R&D projects

I’ll paint a picture of how R&D works in a lot of companies.

The company has its usual day to day operations, which consume the majority of the resources, and off to the side is some R&D project. The R&D project is seen as quite risky, and until its value can be proven the company is unwilling to devote any more time and effort to it.

This creates a crazy set of operating conditions for an R&D project. It’s understandable that the company wants to minimise the risk associated with new projects, but it means that even though the R&D project is aiming to do something new and ambitious it is massively under resourced in comparison to the day to day activities of the business.

Some would argue that the constraints help to encourage innovative thinking. For instance, the first Volkswagen Golf GTI was effectively a skunkworks project, which VW engineers worked on in their spare time.

But on the flip side of the coin, does it make sense for a company serious about innovation to under-resource its R&D efforts? Would it under-resource its customer service department, and still expect output to be good?

I think this is one reason why the failure rate for R&D projects is so high. I think the crux of the problem is there needs to be a better way to manage uncertainty.

Rather than responding to the uncertainty in R&D by keeping financial commitments low, there needs to be more focus on strategic R&D and validated learning.

With strategic R&D, projects which are strategically important to the company should be adequately resourced. Otherwise the company may be jeopordising its ability to compete successfully in the future.

With other R&D projects of a less strategic nature, the focus should be on validated learning. Some companies are now using Kickstarter to validate demand for new product concepts.

Rapid prototyping, and fast iteration can also help with validated learning by getting product concepts out in front of people faster.

By reducing uncertainty in these ways, companies can better justify their R&D investments, which should give R&D teams a greater chance of success.