A Discussion with Keith Goffin, Professor of Innovation and New Product Development, Cranfield School of Management, UK, A Wipro Council for Industry Research Initiative
During a recession, companies cut to the bone to survive. But one thing they should never blindly cut is research and development (R&D). "When the recovery comes, those who have wisely invested in R&D will have a competitive edge," maintains Keith Goffin, professor of innovation and new product development at UK's Cranfield School of Management.
The professor, who says executives must view R&D as an investment and not a cost, adds enterprises need to learn how improve their R&D processes to make them more productive, especially in a recession. Goffin says, "New product development (NPD) is a problem-solving activity that requires a lot of experience, and so there are lots of opportunities for improvements," he explains.
The big question and the focus of his research is: How do you capture the experience of NPD teams? "Companies want to move people up the experience curve faster. They can't wait for managers to complete several projects to gain the requisite knowledge because they can achieve big returns if they make this process faster and more efficient," Goffin explains.
One way is to get better at knowledge management. "But that is easier said than done," he acknowledges.
Trying to capture tactic knowledge
As R&D is about problem-solving, it is by its nature knowledge intensive. There are two types of knowledge R&D managers need to capture and disseminate: explicit and tacit. Explicit knowledge is easy to write down; managers can codify it Goffin explains. In contrast, tacit knowledge is hard to articulate or share; often people can only gain it through experience.
Many companies run post-project reviews (PPRs) at the end of NPD projects to identify key lessons learned, which they enter into databases. "Our research shows that databases are a poor mechanism for knowledge transfer. The really important learning -- the tacit ones -- get lost," posits the professor.
Goffin maintains it's the tacit information that is key to improving the NPD process. And that's why knowledge management is so difficult. "The knowledge and the experience of key people is very hard to capture. It is impossible to get them to write it down and very often there is no corporate recognition for knowledge sharing," explains the professor.
To determine how to improve knowledge management in R&D, Goffin and his team conducted in-depth studies of five companies in the Stuttgart area of Germany, a European hotbed of R&D activity. They studied the project-to-project learning of these companies.
The research included studying confidential documentation, including PPR documents. Then they interviewed team members and 30 NPD managers who each had many years of experience in new product development. The academics even attended restricted PPR meetings.
A key observation was that seasoned NPD professionals communicated tacit knowledge using metaphors and stories in PPR meetings. "Stories and metaphors are a good way to clarify and communicate complex issues," explains the professor. He points out that many cultures use stories to transfer specific knowledge from generation to generation without writing it down. For example, the Aborigines use songs in the bush to remember how to find drinking water.
Another historical example is musical notation. If in medieval times you wanted to play a specific song, you had to travel with a musician who knew it because there was no musical notation. Of course, this method was far from reliable. Composers and performers were frustrated with not knowing the correct pitch, the right rhythm, or the ability to exchange music easily. Pope Gregory I commissioned church musicians to come up with one of the first forms of musical notation.
"We are not at the stage where we can transfer R&D knowledge with the same accuracy as musical notation," says Goffin. "But that's where we need to head."
Three big challenges in knowledge transfer and how to mitigate them
The Cranfield team tabulated how many stories and metaphors NPD professionals used in their discussions in PPR meetings and compared that with the lessons learned documented in formal PPR reports. They discovered that NPD teams transferred very little of the tacit knowledge they generated in PPR discussions.
The research identified three specific areas of NPD where tacit knowledge is essential:
- Spec creep. Goffin says product specifications inevitably change during the development process. "Engineers new to NPD cannot imagine the complexity that spec changes cause. This is something they can only learn on the job. They have to be in the crucible," he reports. The best way to transfer this kind of tacit knowledge is one-on-one coaching.
- Budgeting. "R&D people are not finance and accounting people. But they are confronted with budgeting in a context of high uncertainty -- where the cost of technical solutions and the size of market returns are notoriously difficult to predict," Goffin points out. Once again, they need personalized training.
- Problem-solving. In every new product development project, unforeseen technical problems emerge, observes the professor. "Finding creative solutions to such problems is hugely hard to pick up," he says.
"Our interviews showed us the best way to transfer tacit knowledge is for experienced NPD personnel to coach junior colleagues extensively," says Goffin. "Many companies think they have solved their knowledge management issues if they created a database of NPD lessons learned. But you have to put the focus on the people and not just the IT," he adds.
In addition to personal coaching, another solution is the knowledge broker approach. The professor says experts who have solved a specific problem on one project should coach other project teams that are likely to face similar issues. "The knowledge broker adds value because they have seen the issues before," continues the professor.
Another technique for successful knowledge transfer is to get more people involved in the PPR process. But companies "need a good moderator who is an expert at extracting the tacit points," he advices.
Knowledge management and R&D outsourcing
Goffin says today "very few companies have everything in house to do a full R&D project." Outsourcing has become "a key method of broadening the number and scope of the projects a company can work on."
When companies outsource, knowledge management issues become even more important; otherwise "the key learning that takes place across organizations is totally lost for future projects," he notes. "Wipro Technologies knows this and has established mechanisms to capture key knowledge from projects." Wipro "puts as much emphasis on NPD personnel learning about the 'soft' side of project management, such as communications and cross-cultural interactions, as it does on the 'hard technical side'," says Goffin.
Lessons from the Outsourcing Journal:
- Companies that hope to capture market share when the economy turns around should continue to invest in R&D and new product development. That's how they need to view the expenditure - as a necessary investment.
- Knowledge management in R&D is difficult because the real valuable learning is linked to tacit knowledge, which is hard to codify or write down.
- The best ways to transfer tactic knowledge in an R&D setting are to:
- Have a mentor or "apprenticeship" program for R&D project leaders
- Create a knowledge broker program to create project-to-project learning
- Invite a wider circle of employees to post project review meetings and have them run by a moderator skilled in generating tacit knowledge through the use of metaphors and stories.
Wipro set up the Council for Industry Research, comprised of domain and technology experts from the organization, to address the needs of customers. It specifically looks at innovative strategies that will help them gain competitive advantage in the market. The Council in collaboration with leading academic institutions and industry bodies studies market trends to equip organizations with insights that facilitate their IT and business strategies. For more information on the Research Council visit www.wipro.com/industryresearch or email [email protected].