Innovation Keys - Effective R&D Partnering

Joint efforts to co-develop products and services can be a way to leverage limited resources for increasing profitability for the collaboration partners. Key is to have confidence, risk tolerance and appropriate legal structures in place to make the partnership work. Then assign teams from both companies to work on the project. The focus should be on tasks to be accomplished, along with costs. As with all projects, continued executive management visibility and support for innovation can help drive these efforts to produce significant results.

Joint R&D can help partners spur innovation to produce supporting technology and new goods and services. For example Cambridge Fine Foods of Ontario, Canada, a $9 million business, partnered with Your Grocery Depot, a local retailer, to develop frozen foods for institutions such as prisons and lumber camps. In another example Cooper Farms of St. Henry, Ohio partnered with Prime Equipment of Columbus, Ohio, a $12 million business, to develop meat processing equipment. Both partnerships were successful in creating new and profitable business.

· Crossing Industry Boundaries

While these examples are in food related businesses, the keys to success crossed all boundaries. In both cases there were clearly assigned project managers, support teams, budgets and executive management visibility for the projects. The business relationships with the legal aspects for investment levels, sharing of end products, intellectual property and technology, were in place, but without sustained commitment to keep the teams focused on end results and customer acceptance; the results would not have been as effective.

· Develop and Work the Plan

Once the intellectual property, duration, investment budgets and team assignments are established the teams should define the initial working agreements and communication channels. These can include:

	Integrated project plan with agreed milestones, review points and measurements
	Agreed budgets and expense plans
	Defined reporting relationships for the team leaders
	Resource allocation and availability plans
	Testing and product qualification plans
	Communication paths to each partner's executive management
	Regular status and expenditure reports
	Potential customer evaluation plans and responses
	Conflict resolution paths
	Visibility and recognition mechanisms in both organizations for the effort

· Risk Can be Managed, but Not Eliminated

Part of this process needs to recognize that not every step will go according to plan and each organization must up front indicate when any lack of results will terminate the effort. Innovation has risk, and if either organization has too low a tolerance then partnership will be much more difficult to maintain.

The nature of R&D is that not every project will produce a successful end product so a success rate of one in ten for basic technology is not unusual, while product application efforts like these food industry examples may have the opposite success rate of nine out of ten, or better.

· Can 2%2B2 Equal 64?

These joint innovation projects can create new possibilities and profitable growth. At the same time by sharing the risk among the partners, the parties leverage limited financial, physical and intellectual resources to create new possibilities and spur growth. In these cases 2 plus 2 can equal far more than four, even 64!

Copyright 2008 Donald C. Mann. All rights reserved

Don Mann advises CEOs and business leaders across the globe. In organizations ranging from start-ups to Fortune 100 he has delivered level-raising results of improved innovation, sales, profits and cash flow in good and hard times. His results include developing and improving highly productive and lean organizations with more rapid responsiveness, reduced stress and profitable customer delight. Sitting on a number of boards, he helps CEOs grow their companies and shareholder value. For more information, contact him at: www.RiteMann.com

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