The three competencies in the embedding-innovation building block illustrate a firm's resolve: “We are not powerless in our ability to manage our response to the challenges the marketplace throws at us; we will create our own new opportunities.” The competencies are building an R&D process, using technology to build new services, and using incentives and rewards to stimulate innovation. Embedding innovation underscores a professional service firm's wholesale acknowledgment that its service portfolio has a finite shelf life, that it is powerless to stop the inevitable march of commoditization, and that it will take responsibility for its own survival.
R&D—research and development—these are words that spark instant recognition in most business sectors. Global leaders like 3M and Procter & Gamble have long dominated the products arena, in large part because of their high-powered R&D engines. Even in the U.S. manufacturing sector, which was hard-hit by the economic downturn in the late 1990s and early 2000s, “Research and development spending has remained remarkably resilient … and is expected to increase … [in the current] year. More R&D spending means new product development,