Technology leaps require more one-time costs. As a first reaction, R&D demands more budget, but does not get it that way and yet retains much of its previous development tasks. So it gradually taps into the R&D cost trap. Its second reaction is an increase in efficiency. This often leads to loss of quality and the cancellation of R&D projects. If day-to-day business dominates, technology leaps will be the first to fall by the wayside. At least now, the CEO has to restructure the R&D to prevent a failure of the company.

Only the restructuring of R&D enables the powerful reorientation of the R&D budget. Restructuring may include R&D leadership, collaboration between business units, low cost locations, depth of development and R&D controlling.

The most suitable restructuring is company-specific. For example, a company that is threatened by digitization and has strong, competing business units may employ a CTO with responsibility for R&D budget and human resources. He can also decide without consensus with the business units. The company can increasingly create centers of excellence, relocate development tasks into low-cost locations, outsource them to suitable suppliers or bring them back. It can expand R&D controlling for better transparency, planning, control and performance measurement as it often has few of the competencies required.

We advise you to restructure R&D to redirect the R&D budget for technology leaps and reduce the risk of business failure.