16 • Creating a Lean R&D System
e purposes of R&D and manufacturing dier substantially, since they
serve obviously dierent functions within a company. Manufacturing
modies and integrates physical things (raw materials and parts) until it
delivers a coherent, valuable object for others to sell and buy. Successful
manufacturing repeatedly produces the same objects, each of which can
be sold for (more or less) the same amount of money to dierent custom-
ers. Successful manufacturing does all of this work at a total cost that is
less than the sellable value of the product. e purpose of manufacturing,
then, is to convert raw materials into valuable consumable goods that can
be sold at a prot. e currency of value for the manufacturing function is
the object that is produced.
Research and development, in contrast, generally creates and tests new
ideas, building and integrating the results of those tests until R&D can
deliver a coherent, valuable package of knowledge for others to use. at
package might be a new object, the prototype of a product, that can be
manufactured and sold at a prot. at package might be a new process
with which to manufacture an existing product at greater prot. at
package might be a new technology by which others can create or process
their products, or it might be new knowledge needed to enable business
functions (R&D, marketing, regulatory, and so on) to successfully support
their business needs.
e purpose of R&D is innovation, and the currency
of value for innovation is new, applicable knowledge.
ere are many other dierences between manufacturing and R&D,
but the fundamental dierence in their currency of value is most impor-
tant to our thinking about Lean. ese dierences drive the many
other dierences that operationally separate manufacturing from R&D.
Manufactured objects have intrinsic value, which means that identical
objects can be manufactured and sold for about the same price. As a result,
it is the rare manufacturing process that is run only once. In fact, it is cus-
tomary for manufacturers to make as many identical copies of that object
Academic research is only slightly dierent. Value there is measured in publications, grants, pres-
tige, tenure, and, for graduate students, new jobs. Nevertheless, the currency of value in both
academic and industrial R&D is not an object but, rather, is the relative value of the knowledge
that is generated by the thinking and experimental activities of the researchers.