TECHNOLOGY FUSION AND THE NEW RESEARCH-AND-DEVELOPMENT

As the pace of technological innovation quickens, companies can no longer miss a generation of technology and remain competitive. But keeping up is getting more difficult as innovations increasingly come from outside industries-a textile company that develops a new fiber, for example, can revolutionize the building materials industry. To stay ahead of the pack, insists Fumio Kodama, companies have to find new ways to think about and organize research and development that goes beyond the traditional breakthrough mentality. They need a technology fusion strategy. A "breakthrough" substitutes one technology for another-such as the CD replacing the record album - while fusion blends several previously separate fields of existing technology. The results of fusion can be profound: the marriage of mechanics and electronics gave birth to mechatronics and propelled Fanuc into a world leadership position in the numerical controller market. Fanuc is just one of Japan's many high-tech manufacturing companies that have adopted fusion; others include Matsushita, NEC, Sumitomo Electric, and Toray. In studying these and other companies, Kodama has identified three fundamental management principles that can help companies implement a fusion strategy. First, let the market drive the R&D process, not the other way around, through a process he calls "demand articulation." Second, develop a strong intelligence gathering capability both as a defense mechanism against invisible competitors and as a source of new ideas. Third, and most important, take part in cross-industry R&D. Investing in cooperative R&D projects is a long-term necessity and should not be evaluated in financial terms alone.