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Increasing concern about the state of health-related research in the UK in the 80s and early 90s, led to an influential parliamentary review. The consequence of this was to strengthen health research through a programme that was fully integrated into the management structure of the NHS. No country had ever attempted such an ambitious approach ( Black, 1997). In 1994 a far-reaching review, recommended further, revolutionary changes to the management of R&D in the UK National Health Service ( Culyer, 1994). Many of these were implemented in 1997 with the result that every UK health service at regional and local level has developed an infrastructure, and management arrangements for R&D activity. In most local areas, hospitals with significant involvement in R&D have been eligible to bid to the UK Department of Health for NHS R&D Support funds. In Nottingham, three Hospital Trusts and a community based service made bids to the Department of Health and received grants to support R&D. This paper focuses on one of the hospital Trusts - the mental health service in Nottingham. Our experience will be of particular interest as the first bid that the mental health service made was spectacularly unsuccessful. The organisation was forced to consider dis-investment in its existing research infrastructure and a potential negative impact on the provision of patient care. This led to a wide-ranging consultation and evaluation of research and research-related activity. A range of approaches and tools were deployed to develop the strategy and to ensure its successful implementation and evolution. The strategy reflected a balanced approach, taking into account historical and organisational research strengths, while recognising the need to build capacity and capability, enhance foresight capability and strengthen the knowledge base. The ability to contribute to, and influence policy and practice has been a key driver of the strategy. The result was a successful bid and the evolution of an R&D strategy that has been flexible in its response to policy changes, changing local circumstances and wider socio-economic trends and technical innovations. Furthermore, R&D performance, measured through outputs, impacts and income, has continually improved and increased.