Its all about leadership development. Here are current best practices for CEOs to be more effective at developing and investing in the executive growth of R&D Leaders.
According to OECD data, businesses, educational institutions and research institutes based in the United States—as well as the US government—spent a combined 3.45% of total GDP on R&D. That proportion lagged just two OECD nations—Korea (4.82%) and Israel (5.44%). However, when it comes to sheer dollars spent, no other nation comes close to the U.S.’ total spend of approximately $720.7 billion—with around $538 billion of that coming from the business sector.
While reliable data on how those numbers have shifted over the past couple of years is hard to find, it’s a safe bet that overall spending spiked as a result of pandemic-related R&D in health, while corporate spending tapered due to the uncertain environment and retooling to deal with challenges such as the shift to remote working conditions, and solving supply chain issues.
All of which is to say that R&D may not have been top of mind for many CEOs in recent years—a situation that, while understandable, could leave companies vulnerable to challenges from established competitors and at risk from disruption by startups. Therefore developing and investing in R&D—particularly leaders—should be a focus and competitive advantage for CEOs heading into 2023.
From June to October 2022, Carpe Diem Partners spoke to some 80 senior R&D executives about the ideal traits and best practices for CEOs to follow when investing in the growth of Chief R&D Officers. These Executive Leaders worked in companies with at least $500 million in revenue across the consumer goods, food and beverage, food production and biotech industries.
Broadly, the responses break down into 5 main areas:
Taken together, these suggestions form a blueprint that can be applied to leaders across a number of disciplines, and that will also help CEOs to keep R&D at the heart of their company’s business models—a critical concern for remaining competitive in future years.
With so many pressures and priorities, it’s not surprising some CEOs fall into the habit of discounting or ignoring R&D. As one executive noted, “it’s difficult for CEOs to have the patience to develop innovation”—an observation that stems directly from the pressure to deliver short-term results.
“I want the CEO to be engaged in R&D, and to see the strategic value of what R&D does,” said another leader—a sentiment that was echoed by several others. As part of that process, a third executive advised that CEOs should “link strategy to the innovation plan. Sit down with the Chief Innovation Officer for a few hours and understand where the business wants to go.”
Finally, a number of R&D leaders all suggested reframing the understanding of R&D along similar lines: “Don’t treat it as a cost center, but an investing center.”
Beyond reframing the conversation, R&D leaders also stressed the importance of CEOs engaging with them, to further their development. “Communication is very important,” said one, also noting that an R&D leader “needs to feel that he/she is making a difference focused on developing new products and wants a leader who will support that. Don’t be afraid of failure.”
“I’ve found that the best situations are where the CEO has an edge to them,” said another executive. “Be open to ideas from within the team, collaborative to challenge and discussion for the future. I’ve seen R&D leadership not being developed where CEOs are fixed in their ways, not open to discussion. I like to see CEOs collaborate on new ideas and innovation and development.”
CEOs who successfully open channels of communication with their R&D leaders—and who speak a common language—are better positioned to provide guidance that will help leaders to develop.
“The CEO needs to coach the Head of R&D to be a true partner to the other functions,” said one executive. Additionally, they have a role to play in helping leaders develop “strong understanding of the business, and a great leader of people.”
To do that, R&D leaders “need a seat at the table, innovation education, and ongoing learning,” said another executive. “Role rotation would also be interesting, if feasible.”
Several executives pointed out that guidance is only part of the equation—to truly develop, aspiring leaders must be placed in positions that challenge them, and trusted to deliver. As one executive put it: “Challenge them, and ensure they are actively participating in strategy and GTM discussions.”
Other executives noted that that exact experience was playing out at their current companies, with R&D leaders being entrusted to “lead the integration and be part of the due diligence/M&A aspects for an acquisition.” Elsewhere, key R&D personnel are “part of the process and decision making”, and provide “strategic input on product and direction.”
Tying together each of the previous points, executives noted that both formal and informal development opportunities had an important role to play in building leadership skills within the R&D function.
One executive noted that their company was “taking high-performing people, give them opportunities to help develop them as innovators and business people”—with the list of opportunities including programs geared towards leadership skills for women, improving self-confidence, and participating in innovation seminars.
On the other end of the scale, another executive noted that, while the pandemic had put formal development plans on hold, the opportunity to “wear many hats […] self-learn and fix the issues” had been an invaluable tool when coupled with “lots of involvement in the business from the CEO.”
Conclusions
Overall, the strategy for developing R&D leaders is perhaps best summed up by the following executive response, who noted that a leader should “report to the CEO, but remain autonomous (to innovate). They need to be involved in the firm’s strategy, feel the vision from leadership, and to have leaders understand what R&D brings to the table.”
With that in mind, the ability to develop leadership skills within the R&D function clearly begins with the mindset: the first step is to commit to R&D as a core business goal. From there, the remainder of the development process flows naturally: effective communication, providing access to opportunities, and modeling leadership.
These market insights from Carpe Diem Global Partners are gathered from the firm’s extensive client work leading Board, CEO, CXO, and CHRO executive search engagements for public and private multinational companies. For deeper, custom insights, contact Jeff DeFazio at Jdefazio@carpediempartners.com.