertical and lateral channels of communication function well (Armstrong. 1990).
JCIlVE
i HR'El'IN.7 S IRXE IN lKIl.C'
I ~
Figure 2: Preconditions for integration of R&TD
6. CONCLUSION
5 SENIOR MANAGEMENT AND MARKETING &R&TD
Marketing and R&TD are responsibility to reducing the customer, technological. competitive and resources uncertainty. For the success in reducing uncertainty requires integration and cooperation between marketing and R&TD department. Co-operation between these departments must be supported by senior management within formal and informal management system (process).
One of the most important senior management roles is to create a climate promoting interfunctional co-operation by implementing the right organizational practices. One such practice may be to promote the need for R&TD-marketing integration during new product development. This can be achieved by visible support for integration, corporate policies, job rotations, promoting joint visits to key customers by the R&TD and marketing staff. implementing joint reward system for R&TD and marketing, and by encouraging seminars and workshops where both groups can share their ideas. Management can help marketing managers by supporting the role of marketing in the company: in some technology-driven companies there can be a tendency to ignore the importance of marketing during the new technology and product development process (Sounder, 1988). A corporate culture that supports, encourages and rewards the development and marketing of a steady stream of innovative new products is perhaps the most important key to success. If you don't have one in your company, than the establishment of such a culture is your top priority.
REFERENCES Annstrong, M . (1990). Management Processes and Functions Management Studies Series, London. Griffin, A and Hauser, J.R. (1996).Integrating R&D and Marketing: A Review and Analysis of the Literature. The Journal of Product Innovation Management Volume 13, 191216. Gupta, AK. and Rogers, E.M. (l991).Internal marketing: Integrating R&D and Marketing within the Organization. The Journal of Consumer Marketing, Volume 8,5-18. Hall, A.J. (1989). Bringing New Products to Market, AMACON, N.J. Kotler, P. (1994). Marketing Management. Prentice Hall, N.J. Lapierre, 1. and Henault, B. (1996). Bidirectional Informational Transfer: An Imperative for Network and Marketing Co-operation in a
Changing a corporate culture is a long, slow, painful process. While the change must come from
99
Canadian Telecommunication Firm. The Journal of Product Innovation Management. Volume 13, 152-167. Lucas, G.H. and Bush, A.J. (1988). The Marketing-R&D Interface: Do personality Factors Have an Impact? The Journal of Product Innovation Management , Volume 5, 257-269. McNulty. T (1992) .Putting the Marketing into R&D. Marketing Intelligence & Planning, Volume 10, 17-21. Osborne. R.L. (1996). Strategic Values: The Corporate Performance Engine. Business Horizons. September-October,41-46. Parry. M.E. and Song, XM. (1993). Determinants of R&D Marketing Co-operation in HighTech Japanese Firms, The Journal of Product Innovation Management, Volume 14, 35-48 . Sounder. W.E. and Monaert. R.K. (1992). Integrating Marketing and R&D Project Personnel within Innovation Projects, Journal ofManagement Studies, July, 485-516. Sounder. W.E. (1988). Managing Relations Between R&D and Marketing in New Product Development Projects. The Journal of Product Innovation Management. Volume 5, 6-20.
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