Unlike his missing in action Cisco counterpart, Nortel CTO - John Roese discusses the ongoing challenges of improving the Nortel R&D model in his most recent blog entry:
The Transformation of R&D at Nortel
Inadequacies of the previous Nortel R&D Model:
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Nortel spent over 50% of its R&D budget on late-lifecycle products. |
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R&D spend as a percentage of Nortel revenue was much too high. |
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There was very little reuse of technology going on across the Nortel businesses. |
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Nortel R&D lacked common processes. |
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The employee satisfaction scores of Nortel R&D teams were getting worse. |
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Without stabilization and strength in its R&D organization, Nortel could not reasonably expect to execute on its business strategy to lead in the era of hyperconnectivity. |
Comprehensive and positioned for the long term, the main challenge of revitalizing the Nortel R&D Model required following:
Three Major Pillars
| 1. | It was imperative for Nortel to create a balanced, responsible and stable R&D operating model. |
Accomplishments so far:
| Nortel R&D spend is now in the 14-15% of revenue range. |
| Nortel R&D budget is 20-60-20. |
20% is late-lifecycle spend.
60% is focused on growth and mature product activity.
20% is now directed to emerging new technologies and markets.
Accomplishments so far:
| Created a common Nortel engineering group. |
This group, consisting of thousands of R&D personnel, was created to provide a common foundation that could be leveraged by the Nortel business unit R&D teams.
Under this group, Nortel centralized platform work, common components, common management, silicon development, tools and R&D processes that could be leveraged across a range of Nortel product teams.
This build once, use many approach goes directly to creating efficient reuse in Nortel and allows them to avoid hundreds of millions of duplicate spend in each area.
This consolidated management chain allows Nortel R&D to collectively act as one, make rapid decisions and to develop cross-business unit processes to, again, drive efficiency and scale.
CMMI is generally seen as the gold standard for process, and the results of a disciplined process and operational structure are well understood.
Nortel has now completed much of the baseline, have begun the efforts, and are starting to see the results.
CMMI is a long-term Nortel commitment to process efficiency and quality, and unlike other initiatives in this list, is much more evolutionary than revolutionary.
For example, Nortel has reconstituted a core industrial design group creating centralized Design to Value and Design Cost Reduction groups to drive cost reductions and margin improvement.
Accomplishments so far:
| Launched a new Nortel Fellows program, which recognizes the best Nortel technical experts. |
| Nortel held their first annual technical conference last summer, bringing together 300 of Nortel's top technical people to collaborate and invent the future. |
| Last fall, Nortel held a number of formal recognition events for Nortel patent creators. |
This IPR recognition was driven by the importance of IPR to Nortel’s future and its passion about recognizing and thanking Nortel technical teams for the extra time and effort they take to invent and capture those inventions - essential to a healthy R&D environment.
The ability of Nortel to operate R&D more effectively and at lower cost, to contribute to the improved operating margin of the company, and to create a stronger technical position for the company is certainly not done by any means with the process, but the approach is structured and world-class.
Do YOU agree that Nortel is making progress in revitalizing its R&D model?
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Good stuff, Nortel!