Inside many organizations is an outdated R&D model dating back to the industrial era that doesn't work in today's globally connected world where technologies can be copied and commoditized in a nanosecond. A tech company can spend billions developing a new chip only to have its investment wiped out when a major customer chooses to go with a cheaper version. Ditto a multibillion-dollar investment in a new pharmaceutical drug that vanishes on the day the U.S. Food and Drug Administration rejects it.
The old model has kept R&D siloed within many organizations, unintegrated with business functions, particularly sales and marketing, and therefore not aligned with business strategy. As a result, R&D processes are unable to keep up with the pace of changing customer demands and can't churn out high quality products at a rate needed to meet that demand. "Companies have this disconnect between the senior executive/CEO level in charge of the business strategy and R&D," says Andrew Buss, director of strategic innovation with Archstone Consulting, an advisory management consultancy in Stamford, Conn. "R&D is a black hole where they pour money in and they're just praying that one day something comes out of it."
Source: Chief Executive, http://chiefexecutive.net