Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 19

Managing the Research and Development Department Effective use of research and development (R D) is an important part of any firm's competitive strategy. Some firms take an "incrementalist" approach to R D, continually striving to add value to their products and services. Other firms take a quite different approach by looking only for "breakthrough" results from R D. The breakthrough results are those that fundamentally change the nature of the products, the services, and the competition in the industry. An example of a breakthrough result is General Electric's digital X-ray technology, first sold in 1996, which uses digital imaging to replace the conventional film-based technology. Other examples include Apple's iPhone and Toyota's hybrid vehicles.
Many firms employ both strategies: one R D department uses the incrementalist approach that focuses on continually improving existing products and another R D department uses the breakthrough approach that develops fundamental changes. The incrementalist R D projects help to keep the current product lines competitive while the breakthrough projects hold the promise of a successful future.
Required Describe what type of SBU you would recommend for each of the two types of research and development departments and explain why.