Understanding the ‘r’ in R&D

R&D (research and development) is a black box within organisations through which new ideas are crafted and implemented to drive financial growth. Global R&D spend is colossal with China and US the world heavyweights spending over $500 billion and UK around $50 billion (Statistica 2021).

My personal hunch over the years that R&D never maxes out, and there are always questions about value in terms of financial gains, and value in terms of worth and importance that gets played out in politics and culture. 

Colourful tree

This blog post is just capturing my thoughts and may lead to further research. It is based on my thinking and talking to others, and not necessarily based on my own experiences.

What might some of the challenges be?

Being way back in the company engine room, it is difficult to attribute economic value and return on investment to research activities, and others have written about this (Stephen Diorio 2017).

Defining R&D is difficult and varied, and not having a shared common understanding of the function or people within it may hamper situating it within a company. One useful definition is:

“Research and experimental development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge” (P44 OECD 2015)

Searching and evaluating ideas through to implementing them is not linear and the messy bit in the middle (which is dynamic and exciting) is often difficult to manage and align with fast moving company strategies or changing external landscape

Research may need to serve different clients – the consumer will ultimately purchase products but in some areas like health or medicine, other scientists, professionals and stakeholders are equally important for growing credibility. Here often presents as a language problem.

Why might these challenges arise?

Education, marketing, communications, finances and most business functions you can think of are all supported in higher education departments, therefore a clear identify pervades. You don’t go to university to study R&D; you may study product design, or be a researcher across any academic discipline, but through your education journey you aren’t helped in pulling it all together.

There may be the perception that researchers are boffins or technical heads. I’ve been called critical, and researchers may unwillingly become square pegs within their organisations. The consequences are that ideas and innovations may not receive a well-rounded level of scrutiny or be fully developed.

Opportunities for R&D?

Business success results from operational, cultural, innovation facets that all need to align. Today, firms also derive success from corporate social responsibility, or investing in purpose or mission work. Firms that invest here might be more successful (Jo Confino 2014, and there is other data that shows this).

The ideal is drawing a line right from your company impact (mission, communities, individual beneficiaries) through outputs (products and services) through company and team strategies, and I also believe right into team and individual goals and objectives. Here, research should be able to play an important role too (Tom Brennan and others 2020).

Research as a function may be able to help in multiple areas therefore:

  • Understanding your company culture, policies, people ambitions
  • Evaluating company outcomes and impact
  • Developing mission or purpose by working with stakeholders and devising strategies for evaluation or learning
  • Innovation – research strategy with centrally agreed short-medium-long term goals including both small improvements right through to radial blue sky research
  • Research as a network – researchers are a chatty lot and chances are your teams are well connected externally on an informal or formal partnership basis, feeding in ideas to all four corners of the company

Next steps

I’ll be adding to this post over time as I find new information. 

Reading

Stephen Diorio 2017. https://www.forbes.com/sites/forbesinsights/2017/11/16/proving-the-contribution-of-marketing-investments-and-assets-to-enterprise-value/?sh=716828846e04

OECD 2015 Frascati Manual. https://www.oecd-ilibrary.org/docserver/9789264239012-4-en.pdf?expires=1647012195&id=id&accname=guest&checksum=C6E9968E8CDB9D7B7EFF2B5BB98E7D67

Tom Brennan and others 2020. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/building-an-r-and-d-strategy-for-modern-times

Statistica 2021. https://www.statista.com/statistics/732247/worldwide-research-and-development-gross-expenditure-top-countries/

Jo Confino Guardian 2014. https://www.theguardian.com/sustainable-business/2014/sep/23/business-companies-profit-cdp-report-climate-change-sustainability

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