If you are hesitant about R&D, think again: only improvement and innovation can keep a business relevant and competitive.
In this blog you will learn:
- What stops some businesses from pursuing R&D?
- What’s the difference between Innovation and R&D?
- What funding is available for R&D?
Can we all agree to retire the phrase, ‘If it ain’t broke don’t fix it’? For millennia, humans were happy with firelight and cave paintings, but in these days of smart homes and Netflix, the drive is for businesses to answer customers’ needs with ever-more useful, convenient and desirable products and services.
Unfortunately, the urge to stay in one place is strong: from “my customers know what they like” to “we offer a traditional service”, doing things differently can feel like opening the door to potential disaster. Who can forget ‘New Coke’?
Andrea Reynolds, CEO and Founder at our finance partner Swoop, says that reluctance to embark on research and development is all about mindset and not about hard realities:
“There is a misconception that to claim for R&D you must be in tech or creating robots. In fact, it can be about significant improvement of a product or service in a way that hasn’t been done before or overcoming a technical challenge to bring a new product or process into being.”
Another perception is that R&D will only lead companies away from their original mission or create something new which conservative-minded customers will need to be persuaded to try, carrying with it a high chance of failure. Andrea says that this would be to misunderstand the difference between R&D and innovation.
BJ Cunningham knows about taking high-risk disruptive action in a conservative market. Cunningham is the creator of DEATH™ Cigarettes, an iconic troublemaking tobacco brand which enjoyed the spotlight of notoriety in the 1990s; proving to be the brand that won’t die, DEATH™ has recently relaunched as a clothing label. BJ says that innovation carries inherent risk, while R&D is a more stable proposition for a company:
“Innovation (or inspiration) and R&D are often confused or conflated. Innovation and inspiration can come from anywhere and normally means a tweak on or fusion of something that already exists. R&D normally follows on from innovation where it is necessary. In other words, you have a great idea but it doesn’t exist and needs to be invented.”
The bicycle is a great example: originally a transformative idea – a self-powered transport for one person – subsequent R&D added things like gears, pneumatic tyres, cycle lanes, carbon fibre frames and electric motors to refine the idea further. The Victorian boneshakers and penny-farthings are the ancestors of the ultra-light bikes speeding around the Olympic velodrome in Tokyo, but they are recognisably the same idea.
The hard work of getting people to do something different has been done; R&D can be an easy win for a business as it is better thought of as improving an experience or product with which the customer is already familiar.
Further, R&D does not have to be about what the customer sees; refining back office processes can also be a part of the R&D exercise: one of the chief selling points of robotic process automation is not that it will do away with human workers but will give those workers more time to add value to the customer experience.
How to find space for R&D in your company
If you do not have a formal R&D department, you can still dedicate space and time to R&D within your business, and indeed, some of the best ideas for improvement wil come from the front line staff members who see frustration points and have ideas about how things can be improved.
Ask yourself if what your business does can be made:
- More effective
- More convenient
This is not to say that businesses should ditch their core values in pursuit of shiny objects: in a fast-moving world, customers still value quality, longevity and tradition – they just want them delivered at 2021 speed.
“Innovating a product or service has no impact on the brand” says BJ Cunningham.
“A brand is a promise. Improving on delivering that promise or adding different service offerings to that promise does not alter the promise itself. Moreover, strong brands can transcend product boundaries – think of Virgin which has sold products from records to financial services to space tourism. With a strong heritage secured in a strong and credible promise, any company in any sector has the opportunity of shifting that brand into another product category.”
Andrea Reynolds says:
“R&D is not a risk, it is a necessary process for companies of every size to engage in. Businesses that stand still will be the businesses that get overtaken. A lot of the time businesses don’t realise the activities they are engaged in count as R&D. Construction is a classic example and although so much R&D is taking place, the sector is one of the lowest claimants.”
Reynolds says that R&D is a fundamental project for any SME from the beginning:
“Whether a business is applying for a grant, startup capital or a loan to expand the business, R&D has an essential part to play. The marketplace is unforgiving of ideas that aren’t meeting the needs of the customer as well as competitors. Business owners need to get comfortable with failure, do it often and embrace the positive outcomes when it happens. An idea that fails at the research stage still teaches you something and it’s cheaper to fail fast than to fail after you’ve put it in front of customers.”
If you want to chat about your R&D options with one of our Tax Accountants, get in touch by booking a discovery call.