Companies constantly need to innovate to succeed. You can’t simply sell the same product or service over and over, year after year. You need to innovate and offer something new. For many businesses, that means investing in research and development. Christian Eidem, a one-time undergraduate thesis writing partner of Elon Musk, summed this up succinctly when he said: ‘A company not only has to continuously come up with newer and better products, but has to do so faster than its competitors. The response to this need is increasingly to outsource research and development expertise.’
As Eidem also points out here, not every company has the capacity or capability to invest in expensive research and development departments. Which means it is important to find partners or organisations that can do this work for you. Before we look more closely at the options available for that, first we should take a look at exactly how and why research and development are needed.
The importance of research and development
The OECD defines research and development (R&D) as ‘an activity undertaken for the purpose of discovering or developing new products, including improved versions or qualities of existing products, or discovering or developing new or more efficient processes of production’. Therefore R&D results in the creation of new work and knowledge that can be used to create entirely new products. This means it is essential to progress, growth and success of businesses around the world.
Research and development should be understood as the first process leading to any technological innovation. It should ideally embody the vision of your company and your overall business strategy. This is your money set aside to invest in your future services of products that will ensure your long term financial security. If you want to be an innovative presence in your field, then R&D should be an essential tool of your business.
R&D can not only lead to innovation in expected fields but it can also open doors you didn’t even know about or had not considered before. But overall, the process of R&D should lead to the long term financial success of your organisation.
The advantages of R&D
By implementing R&D in your business, you will be creating an atmosphere that encourages ideas to grow and evolve. It fosters greater flexibility and energy, allowing your business to adapt and meet growing and changing markets.
However, there are plenty of other advantages. These include patents, which can be acquired when you pioneer new products and ideas. This gives you greater protection and control over your business and could even lead to future revenue streams. This helps you to secure long term profits within your market.
Your R&D activities can reduce manufacturing costs and improve your processes and lead to less costly processes for the manufacture of your product, all of which can be passed on to your customers. R&D is also a great way to attract investment by showing that you have ambition and the right infrastructure to move forward. A good R&D department or links to one, prove to investors that you are forward thinking and serious about success.
It has similar benefits in terms of recruitment. This shows ambitious young employees that you mean to push the business into new areas.
How R&D can work for you
Don’t go thinking that this is all the domain of big corporations in the high tech and pharmaceutical sectors. It might be the case that your SME can’t compete with the large multinationals and their armies of employees and endless bank balances. But that is to underestimate the importance of innovation. Back in the late seventies, the computing world was dominated by large corporations like IBM. Then along came a couple of guys making computers in their parents’ garage.
Steve Jobs and Steve Wozniak were just a couple of bright computer studies graduates when they came up with the first Macintosh. Over the next few decades, they came to dominate the market and change the way people thought about their technology. But they didn’t stop there. The innovation that fuelled that first idea came to produce the iPod, iPhone and many other devices. They understood the importance of not standing still but it all came from a good idea.
There is also a large wealth of public knowledge out there that can be tapped into. As Christian Eidem pointed out in his work with Elon Musk. They said in their paper: ‘The response to this need is increasingly to outsource research and development expertise. This can range from something as simple as obtaining the answer to a question in minutes that might otherwise have taken days, through to ten year co-operative projects. The problem that exists today is the lack of any suitable forum for the exchange of knowledge, particularly on the international level.’
Their idea was to create a forum where companies and innovators could share and exchange ideas, thus creating a place where R&D could be shared and even outsourced. You could meet people working in a similar field or even source the right minds to help you take your product forward.
The two students then went on to say: ‘Companies must strive for a constant process of self-renewal and innovation to ensure their technological edge as they race through product cycles.’
Adding: ‘The research and development market is tremendously fragmented, especially on an international scale. Pockets of knowledge and specialties exist in specific regions around the world and are not being tapped or exploited. At the base of the problem is a lack of communication, or more specifically, a lack of a communication medium that integrates all such information and provides quick and easy access to the user. Without the benefit of real-time knowledge of ongoing research and expertise around the world, simply deciding who to approach for their R&D needs can be a long and difficult process.’
It seems that both Christian Eidem and Elon Musk were right. Maybe it’s time that you started seeing R&D as something you could integrate into your business.