Blog #3: Using R&D to keep succeeding when you're already succeeding

Using R&D to keep succeeding when you're already succeeding

Companies in emerging markets analyze their strategic situations differently than “already set” companies. Normally, a company in an emerging market closes a gap, or develops a creation that disrupts the industry. This week’s readings recalled the use of data into understanding how consumers behave, and how that may drive to a company’s failure is used or interpreted inappropriately. Furthermore, it recalled intensive investments in research and development to produce creations that can change today’s customer’s lives.

In the United States, consumers are highly familiar with Amazon. Since origin, the company focuses on developing a marketplace in an online environment. The company was a startup, not a giant, and the market—back in the 90s—was emergent. It could easily adapt to changing environment, and today, Amazon can foresee gaps and needs—and cool things for consumers, even before consumers want them. So, what is Amazon doing right? In the face of technology companies’ daily-bread failures and bankruptcy declarations, the Sears catastrophic demise, and the ever-changing customer wants…

How is Amazon framing itself to succeed in the future while managing the success of today? One answer may come from their intense use of data analytics to understand consumer behavior and preferences. Another arm may come from the intensive funding into research and development (R&D). To illustrate R&D, I will briefly look at another company—Disney.

On The Innovator’s Dilemma, Clayton M. Christensen writes that the demise of several companies falls on good managerial practice¹. But this doesn’t imply that to remain a leader in emerging markets and technologies, a company must throw away the cornerstones of business and resolve to bad managerial practice. It means that leaders in behemoth companies must be strategically clear and find a balance. That balance, for Amazon, as well as Disney, and other companies that work to succeed and remain leaders in a fast-paced, technologically changing environment comes with serious investment in Research and Development. Not only financial investment, but partnerships and human capital in the creation, pursue, and even failure of technologies that may appeal to customers.

Disney Research is the R&D arm of Disney. Its offices strategically partner with universities, they hire graduate students as well as professors to create and conduct scientific research on many emerging areas, such as Artificial Intelligence, cognitive psychology, and human-computer interaction². In 2014, labs were located at Cambridge, MA; Zurich, Switzerland; Los Angeles, CA; and Pittsburgh, PA. The Cambridge lab closed in 2016³. Carnegie Mellon was associated with a lab until late 2017, when due to budget cuts, the lab closed⁴. When asked about the closing of the Cambridge lab, a Disney spokesperson simply replied: “We regularly evaluate our organization to meet the evolving needs of our business.’’³

Companies working in this kind of ruthless environment, where today are leaders and tomorrow may be out on the street, must be ruthless about their funding—and removal of funds—for technologies and partnerships that may not be producing the desired financial outcome. It is a part of the game.

1.       Christensen, C. M. (n.d.). Introduction: Why Good Companies Fail to Thrive in Fast-moving Industries. Retrieved from https://www.thecasecentre.org/educators/products/view?id=71787

2.       Disney Research. (n.d.). Locations. Retrieved from https://la.disneyresearch.com/labs/

3.       McGinnes, M. (2016, February 11). Disney is closing its research lab in Cambridge. Retrieved from https://www.boston.com/news/innovation/2016/02/11/disney-is-closing-its-research-lab-in-cambridge

4.       Tunnard, A. (n.d.). Disney Research leaves CMU center, collaborations continue. Retrieved from https://thetartan.org/2018/2/26/news/disney