Previous posts introduced R&D as a moniker for projects that are both exploratory in nature and include an intention to commercialize the results. That is, neither pure research (as in traditional academic research) nor simply development-oriented (as in the iteration or implementation of predetermined product features).

The “Why R&D” question has two facets that I’d like to address in this post.  First who should embark on R&D programs and secondly, what value does R&D bring to a business venture.

R&D really does have powerful value in all business operations.  I may diverge from conventional thought a bit here, in that I’d argue that even a simple mom-and-pop retail store can and should benefit from regular R&D projects.  It goes without saying that large organizations with multi-million (or billion) dollar revenues need a coherent R&D strategy to remain competitive.

Who Should Have R&D Programs

In a word, everyone.  But on the small-end of the spectrum, one may well ask how R&D can be implemented, let alone afforded, given slim margins, and slimmer resources.  Let’s consider first a few characteristics of R&D.  Key elements of R&D are:

1. Addressing a need for an answer to a product/service question or solve a problem
2. Employing an approach to achieve item 1 with structure and focus on achieving a solution
3. A commitment to ensuring the results of the project are captured
4. A plan to exploit the results of the project to improve the business

These are four core points required to call something an R&D project.  Inherent in item 1 is that there is uncertainty.  If the problem is needing to buy widgets, the solution is simply finding a source and procuring the part.  It might be challenging and specialized, but the lack of uncertainty in direction and solution makes it a non-R&D activity.

Let’s consider an owner-operated small business – say, a coffee shop.   Bob’s Roastery simply acquires coffee beans, both roasted and unroasted.  The former he sells both by weight and by converting into coffee drinks, the latter he roasts on-site and provides in similar offerings. In the context of Bob’s, an R&D project might seek to answer such questions as

• how to roast a new source of beans to provide the optimal cup of coffee
• is there a new coffee-based drink that will differentiate Bob in the crowded coffee market-place
• what are the optimal brewing conditions for a new espresso machine?

For solving these problems, there are unstructured (and likely unproductive) paths to a solution and there are structured approaches.  There are risks involved too.  Maybe a new source of beans doesn’t produce a quality beverage that will meet Bob’s expectations.  Maybe the new machine cannot produce a better result than what staff are currently producing.  Maybe a new drink will be unpalatable to customers and result in a financial loss.

Too often small businesses try piecemeal, on-the-fly, near-random tweaks to solve product problems in a retail operation.  Bob’s would best benefit from a structured, side-project to matrix-test alternatives, while adjusting variables.  On the new beans project, roasting with a variety of parameters and taste-testing the results against predetermined criteria, with a few qualified tasters might be appropriate.  Clearly, the costs can easily be capped to a small amount of unsold product and a few hours of extra employee/owner time.

Not only does a structured, planned R&D project provide better and documentable results, the investment required can often be handled differently in the operation’s accounting.  In some situations, tax credits (e.g. Cdn, US) or other R&D-encouraging financial programs may be available to business owners.  Sometimes projects can be performed in concert with local college or university classes which benefit from the learning experience.

For larger corporations, investors and even customers are particularly interested to ensure that R&D is part of your plan.

From a customer’s perspective, the presence of R&D operations is a reassurance that there is a future path for products that may look good today but have a rapid obsolescence rate.  Without a migration path that preserves a product’s user-learning curve, a customer may look elsewhere for long-term stability, and cost-of-ownership reductions.

From an investor perspective, it’s typical to look for an indication that approximately 15% of revenues are being redirected into R&D.  Companies that spend too much on R&D may be neglecting support of current products.  Those that spend too little may have only a short-term ability to remain competitive in the market.  The fraction of spending on R&D will vary with market segment.  Traditional industrial businesses may be able to stay current with a lesser investment, while early-stage or technology-based businesses may required considerably more spending to stay competitive in their market.

Why R&D

Research and development brings many benefits to a business.  Some of them are:

• managing evolution of products to avoid obsolescence
• developing product features that differentiate them from competitors
• finding paths to lowered cost-of-production
• expanding the portfolio of products that can be offered to customers in a particular segment
• reassuring customers that the business is forward-looking
• establishing opportunities to grow a business into other market segments
• enhancing the reputation of a product or business, e.g. improved environmental positioning

Again, it is worth highlighting that a key component of an R&D program that addresses such goals is the use of a structured process.  Seat-of-the-pants solutions implemented on-the-fly do not constitute R&D.  Unplanned incremental changes in business are similarly not R&D.  Only with a structured program is either a positive outcome likely or a financial benefit to the business probable.

All R&D projects should include:

• A stated problem or opportunity
• A desired outcome or goal
• A definition of project completion
• A plan of attack to achieve the goal(s)
• Outline of expected risks and their possible solutions
• An outline of resources (people, equipment, supplies) for the project
• A budget of costs to be considered

Upon completion, the project should:

• Capture the actual activities and outcomes of the project
• Describe the path to exploit the outcome for the benefit of the business
• Itemize the actual costs.

Even though benefits to your business are themselves reason enough to engage in R&D, surveying the tax situation to benefit from possible R&D-encouraging government programs is a good idea.  Often there are consultants that help to file such claims based on contingency fees, and you may find that doing so on your own is perfectly manageable.

 

 

There is no universal nomenclature dictating what constitutes “research and development” though there are likely some elements of agreement regardless of the perspective of whomever you ask. Within the breadth of opinion on what R&D means, one often includes something more accurately called straight development.  It is much rarer to see an group touted as R&D when it is actually doing what is more accurately pure “R” research.

Straight-ahead development is a very market-driven activity.  Its constraints are purely commercially-driven. It is bounded by time-to-market, trade-offs of feature/capability based on customer needs, and somewhat interchangeable “resource-unit” allocations and associated costs.

When we talk of pure or basic research, we mean investigations that seek to clarify the basic understandings of a field, or a sub-field, of science.  We explore observed phenomena with a structured approach (scientific-method) to uncover answers for which we have a suitably high-level (though not without uncertainty) of confidence.  In this area we more accurately use the “R” on its own, rather than within the concept of “R&D.”

Research and development is about a sweet-spot between these two extremes.

Where an “R&D team” is embarking on exploratory work it is most often assumed that there will be an eventual application of the outputs in the market-exploitation sense. This is technology-transfer.  The term R&D is typically only used in technical and science fields.

In the so-called “social sciences” there are different interpretations of the word “research.”  Indeed, disciplines that include the word “science” in their description paradoxically are not doing science at all, and so it is not surprising that the nature of their word “research” is quite different as well.  In that context it leans more towards surveys, literature-gathering, and information compilation.

Broadly in the liberal arts, history or literature for example, “research” is a process of exploring diverse written source materials, cross-referencing and collating existing publications and information.  For the purposes of this blog we will consider those endeavours “tertiary” research activities – all valuable to the progress of their field, but outside the context of our interests here.

In industry and academia exploiting technology and the sciences, research is of a more fundamental nature, where discovering or explaining physical phenomena is our primary interest. Whether this is to add to the body of human knowledge or to create commercial opportunities varies.  Sometimes the work is “secondary research” in that it involves combining of existing capabilities, however the goal even then is to create a capability or ecosystem that didn’t exist before.  For example, research into networking and internet-based services fit well into this area. This still meets our concept of R&D – a structured pursuit of something new and commercially viable.

An inherent component of research is the concept of possible failure.  Tertiary research that seeks to identify information and experiences of others known, or likely, to exist, may be merely termed “search.”  Inherent also in the concept of “failure” in research is that it may often give us something just as valuable as success does.  It closes potential avenues, narrowing the scope towards ultimate discovery.

So while we do not dismiss liberal-arts research as without value,  it’s rather the challenge of balanced R&D activities, as defined, which are of key interest in this blog.  Mainly because the culture, techniques, costs and management are of a profoundly different nature.

Categories

Sources can define R&D in a variety of categories and types. Original versus secondary, directed versus non-directed, quantitative versus qualitative, etc…  My preference is for a simpler three-way categorization from OECD suggestions:

• Basic or “Pure”
• Applied
• Experimental Development

The first category may often be termed simply “research” as earlier discussed. For example, this is what we most often see in the university/academic context, although that has been changing with greater interactions between academia and industry.    The latter two categories will be the main focus of these R&D discussions.

As we explore the subject in this blog, and the ways in which it can be more successful, much of what we discuss can have some applicability to pure research as well, though we sometimes diverge from relevance to that space.  Thus I propose that we consider pure research a thing that is somewhat of an R&D super-set. It is a substantial activity with characteristics unto itself.  Much of the management concepts discussed, such as criteria for selecting programs, measurement of success and analysis of outputs may apply to our colleagues concerned with pure research, but it may sometimes be a stretch to find analogous application.

In conclusion there’s a band of activity that defines true R&D.  There is the uncertainty and breaking-of-new-ground like in pure research, but there are also applications and economic constraints similar to those in pure development.  Let’s agree that our discussion on this blog will be oriented towards a balanced concept of R&D that exists in the middle.  While we’ll be interested and often motivated by uncertainty and creativity in fundamental questions, we’re also interested in the rewards of how results contribute to commercial success.

Every business large or small should have research and development components to its ongoing operations.  The fact that this does not always happen is a motivation behind this blog.  The other motivation is to organize some thoughts on the subject arising from almost three decades in the space, and possibly illustrate them with a few examples.

An R&D project might be as simple as a retail operation using sales data to devise a means to better tune their stock selection to the needs of customers, or it might be a big multi-national running a multi-million dollar investigation of the future of an entire market segment. The key characteristics of an R&D project are that it has a structured investigative approach and it seeks to solve a problem, improve a process or understand a phenomenon. Most desirably, the result is captured and applied in some way – either in posing new questions for investigation, or for improving the fortunes of a business.

With a wealth of R&D leadership behind me, this blogger seeks to draw from the combined resources of industry research and experience in creating and guiding R&D programs to improve the status quo.  It’s fitting that in looking at the world of research and development, one finds that there has been much research into the craft of research, to help us learn to do it better.

In industry there are often big commitments made to run an effective R&D program, yet often the issues that hold us back remain poorly addressed across many projects, while the core work of R&D progresses on at breakneck speed.  This blog will seek to tackle many of the core how/why questions around effective R&D. For example:

• Problem capture and idea generation – creativity
• Project selection – which great idea to “run-with”
• Promotion of R&D projects
• Planning and forecasting R&D projects
• Completing an R&D project – when are you done?
• Transfer of R&D outputs into exploitation
• Motivation and creativity for researcher/developers
• Post R&D best practices – learning for the next go-around

This is not an exhaustive list by any means.  And the phenomena of the blog is particularly well suited for exploring side-bars.  But of all these areas-of-exploration perhaps the issue of technology-transfer stands out as the most challenging nut to crack in most R&D organizations.

In many companies, R&D outputs are seen as an impediment by product teams, distracting them from the hectic product-pushing and support of day-to-day work. In other organizations, R&D is simply support for product groups, implementing the next feature, responding directly to customer issues with poor product fit to their particular problems.  In some situations, R&D exists as an esoteric exercise done to advance general knowledge without a means or perceived need to make it figure into the market success of the corporation.

The best solutions to improving the interface between the market and R&D appear to be built around an effective definition of how projects are launched in the first place.  Ensuring communication channels are open, stakeholders are involved, and projects are launched with a clear definition of goals, outputs and how completion is defined.

To achieve a thorough discussion on R&D programs will require that we look at all phases of R&D programs.  Hopefully you will find this blog a good mix of R&D management ideas and practical guidance that can help you with problems you might face.

To look at R&D and its benefits from a pragmatic and broad perspective can’t help but enable us to do it better.  I will endeavour to illustrate how it should fit into the plans of every company,  from a one-person tailor on a side-street, to a brand-new start-up to a multi-billion dollar global operation.

Ironically, it appears that even the research into research methods is often poorly transferred into practice.  Looking at the ‘big issues’ identified in 1980’s books on the topic I see items that continue to challenge organizations today.  Can a social-media-based discussion help change that?  Probably not in a big way, but discussion is always a helpful part of information dissemination.

So follow along if the topic interests or intrigues you, and feel free to participate through comments, or through twitter at @rossgk.