China produces 16.5 times more engineering students annually than Germany. The average engineering hourly rate is 25 to 35% of the German level. The availability of well-trained engineers is significantly lower in Germany compared to the global market.

For many companies, the greatest potential for growth and profitability lies in Asia and America. Companies that believed they understood local customer needs from their central headquarters often proved to be wrong.

The response speed to customer needs is too slow when everything runs through the headquarters.

Most companies have already established production facilities locally in these markets, increasing the distance between central development and production and complicating design-to-manufacturing.

Lastly, Generation Z in Germany has different life goals compared to those in Asia.

These factors advocate for a global R&D network.

What good is the higher availability and lower hourly rate of engineers if the local skills are not sufficient?

Suppose we have invested heavily in building up these skills. What happens when high employee turnover in Asia repeatedly undermines our knowledge building efforts?

Or worse yet – what if the accumulated know-how is exploited, leading to us inadvertently creating competition for ourselves?

Is it truly the best solution then?

There are two motivations for change: to avoid something or to achieve something.

Let’s assume we want to avoid being too slow, too expensive, and out of touch with the market. Therefore, we establish local R&D sites in India, China, Eastern Europe, and the USA.

Initially, engineers at the headquarters may feel constrained. They are expected to build expertise at the new locations, which could seem like undermining their own position. Why should they create internal competition?

How have other companies successfully built a global R&D network? What could motivate us to achieve something rather than just avoiding problems?

What motivates us to become a global, intercultural network where all employees enthusiastically contribute their knowledge and focus on one thing: achieving highest customer satisfaction and outperforming the competition!

What is our vision – what drives us?

Success factors for global R&D networks:

1. Product Ownership

A location in a Best Cost Country (BCC) suffered from high turnover because only less demanding tasks were assigned there. Turnover significantly decreased when the local R&D site was given its own product ownership. This strengthened employee engagement and identification with projects.

2. Personal Relationships

Reservations towards people from different cultures diminish fastest through personal relationships. In a highly successful company, key players sometimes visited each other with their families. Such interactions foster trust, and with trust, most problems can be solved more quickly and efficiently.

3. Operating System

A clearly defined framework that regulates cross-location collaboration is essential. Elements such as close coordination, team self-responsibility, and effective leadership through clear goals, autonomy, and feedback promote trust and efficiency.

4. Additional Success Factors

AS&P has accumulated over 25 best practices from global R&D networks over 30 years and more than 1,600 projects. In a self-assessment workshop, we define and evaluate relevant approaches together with you.

These success factors help companies efficiently and sustainably manage their global R&D networks by promoting the right responsibilities and relationships, and establishing a solid operational framework.

An optimal global R&D network could meet the following criteria:

1. Cost Advantages: Optimal Best Cost Country Mix.

2. Market Proximity: The R&D understands the customer better.

3. Production Proximity: Development and production work integratively together.

4. Time to Market: Innovations and applications can be implemented faster.

5. Low Complexity: Roles and responsibilities within the R&D network are simple and clear.

6. Synergy Optimization: Platforms, modules, and standards are present everywhere.

7. Competence Availability: Optimal access to relevant global centers of competence.

8. Resource Utilization: Efficient balancing of resource fluctuations across all R&D sites.

What are the goals for your global R&D footprint?

1. Current State Analysis.
– First, we want to understand your current situation.

2. Self-Assessment-Workshop.
– In the self-assessment workshop, we will show you best practices.

3. Action Plan.
– Based on this, you assess your need for action.

4. Improvement Potential.
– We estimate the quantitative improvement potential.

5. Vision.
– Together, we define a vision.

6. Implementation Plan.
– We establish an implementation plan.

The R&D Performance Self-Assessment.

In a 3-hour workshop with the R&D leadership team, you will learn about our methodology:

Part 1: Self-assessment of R&D EBIT cost potentials.

Part 2: Maturity level of the organization across 5 levers.

Part 3: Result interpretation.

By narrowing down through scenarios, it quickly becomes clear whether an initiative is worthwhile.