Feed R&D or Farm It Out

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HBR CASE STUDY

RLK Media built its reputation on brilliant innovation in high-end consumer electronics. But with customers defecting to mass-market products, RLK has to rethink its approach. Will outsourcing R&D save the company or destroy it?

Feed R&D– or Farm It Out?

by Nitin Nohria

“O

DANIEL VASCONCELLOS

k, just sit there. No, right there, in the La-Z-Boy. Don’t move.” Lars sank into the battered Naugahyde chair at the edge of the audio-engineering lab, wondering vaguely if there was anything on the cushions that might stick to his suit. As CEO of RLK Media, he gamely participated in these periodic demos. It was a good way to connect with the R&D team–and, besides, sometimes they actually surprised him. Lars checked his watch and then settled his gaze on Ray Kelner, RLK’s founder and chief scientist, who was fidgeting at a workstation. “Ray, can you get this show on the road? I’m out of here in ten!” “Two seconds, Lars. Two seconds!” Ray cursed under his breath as he snapped a patch cable into an Ethernet

switch. A tangle of wires looped from the workstation to a top-heavy rack of audio and video hardware. Duct-taped braids of colored cables snaked across the floor. Lars wearily surveyed the mess. This better be good, he thought. Another gorgeous camcorder nobody wants, and we’re sunk. “Comfortable? Good. Now–put these on.” Ray handed Lars a headset with goggle lenses and a ribbed aluminum frame. He slid the headset into place. As the engineering team looked on, Ray snapped a Firewire cable into a port on the goggles. Swiveling around to his keyboard, he tapped in a command and watched a blur of code scroll up the screen.“Showtime,” he whispered to himself. Nothing. Lars sat expectantly for a few seconds and was reaching to take

HBR’s cases, which are fictional, present common managerial dilemmas and offer concrete solutions from experts.

july–august 2005

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