How to Define & Build Effective R&D Capability in Your Organization

This article first appeared on Acorn Labs in July 2023.

For a more in-depth look at R&D capability, have a read of the full article.

Research and development (R&D) capability is the combination of skills, behaviors, knowledge, tools, and processes required of R&D professionals for an organization to achieve its goals and objectives.

R&D may mean different things for your organization, including driving competitive advantage, future growth, risk mitigations, or cost reduction. Regardless of what it means for your business specifically, it’s something that you need to stay on top of if you want to keep pace with your competitors.

3 steps to define R&D capabilities

There are three steps to define your research and development capabilities.

1. Define the landscape. This includes understanding your mission, purpose, and values, and how R&D contributes to those in terms of the value it generates now and into the future. It needs to be a central part of your organization’s operations.
2. Define the purpose. Consider whether your R&D capability will help your business achieve its goals, if there’s a market demand for it, if it competes or complements current capabilities, and identify any risks involved with developing it.
3. Define the outcome. Give the capability a name that makes the expected outcome clear, such as conducting product research and development, or developing and testing prototypes.

Strategies for building R&D capability

Building R&D capabilities goes beyond technical expertise—it involves creating an innovative engine that adapts to external trends. The strategic approach to building R&D capability involves six key steps.

1. Engage leadership

No one knows what internal capabilities are missing or need development better than your R&D leaders. So, to prioritize engagement with R&D leaders, focus on their key priorities.

1. Optimizing research spend or investment
2. Attracting and retaining talent
3. Reducing product development cycle times
4. Understanding customer demands
5. Technological innovation and investment.

When you lead with the KPIs R&D leaders care about most, you’re more likely to get their buy-in, meaning they can champion the methods to develop R&D capabilities. Draw a clear line of causation between building capability and the improved outcomes R&D can expect through their KPIs to get that support.

2. Establish co-ownership

Build a collaborative relationship between HR and R&D leaders. The role of HR in the capability-building process is to ensure that everything is aligned with business strategy, while R&D leaders drive change within their teams. You need the input of both to effectively build R&D capabilities that will drive business outcomes.

This doesn’t mean just making them project leads. Bring them both in for a proactive analysis of needs now (as well as what will be needed in the future), and then again later for selling the story of capability-building to the workforce.

3. Understanding R%D capability gaps

This is where you should conduct a proactive capability gap analysis to gain a better understanding of capability in the workforce, through a mix of self-assessments, manager assessments, and subject matter expert evaluations.

It’s best to use at least two types of assessments to get the most objective overview of your capability and bring in subject matter expert evaluations for niche or specialized capabilities.

4. Assessing R&D capability maturity

Unlike individual capabilities, which are measured with capability assessments, organizational capability is measured in terms of maturity on a scale ranging from “initial” (where work is performed reactively) to “optimizing” (where there is a focus on continuous improvement and agility).

Visualize capabilities through a heat map to prioritize and justify development investments based on business risk.

5. Building R&D capability

Optimize existing learning and development activities by addressing knowledge and information accessibility issues. Codify behavioral capabilities by centralizing knowledge with a knowledge or learning management system. These can help mitigate information hurdles by acting as sources of truth, or even capability academies, through which best practice sharing can be facilitated. These should supplement the learning that happens in the workplace in a 70/20/10 approach.

6. Tracking progress

With consistent capability assessments, there should be an element of predictability to capability building. Determine the efficacy of training from start to finish with reassessments such as:

1. Conduct proactive training needs analyses at certain milestones (like onboarding or succession)
2. Integrate performance management and capability building
3. Leverage advanced analytics to optimize the effectiveness of L&D activities.