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

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Want the six-step process to building R&D capability, as well as the simple three-step way to define R&D capabilities? We’ve got you.

Think about what R&D means to your organisation. Is it driving competitive advantage, future growth, risk mitigation, cost reduction, or all the above? Then think about the speed of development new technologies and scientific advancements. If you’re not onto it, you can be sure your competitors will be.

Bad news first: The rate of product, service and technological development isn’t likely to slow, which means you need to look inward and figure out how you can keep ahead of your competitors or keep pace. But the good news is that there’s a solution, and it’s building vital R&D capability.

So, defining R&D capabilities unique to your organisation is the first step. We’ll discuss how to do that in this guide, as well as how you can continuously develop R&D capability to remain competitive.

What is R&D capability?

Research and development (R&D) capability refers to the collective skills, behaviours, knowledge, tools and processes required of R&D professionals for an organisation to achieve its goals.

3 steps to define R&D capabilities

Do you know what the R&D department does? It helps to start from scratch here, without the preconceived notions of what your R&D arm has been doing up until now. This’ll help you shape the clearest capabilities possible.

Step 1: Define the landscape

Given all capability building roads lead back to business goals, we need to start with the business itself. That means asking three questions.

What is the organisation’s mission, purpose and values?
How does R&D contribute to that mission, purpose and values?
What value does R&D generate now? What value will it generate in future?

For R&D to deliver real value, it has to be a central part of the organisation’s operations. So, consider customer demands, corporate strategy, emerging technologies and any other environmental factors in your answers here.

Step 2: Define the purpose

Next, you want to clearly outline the purpose for each R&D capability. This is not an exercise to tick a box; the point is to define sustainable capabilities.

So, consider:

Will the capability actively help your organisation achieve its goals?
Is there a market demand or need for it?
Do you currently have the capacity to sustain it?
Will it compete with or supersede existing capabilities?
Are there risks involved with developing it, such as financial or reputational?

Step 3: Define the outcome

Lastly, we wrap the capability up in a bow and stick a name tag on it. Doing this last means that you’re crystal clear on what work is being done, which gives you the foundation for naming it.

The key here is to name things in plain terms. This is not just a high-level business tool. Employees need to be able to understand capabilities to get the most out of professional development, too.

For example:

If you follow each of those links, you’ll land on our complete capability directory. That’s right—we’ve got a full suite of R&D capabilities available for free here. You can copy, download and edit them to your heart’s (or organisation’s) desire. We’ll recommend changing the language used as best fits your organisation.

Strategies for building R&D capability

Building R&D strategy goes beyond simply building technical expertise. You need to create an engine that is innovating to match external pace and market demands, which requires something of a top-down approach.

We start with:

Engaging leadership for clear talent needs
Establishing co-ownership to get cultural buy-in
Assessing R&D capability gaps
Evaluating organisational capability maturity
Designing methods to bridge gaps
Tracking progress and revising methods.

Engaging leadership

Generally speaking, R&D leaders have a few key priorities.

Optimising research spend or investment
Attracting and retaining talent
Reducing product development cycle times
Understanding customer demands
Technological innovation and investment.

We lead with this because its what you should be leading with, too. But let’s backtrack a little first. You want the ear of leaders, because they can both tell you exactly what internal capabilities they’re missing, and champion the methods to develop those in the workforce. But they need clear strategic impact on their KPIs to join the movement.

And we’re back to understanding just what they care about. Now, the exact pain points of your R&D leaders may not be the same as above. If so, talk to them. Find out what is plaguing them. It could simply be lacking technical knowledge, process innovation or even basic research skills in their teams.

When you’re clear on that, position capability building as the solution. Draw a clear line of causation between building capability and the improved outcomes R&D can expect through their KPIs, and you’ll have them in your corner.

Co-ownership between HR and R&D

As mentioned, R&D leaders are the perfect channel of information from the workforce to HR, which is why you want to define their accountability in this process.

That doesn’t mean making them project leads. Rather, tap them at certain milestones to make the most impact.

Milestone one: Proactive analysis of needs now (as well as what they’re going to need in future, if you can swing it)
Milestone two: Selling the story of capability building to their workforce.

In short: HR keeps everything aligned with business strategy while R&D leaders stoke the fires of change within their teams. Together, those two points of view ensure that development methods are timely and truly impactful. That’s handy when the going gets tough or the market changes suddenly; no one is responsible for all the work, but the right levers are pulled by the right people for the work to get done.

Understanding R&D capability gaps

Here’s where we do one of those proactive analyses. We want to gain an understanding of capability in the workforce to form a better baseline for the next steps.

Capability gap assessments evaluate, you guessed it, the gap between the level of competency employees perform a capability to compared to the standard they need to meet in their current or a future job role.

You’ve got three types of assessments that you can use.

Self-assessments, where employees evaluate their own competency.
Manager assessments, where a manager assesses an employee’s competency.
Subject matter expert assessments that are used for niche or specialised capabilities.

To get the most holistic view of employee capabilities, a mix of the three is best. For starters, self-assessments on their own are biased while subject matter experts don’t have the time to be at the beck and call of these assessments. However, the former gives employees autonomy in their own professional development and the latter adds a kind of objective, external knowledge to the process. Consider the manager assessment as the anchor to provide the most strategically-aligned take on performance.

Assessing R&D capability maturity

The next level up from employee competency is organisational capability maturity. This is essentially a birds-eye view of the R&D capabilities you have available to you at any given time.

Capability maturity is almost always assessed on a scale that weighs business risk against availability. In a question: Would your competitive edge suffer if this capability was not at full capacity in your organisation?

The maturity scale represents a pathway to ideal performance. It starts at:

Initial, where work is reactive and unpredictable.
Managed, where projects are planned and measured.
Defined, where work becomes proactive.
Qualitatively managed, where data informs decisions.
Optimising, which focuses on continuous improvement for stability and agility.

The easiest way to present this information is with a heat map. Visualising capabilities this way makes it easier to justify priorities (and the investments that come with them) in the next step to different stakeholders.

Methods to build R&D capability

First things first: We’re not going to suggest you entirely revamp L&D. Rather, we want you to think about how you can optimise existing activities, and then introduce some new ways of learning.

Think about how R&D work gets done, regardless of capabilities. Consider the bottlenecks or hurdles in those tasks—that’s where you want to embed learning for the greatest impact. We can often narrow down everyday performance issues to two problems: Lack of knowledge and lack of accessible information.

We can combat both by addressing the second. That means codifying behavioural capabilities through technological capabilities, i.e. centralising knowledge.

Knowledge or learning management systems help mitigate information hurdles by acting as living, breathing sources of truth. You could go the extra mile and make it a capability academy, through which you can facilitate communities of practice and encourage best practice sharing (and improve innovation, performance and collaboration while you’re at it).

The thing about learning environments like this is they are not just massive content libraries (those are akin to throwing dry pasta at the wall and hoping it sticks). They are meant to be supplemental to the kind of L&D that happens in the workplace—the theory behind the practical. Take a 70/20/10 approach, since R&D are used to being more hands-on, anyway.

And besides, many of the desirable behaviours in R&D professionals (intellectual curiosity, enthusiasm, organisation, learning agility) are also traits you want in leaders. So, don’t discount the ways you can provide continual leadership development for R&D. Mentoring and coaching programs are a great way to upskill upcoming talent on the complexities of R&D leadership, like:

External partnerships and networking
Internal talent development
Cross-business collaboration and influence.

Tracking progress

Unlike R&D, where the outcomes are largely unknown, there should be an element of predictability with capability building. That’s down to consistent assessments to root out inefficient or ineffective parts of the process.

Reassessments, as they’re otherwise known, help you determine the efficacy of training from start to finish. That could look like:

Using proactive training needs analyses at certain milestones. Figure out the triggers for those needs (onboarding, succession) and the frequency at which they might occur. Combined with capability maturity, you can see if there’ll be a business impact felt.
Blurring the lines between performance management and capability building. Don’t let one be the trigger for the other, but rather create a constant flow of capabilities for true mobility. We’ve pioneered the first performance learning management system (PLMS) precisely for this reason—to create the tangible link between learning and business performance.
Optimising the advanced analytics of your knowledge management system, like your PLMS. Use common metrics as a baseline for a learner engagement; completion rates, expressions of interest and assessment scores give you baseline insight into the relevance and timeliness of L&D activities.

Key takeaways

R&D capability is the only way to keep an R&D strategy afloat, let alone driving competitive advantage. But what is vital for a faster path to market for the pharmaceutical industry will differ from what powers a software company’s growth engine—meaning your R&D capabilities should be unique to your R&D execution engine.

It asks you to consider what is core to your R&D function, and therefore something that your organisation is good at doing.

When you’ve got that nailed down, it’s a six-step process to:

Engage leadership
Make them co-partners
Assess capability gaps in individuals
Evaluate capability maturity at scale
Optimise L&D
Track, review and revise your work.