The Strategic Business Unit

Being part of a business unit increases your influence on its strategy.

In the 1980s there was a big shift from running the whole organisation by functions, to one involving the devolution of power into specific business groups, which became known as Strategic Business Units (SBU). In this organisational method, the overall business is segmented into a number of smaller units. These are those businesses, considered to be strategic in the future development of the company, grouped on the basis of product lines, markets and customers. Each SBU is given the responsibility of managing the functional components necessary for its development, including R&D. This structure, sometimes known as the business tube model, is shown schematically in Figure B4.

Potentially there are major problems for R&D within the overall company, especially if the SBUs are of modest size. These problems are in essence the converse of the strengths of the functional organisation. For instance, in the smaller SBUs it is very difficult to build up the necessary skills base for carrying out any effective R&D. The problem revolves around having a critical mass, large enough to justify the required infrastructure. For example, it is difficult to put a person with a specialised skill into team on a part time basis or for a specific short period of time if that person has not got the support of a wider function; a home to go back to on completion of any secondment. Career planning in R&D is also made more difficult unless there is a good working career development process operating across the SBUs. Certainly strategic research, work that will not be applied for at least five years, based on core competencies is almost impossible. The managers working in the SBUs are geared to meeting the challenges of today and, in R&D terms, this means getting competitive new products from R&D out to meet customer's current needs, as quickly as possible. Whilst this is highly desirable for business profitability, there is a danger that in these circumstances R&D becomes very short term and development orientated, with the search for genuinely innovative new products or processes taking a back seat. In the worst cases, the time is never right to put some speculative money into R&D. The future is mortgaged for the present. This has been called "the tyranny of the SBU" [B-5].

In spite of these potential difficulties, the big advantage of the SBU is that an R&D

Figure B4. Organisation by Strategic Business Unit

Manager is genuinely part of the business team and is therefore directly aligned with its policy. This position can be used by the R&D Manager to influence the thinking of the business team. One result could be that any difficulties that could be faced over the development of the skills needed for the longer term are minimised, or even removed. An additional benefit of the SBU is the intimate relationship R&D personnel have with their colleagues across the business unit. They can really see that they are making a direct and measurable contribution to the welfare of the business as financial data and business performance information is shared.

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