Research and development form the basis of the viticultural and oenological industry’s competitive advantage and relevance in the international market.

This aspect was clearly highlighted by the Vision 2020 investigation into research. The integration of research and development conducted by various research bodies, with the strategy/requirements of the industry, is extremely important for the success of all the role players. However, all the partners in the process must target the same goals and strategies, and these must be understood and interpreted in the same way by everybody. This is essential since certain characteristics hold true for all research-based business, regardless of the kind of industry:

  • Research and development constitute a long process (years rather than months), even more so in the case of long term crops such as vines.
  • Research and development are expensive. Substantial investment is required to make a difference and the return on investment can usually only be seen years later.
  • The risk is large. Research for problem solving or new technology is by definition innovative. There is consequently always the risk that a suitable answer will not be found.
  • Investors in the industry expect sustained economic growth.

Often, however, research bodies and business units (farm, cellar, marketing company, etc.) in the industry have conflicting goals and practices (Table 1).

Table1. Conflict between research bodies and commercial business units.

Characteristic
Research and development
Business unit

Time frame
Long term
Short term
Financial structure
Cost centre (Expense)
Profit centre (Income)
Product
Information
Goods
Approach
Concepts/Principles/Theory
Facts/Quantitative
Orientation
Scientifically unique/Industry requirement
Attractive to the market/Profit potential

Research and development generate future ideas and products and is an expense to the industry, while the business units in the industry have to handle the immediate environment to generate sales and profit. The industry is focussed on defined markets characterised by figures, historic information and trends. The product is tangible goods and results are measured in sales and market share. Research and development, on the other hand, focus on concepts that have often not been tested or proved. The process could take 10-15 years to realise a product that may or may not be used by the industry. Only a small percentage of the products will eventually find their way to the market place or impact on it.

The conflict therefore makes it clear that effective mechanisms for integration are essential. Such integration must ensure that research and development organisations and the industry have common goals and function within a well-defined framework. The framework should be sufficiently flexible and receptive, however, to capitalise as quickly as possible on unplanned and valuable discoveries that will benefit the industry.

Building a corporate technology strategy

Common goals and reconcilable strategies can only be developed through a process of sustained, constructive dialogue between the research and development organisations and the commercial sector of the industry. Long term strategic planning, revision of programmes and budget negotiations form the nucleus of the integration process.

Parties should agree on the technological areas that constitute the focus of the research. This enables the research and development bodies to structure their business and focus expertise and resources where it matters most.

Projects should never be judged in isolation, but measured by the overall strategy. The research and development bodies themselves must also select and prioritise projects. This minimises the effect of short term business strategies and unnecessary shifts in research and development focus. Furthermore, the research and development body then has ownership of the decision, while dedication is improved. A good example is the need for research on soil biology. It has been a priority within the research bodies for a very long time, moreover because eventually it will have to provide basic information for the organic cultivation of wine grapes. Initially the industry did not consider it a short term priority, but now its usefulness has become very clear with organic cultivation having suddenly become a huge priority. Time has been lost, however, since the research bodies have been able to provide limited input only with regard to the research priorities of the industry.

Lessons learnt by international companies indicate that the above-mentioned process helps reseachers and managers learn more about the markets and market forces so as to incorporate these in their thoughts and decision making. On the other hand, the industry learns more about the science that drives research and development and has a better notion of what is viable and exciting, and why. Both groups therefore begin to participate and have empathy with the successes and failures that form part of the reality of research and development and the marketing of a product.

How should the industry approach research and development

It has been pointed out that a close link between research and development and the business strategy of the industry is of cardinal importance. For the maximum return on the investment in research and development, and for the long term success of the industry, research and development should play an integral role in the development of a business strategy and tactics. Likewise the industry should set goals and help to shape the strategy of research and development organisations.

To facilitate this integration, a system is required that will cover the entire research and development process. However, the system should not be over-managed. Formal contact is necessary if each group’s official viewpoints are required, but informal interaction is usually most productive. The Technical Committee System ( Figure 1 ), which is currently being operated by Winetech to determine research priorities, evaluate project proposals and discuss progress reports with the researchers, enforces goal-oriented formal contact among all parties. The system helps to promote an environment of open communication which can only be sustained by goal-oriented action and hard work by all parties. Although informal contact between the industry and research and development organisations takes place in various fields, both parties could pursue this aspect with more determination.

The more innovative the proposed project, the more the concept has to be sold to the industry by the research and development organisation. Unfortunately this is where researchers usually fall short. They often believe that the project will sell itself to the industry because it is so “good”. If they do try to sell the idea, they often use information and descriptions that are too technical and difficult to translate into competitive advantages for the farm or the market.

The industry must therefore be informed, on an ongoing basis, about the programmes and products of research and development. They must be involved right from the start in order to understand better what might develop into a product. Research and development organisations should be receptive to the ideas of the industry and should continuously provide answers to queries as a means of building and sharing ownership. This will result in products that are better suited to the requirements of farmers and markets and that have commercial value for the industry.

It is very important, however, that there should be room for innovation and entrepeneurship in the research and development organisations. The process must be sufficiently adaptable and receptive to innovative ideas that may influence the industry and have to be rapidly pursued.

Industries that rely heavily on research and development are dependent on an ongoing stream of short and long term products (technologies). The industry must develop goals and strategies for both types of products. Research and development organisations must take the lead in long term strategies, while the industry, or more correctly, the market, should determine the short term strategies. The important prerequisite for the goals to be achieved, however, is that both groups should take part in the process and accept it jointly. Winetech recently launched a process to construct “technology trees” for its research and innovation process ( Figure 2 ). This is an excellent approach, since it provides all parties with a clear image of where knowledge gaps may exist, but also precisely where each project/technology fits into the larger picture. For example, Figure 2 shows how the measurement of microclimate provides essential climatic information which is used in conjunction with geological, soil and topographical information to define basic terroir units. The latter, together with plant material and vineyard practices, in turn shape the terroir from which the wine originates. Eventually the terroir combines with other units to provide quality products, which should make the industry world leaders.

In a next step, programmes are to be identified from the technology trees and programme leaders appointed for each. The programme leaders will be responsible for the overall co-ordination of all role players in the programme. The final step will be to use a Management Information System to get existing technology, and new technology that is in the process of being developed, in a readily available form to users.

The industry and research and development organisations will have different focusses and approaches. Neither of the two is always right or always wrong. The challenge is to get/keep the gap between the two as small as possible and create a process that will facilitate understanding of each other’s positions.

Summary

  • Research and development is the basis of the industry’s competitive advantage.
  • The industry is more focussed on the present, research bodies are more focussed on the future.
  • Systems are in place, or are being put in place, to make the gap between the industry and the research and development bodies as small as possible. Here reference is made to Vision 2020, the Winetech Technical Committee System, the construction of “technology trees” and the appointment of programme leaders.
  • A management information system must be developed to make technology available to users.

 

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