21 Aug Prepare Review, Creating Cultural Change in a 115-Year-Old R&D Organization, and be prepared to discuss. Respond It’s important to build a guiding coalition for your change. How did the

FEATURE ARTICLE

OVERVIEW: This case study highlights the practical steps a 115-year-old company's R&D organization executed to change its culture — a change that was critical in order for the R&D group to improve both speed of decision making and alignment with its business units with regard to project selection and prioritization. The scope of the cultural changes extended beyond traditional product design and development. The case study describes the communication methods the R&D organization used to change others' perceptions of it from a corporate overhead that delivered little value to a resource necessary for the profitable growth of the enterprise.

Keywords: Cultural change; R&D alignment; R&D strategy

Over a five-year period, Timken R&D worked to improve the speed and quality of its decisions and its alignment with the business.

For almost 100 years, the Timken Company's R&D organization focused on one product category: tapered roller bearings. In 1898, Henry Timken patented a tapered roller-bearing assembly that revolutionized freight-wagon axles. A century later, over 90 percent of the company's sales continued to be generated by various embodiments of tapered roller-bearing technology. Needless to say, the Timken R&D organization was comfortable working in that space; not surprisingly, the R&D group had developed a culture based on deeply entrenched norms and assumptions — a culture that was increasingly misaligned with the needs of the business.

In 2001, Timken decided to expand its product offerings in an effort to serve changing markets. Initially the expanded product offering was achieved through acquisitions, which had minimal impact on R&D, but over time, it became clear that innovation was required across the full breadth of the product portfolio. Traditional competitors were no longer the only competitive threat, and past approaches to innovation were no longer sufficient.

Over a five-year period, guided by a desire to deliver relevant technologies to the company's business units, R&D leadership set a course to improve the visibility of its efforts and facilitate meaningful portfolio management discussions with business unit leaders. Building support for radical innovation projects and increasing alignment with business units required two efforts: a process to identify and prioritize new ideas and a process to execute those ideas from concepts through commercial applications. The existing gate process was expanded to become the Concept to Commercialization process. The concept part of the model related to upstream, long-term technology projects; commercialization was the focus of near-term new-product development. The concept portfolio was fed by revamping the existing technology roadmapping process.

During the transition of the concept portfolio, behavioral changes in project governance and deliverables were coupled with attitudinal changes around the value and focus of frontend R&D efforts. Accepted norms regarding roadmapping were challenged, which resulted in changes in R&D managers' responsibilities. As a result of these efforts, the vision to deliver relevant technologies through improved visibility and meaningful discussions about the concept portfolio was achieved.

The Need for Change

The roots of Timken's R&D culture can be traced back to the 1970s, when the R&D organization was physically separated from company headquarters, allowing it to develop its own culture, isolated from that of the business. By 2009, the Timken R&D organization could be described as having a consensus culture. A single informal dissent could kill an idea or keep one alive. Technical project reviews relied on informal decision making that was not consistently documented.

Worse, R&D was perceived as having goals that were disconnected from the needs of the company's business units. An "us" and "them" attitude prevailed, with business unit leaders complaining that, for instance, "They [R&D] only work on science projects." Business unit leaders, who influenced R&D funding, perceived that R&D was advocating new technologies that were not aligned with their needs. This perception was not entirely unfounded, hut it was the result of an executive mandate from the early 2000s, when the R&D organization was charged with developing breakthrough products, under the assumption that business unit managers would accommodate any new products that emerged from R&D. As a result, R&D developed some technically sound, novel, fully functional prototypes — only to discover that they lacked commercial viability or were not aligned with any business unit's strategy.

In turn, the R&D team perceived that the businesses viewed it as an order-taker and felt it was being directed to develop solutions without a clear understanding of the underlying problems and priorities. This impression was reinforced by the company's innovation process, which was fed by a collection of technology roadmaps created by multiple business unit teams using multiple formats. These tended to focus on near-term new-product initiatives provided by the business units; a single roadmap could include over 120 tactics across a dozen vectors (Figure 1). Other roadmaps were simple lists of high-level bullet points, such as "reduce costs," with no additional guidance offered.

All of these maps were intended to feed both short-and long-term R&D pipelines, but they typically were filed away shortly after they were created, and then forgotten. It became rare for new R&D development initiatives to meet the short-term financial criteria business units had established to move a project forward, and the existing stage-and-gate process became known among R&D personnel as "Kill-Gate." R&D, and especially long-term conceptual projects, stalled. Because R&D decision making was informal and often undocumented, it seemed to business-unit leaders that projects never advanced or were continually being rescoped to escape business alignment constraints.

In 2010, a new R&D management team was charged with improving innovation output and establishing a more collaborative culture with the business units. The team realized that first, R&D needed a clearer governance procedure to drive decision making and either move projects forward or kill them, and second, both R&D and the business units needed a clear grasp of how they were aligned and how R&D could serve the needs of the business. An initial step in that direction was the deployment of a governed stage-and-gate process called Concept to Commercialization. The process had two parts linked by a business adoption step. Business adoption was where a completed concept project, such as developing a new material, would feed into a commercialization project, such as developing a new product line. This process represented the first visible tie between the work output of R&D and the needs of business units.

Initial deployment efforts focused on existing near-term commercialization projects in order to expedite new product launches. As a result, in 2011, a dedicated team of program managers completed a record number of existing commercialization projects predating the Concept to Commercialization process. That success with short-term commercialization projects spurred questions about how similar success could be achieved in the longer-term concept projects. These questions led R&D management to ask, "How can the process of transitioning newly developed technologies into new product development be improved?" Thus, the goal of strengthening the formal bridge between new technology development and new product development was proposed.

The Concept to Commercialization process would be the framework to deliver relevant technologies to the business, but the concept portion of this process needed to be seen as relevant beyond R&D. Since discussions about long-horizon projects typically took a back seat to daily operations, R&D leadership needed to build a case for why the concept portfolio was important to a growing business. Such a task would require a vision that others would support and that would generate a sense of urgency.

Framework for Change

The journey toward cultural change at Timken can be understood through the lens of Kotter's (1996) eight steps of organizational change:

1. Establish a sense of urgency. This requires making clear that the current state is so unacceptable that change is worth the risk.

2. Create a guiding coalition. Recruit a core team of advocates to support and guide the change journey.

3. Develop a vision and strategy. The guiding coalition develops a vision and strategy around a goal common to all in the organization.

4. Communicate the change vision. The vision and goal must be shared throughout the organization in order to build support for change and for the change strategy.

5. Empower broad-based action. Leaders empower a broader base of people to execute the strategy, removing obstacles, such as existing policies, that impede change.

6. Generate short-term wins. Tangible short-term results build support for the vision and bring more parts of the organization on board.

7. Consolidate gains and produce more change. With a few short-term wins, support strengthens, enabling additional change.

8. Anchor new approaches in the culture. In this final, critical step, the changes become part of the organization's new normal. Activities that had been new to the organization become integrated into its regular processes and no longer require the oversight of the guiding coalition.

Over a period of 15 years, Kotter studied dozens of organizations' attempts at major change. He found that culture and culture change had a major impact on the success of a change effort. Contrary to the accepted wisdom that organizational change should begin with culture change, Kotter found that successful efforts ended with a new culture shaped by the change.

While the Timken leadership did not intentionally reference Kotter at the start of the transformation, one team member had undergone formal training in the approach, which influenced the execution.

Establish a Sense of Urgency

"Establishing a sense of urgency is crucial to gaining needed cooperation." (Kotter 1996, p. 36)

The R&D leadership at Timken established the need for change through a comprehensive analysis of the concept portfolio, performed by associates who had no prior attachment to the projects or process. Unfamiliarity with R&D and its jargon posed some initial challenges, but the exercise confirmed what some suspected — the concept portfolio lacked sufficient rigor and clear decision-making processes. More substantial were the findings related to the portfolio's performance: more than 50 percent of the open projects were in their later stages. A simple plot of the value of the concept portfolio's projects against their anticipated year of completion revealed that R&D's value to the business was projected to decline significantly in the near future (Figure 2).

The realization that the fuzzy front end of the Concept-to-Commercialization process was short on fundamental research ideas to support corporate objectives for organic growth awoke R&D leadership to the danger that the company would suffer from what Tushman and O'Reilly (2002) call the "tyranny of success" — the inability to balance innovation with organizational effectiveness. This fear engendered a sense of urgency to drive significant changes. Substantial new technology initiatives that led to longer-term yields were needed, and more important, the businesses needed to have a clear understanding of the value of these higher-risk, higher-reward efforts. In an effort to gain support for change, R&D leadership shared their realization and concerns with executive leadership, who gave the R&D leadership team a directive to reverse the situation.

Create a Guiding Coalition

"A strong guiding coalition is always needed — one with the right composition, level of trust, and shared objective." (Kotter 1996, p. 52)

With the need for change firmly established, a dedicated R&D process team was created to enhance the innovation process, manage the concept portfolio, and work with subject matter experts to update the technology roadmaps and the roadmap creation process. The R&D process team quickly recognized that new portfolio performance tracking metrics were also needed to indicate and communicate success.

At the time the R&D process team was formed, R&D's scope included product development; as a result, the team was composed entirely of associates assigned to the R&D organization. In spite of this apparent homogeneity, however, the team was diverse in terms of experience. Two members were relatively new at Timken and had no engineering experience. Two others had long tenures and engineering backgrounds but had also held positions outside of the R&D organization. In addition, motivated by the need for fresh perspectives, R&D leadership departed from past norms by assigning associates with no engineering experience to key roles on the team. For example, the team member assigned to spend 80 percent of her time on technology roadmapping had a technical marketing background. Within the traditional Timken culture it was thought that "everyone in the company has an engineering degree," which was mostly true — from sales to marketing to executive leadership. So while assigning a person with marketing experience to lead a roadmapping activity would seem commonplace in many contexts, for Timken, and especially for R&D, it represented a changed mindset.

At this stage in the change process, the concept portfolio's front-end innovation projects were conceived and executed entirely within the walls of the R&D organization. Therefore, there was no significant reaction to the formation of the team from outside R&D. Throughout the remaining steps, the R&D process team led the design of new processes, communicated the vision across the enterprise, acted as a sounding board for concerns, and negotiated to overcome obstacles that were internal and external to R&D.

Develop a Vision and Strategy

"Vision refers to a picture of the future with some implicit or explicit commentary on why people should strive to create that change." (Kotter 1996, p. 68)

Developing the vision and strategy to drive change required stepping back to analyze where and how R&D could best support the needs of the enterprise. An outside consultant was enlisted to guide R&D leadership in developing and articulating its change strategy. Because the enterprise had grown through acquisitions, the vision encompassed both the legacy core products and the broader scope of new products.

The strategy defined a number of innovation domains, such as "support core business" and "develop new technologies." By echoing the goals of the business units, these innovation domains demonstrated an authentic common interest with the business units and established a tone of partnership. Cross-referencing active concept projects to the innovation domains demonstrated that the business units' perception of an R&D focus on "misaligned science projects" was unsupported, further reinforcing the cooperative tone.

The growth strategy was developed in two forms: a detailed seven-page brief for executives and a condensed PowerPoint presentation for R&D associates. The brief noted, "The aim of any strategy is to build a commitment to a pattern of behavior that will allow an organization to compete effectively and win in the marketplace." The core value of innovation remained, but the breadth of innovation efforts was expanded to encompass power transmission products, replacing the earlier, narrower focus on bearings. Two efforts were highlighted — the Concept to Commercialization process for idea execution and the technology roadmapping process for idea generation. Furthermore, the strategy endorsed open innovation, which was a departure from past attitudes about fundamental research. The goal to have R&D better aligned with business unit strategies was considered critical to the objective of delivering relevant technologies to business units.

Communicate the Change Vision

"That shared sense of a desirable future can help motivate and coordinate the kinds of actions that create transformations." (Kotter 1996, p. 68)

Communicating the R&D strategy and vision required effort from many individuals, using various delivery methods and cadences. The CTO made a public commitment to embrace this new Concept to Commercialization culture and set expectations at a quarterly meeting at which the new strategy was introduced to all of the company's R&D associates. The introduction concluded with the CTO responding to questions from associates.

Throughout the next two years, the new R&D strategy was presented to wider audiences, including the company's executive leadership, which had given the R&D team the scope to make the needed changes but not been involved in the conceptualization and execution of the change process. In some instances, R&D leaders drew on their past non-R&D experience and used informal networking to communicate the strategy. Metrics related to business unit alignment and the concept portfolio's performance were introduced and shared to emphasize R&D's commitment to the vision.

At the tactical level, socializing the R&D vision required more personal approaches. R&D project leaders and lower-level managers were required to attend training in the new expectations regarding project charters and gate deliverables. During the sessions, which were led by an R&D process team member in conjunction with a business unit manager, participants revised their project charters to minimize technical jargon and focus on business deliverables. For example, one project's initial charter read, "Identify the impact element abc has on material xyz's micro structure." The revised charter read, "Reduce late deliveries of raw material xyz for product A by determining if eliminating element abc will reduce the need for reprocessing while maintaining current product performance." These initial meetings were early examples of R&D project leaders partnering with business unit managers to support a shared vision.

The vision was also shared and consolidated through a significant rethinking of the technology roadmapping process and expectations for the roadmaps themselves. The R&D process team member charged with the roadmapping process collected and summarized the decentralized product and market plans provided by over a dozen business unit managers. Afterward, face-to-face meetings were held with these managers to document their visions, including those that had not yet been fully analyzed. R&D personnel shared nascent technology ideas with the managers to encourage discussion of their perceived, but as yet undeveloped, business needs. Cialdini's (2001) concept of social proof was used to persuade business managers to focus on long-range plans by sharing intermediate or partially developed plans from one business unit manager with other managers to spur ideas. The results were maps of potential future products that extended beyond the short-term horizon. The first two iterations of this process were led by the R&D process team; the final iteration was managed by the business unit managers. In this last step, R&D and business units joined to discuss long-term product and technology needs rather than near-horizon solutions, marking a significant departure from past practices.

Empower Broad-Based Action

"The purpose of stage 5 is to empower a broad base of people to take action by removing as many barriers to the implementation of the change vision as possible at this point in the process." (Kotter 1996, p. 102)

After the vision was communicated, some R&D associates voiced concerns about the feasibility of its execution. Issues were raised regarding current project management practices, the complexity of existing roadmaps, budget priorities, and the challenge of explaining fundamental research to those with no subject matter expertise. Culturally, many in R&D believed that projects in the long-term concept portfolio were so different from short-term commercialization projects that best practices from the commercialization portfolio could not transfer to the concept portfolio.

The R&D process team responded by flexing processes imported from the commercialization process to accommodate the different needs of concept projects. For instance, during the project lead training, it became apparent that the existing work breakdown structure (WBS) template did not fit most R&D concept projects. In response, a limited number of WBS template variants were developed to allow project leaders to relate better to the stage-and-gate process. The tailored WBS approach was designed to be more relevant to actual concept project progressions. In addition, the one-page WBS facilitated a common understanding of a project's scope, status, and progress toward deliverables. Finally, allowing concept project leads to have some influence over the communication of progress helped instill a sense of ownership in and commitment to the new process.

Perhaps the most significant change to the existing R&D stage-and-gate process was the decision to introduce non-R&D gatekeepers to the concept portfolio's governance procedures. Many R&D project leads were concerned that non-R&D managers would kill projects they did not understand. This concern was magnified by the belief that having an R&D project killed would have a negative impact on individual performance appraisals. To overcome these obstacles, two actions were taken. First, a decision was made to restrict gatekeepers at the filter stage — the initial go/no-go decision gate — to R&D management (Figure 3). Second, in preparation for the transition, a series of reviews was established so that each project in the portfolio could be discussed with the new non-R&D gatekeepers. Over time, gate meetings began to focus on each project's strategic fit and anticipated value rather than technical details.

Around the same time that non-R&D gatekeepers were introduced, the executive team removed a significant hurdle for breakthrough ideas by creating a corporately funded budget to finance high-risk ideas. The separate budget afforded R&D leadership the discretion to investigate potentially disruptive technologies while maintaining a balance with shorter-term business unit priorities.

New tasks related to technology roadmaps were executed as a separate work stream from the stage-and-gate process. The deliverables and the new method by which they were produced challenged many existing norms. First, R&D challenged business units to prioritize their needs rather than speculate on potential technical solutions. Ultimately multiple product maps from business unit managers were reconciled and reduced to a single, mutually accepted chart capturing all "critical to customer" needs (Figure 4).

The second significant departure from past practices was that R&D platform leaders were assigned and required to formally pitch their recommended platform strategies. At the time, Timken had seven technology platforms, around which projects were grouped and organized. As a result of the changes to the roadmapping process, the role of the platform manager shifted from manipulating a dozen or more short-term roadmaps to recommending a strategy to achieve the prioritized needs of the business units. All platform leaders used the same polar chart template to present their strategies (Figure 5); however, each was given freedom to sub-categorize his platform for better organization. This freedom allowed each platform owner to explicitly capture his subject matter expertise while simplifying project classification. Platform proposal presentations were conducted in off-site meetings to sharpen focus and minimize distractions.

Generate Short-Term Wins

"Most of the rest of us expect to see convincing evidence that all the effort is paying off." (Kotter 1996, p. 119)

Early on in the change process, a few active concept projects were publicly killed in gate meetings. One, an R&D-initiated project, had excellent projected value but failed the technical proof-of-concept stage. Two others, also R&D-initiated, had acceptable proof-of-concept results but were not viewed as an appropriate strategic fit by the business units. R&D's willingness to publicly change its tactical course after input from business unit managers demonstrated its commitment to a fruitful partnership. This gesture was repaid in kind I when an existing modeling project was presented to the expanded set of gatekeepers (including non-R&D gatekeepers). The non-R&D gatekeepers not only agreed with R&D's valuation of the project, but they also insisted that the project receive a higher priority to accelerate its value to the enterprise.

While it may seem counterintuitive, killing projects was considered a "short-term win" in the journey towards delivering relevant technologies to the business units. The early gate decisions made under expanded governance helped to change past beliefs that R&D was isolated from other functions, building business unit confidence in the change.

Consolidate Gains and Produce More Change

"Whenever you let up before the job is done, critical momentum can be lost and regression may follow." (Kotter 1996, p. 133)

After the majority of the R&D process changes had been implemented, they were shared across the enterprise to help invigorate the new processes. The platform polar charts began to be referenced regularly during quarterly R&D platform reviews — breaking the old paradigm of roadmaps only being referenced once a year. The polar charts, coupled with indications of how a project supported a business unit's strategic direction, became mandatory in platform reviews and gate meetings.

Once the changes to R&D strategy, the institution of the Concept-to-Commercialization process, and the streamlining of the technology roadmapping system were stable, a binder was created to document the process and its deliverables. At first, a limited number of binders were shared by R&D leadership with executive leadership; ultimately, the positive feedback from executive leadership led to other function leaders outside R&D requesting documentation of the process and its results.

Anchor New Approaches in the Culture

"Culture change is not something you manipulate easily." (Kotter 1996, p. 156)

An important step in the improved R&D process came when the new system was communicated externally. In a press release published on June 11, 2014, Rich Kyle, CEO of the Timken Company, announced that "the company is committing $60 million to its DeltaX Initiative, a multi-year investment designed to dramatically improve the company's concept-to-commercialization efforts" (Timken 2014). The public reference to the internal term "Concept to Commercialization" was evidence that the R&D changes had become part of the company's culture.

The Benefits of Change

Ultimately, culture is a mix of beliefs and the behaviors driven by those beliefs. Overall, the work described in this paper has produced