Agile can be defined as a capability – a rapid response to turbulent markets, changing business requirements and advances in technology. Although more widely discussed in the context of the software industry, researchers Alexander Kock and Andre Meier identified a growing phenomenon for R&D Units to adopt agile principles, and in doing so, they make a significant contribution to the firm’s organisational ability and overall success.
Agile R&D Unit Organisation (ARDO) can be defined as both a capability – how the R&D unit combines cultural, structural, and process-based resources to increase the unit’s adaptiveness toward changing environments – and also an outcome – the unit’s increased adaptiveness toward changes of any kind.
In their paper ‘Agile R&D units’ organisation and its relationship with innovation performance’ the researchers Andre Meier and Alexander Kock explore the relationship between ARDO and innovation performance. It builds on their earlier work.
Kock explains: “We developed the ARDO concept in a qualitative study based on expert interviews (Meier/Kock 2021). Then, we developed and validate a measurement concept (Meier/Kock 2022). And in the current R&DM paper we explored its relationships to outcomes.”
The researchers studied a large multinational company that had 162 R&D units and looked specifically at how ARDO relates to front-end and new product development success.
Kock continues: “The company had taken a deliberate decision to advocate an agile approach. However, it was not a mandatory transformation and all units had autonomy over whether they introduced agile elements and how intensively.
“Accordingly, we observed quite some variance across organizational units, allowing us to identify relationships to innovation success.
“However, since the units had autonomy regarding the extent of ARDO, it might also be that the more successful and better units more likely chose to introduce new work approaches (i.e. we cannot conclude a direct causality of ARDO on innovation success).”
Six dimensions of an Agile R&D Unit Organisation
The researchers conceptualised ARDO as a dynamic capability with six dimensions:
- Culture based on agile values – characterised by high personal commitment, clear goals, openness regarding tasks and project status, mutual respect and tolerance of failure.
- Customer integration – customer satisfaction is a primary objective, to the point of co-development on some projects.
- Autonomy – appropriate individuals make decisions and respond quickly, resources are allocated according to need, with trial and error experimentation.
- Iterative working – feedback driven sprints, with every iteration delivering a product increment. Enables continuous learning and adjustment of objectives.
- Cross-functional collaboration – in-depth expertise in a specific field combined with general knowledge of related areas.
- Flat hierarchies – reduced levels of management lead to faster decision-making.
The researchers interviewed the innovation leaders for each of the units and measured the outcomes through informants’ assessment (as described in the paper) using multi-scale-items. They observed the full spectrum of innovativeness across the units. Some units were only involved in interactive product development, while others developed completely new technology (radical for the company).
Key findings
- Front end innovation – on average, agilely organised R&D units are also more successful in their front end, suggesting that ARDO contributes to generating innovative ideas, selecting the most promising ones, and processing them quickly.
- Positive relationship between front-end success and NPD success for units practicing ARDO.
- ARDO and the resulting agility are particularly favourable in turbulent market environments, potentially as an agile approach is particularly beneficial when information is uncertain.
The conclusion is that Agile R&D Unit Organisation offers benefits across all types of innovation (i.e., it is beneficial for radical innovation and incremental innovation) and it consists of principles that can be applied to different degrees.
Kock says: “The results of this study might encourage managers to reorganise their R&D unit as they could use the proven benefits, such as increased agility, front-end success and NPD success, to justify reorganisations.
“One of the R&D units in the focal company adopted the ARDO approach to cope with the unit’s constantly changing business environment – it reorganised its structure, implemented iterative approaches and laid a specific focus on specific cultural facets to become agile.
“According to the unit manager, these changes led to astonishing results and encouraged other R&D units to follow this example, resulting in reorganisation of the whole business unit.”
For more information see the paper: Agile R&D units’ organisation and its relationship with innovation performance, Andre Meier, Alexander Kock was published by R&D Management 2023 https://doi.org/10.1111/radm.12655
Background reading
Meier, A. and Kock, A. (2021) Characteristics, antecedents, and consequences of agile R&D Unit Organisation – a conceptual framework. Journal of Competences, Strategy & Management, 11, 1–20.
Meier, A. and Kock, A. (2022) Agile R&D units’ organization beyond software – developing and validating a multidimensional scale in an engineering context. IEEE Transactions on Engineering Management, 69, 6, 3476–3488.
