Why is the R&D department so important, even in small businesses?
We would be really excited while “upgrading” to a newer mobile from our old one to experience the latest features. While in the car or bike dealership, we would certainly ask the sales representative to explain about the most recent specs that are better compared to their prior generation. Whenever a new update is available in the app store, we keep an eye out for new options that are added to the software application. The list is never-ending.
In a nutshell, we all love the “better” versions of everything
It is all the result of a group of scientists and researchers who focus completely on creating things for the next generation. Research and development is an unavoidable department in practically all worldwide product organisations. Big companies usually invest a bare minimum of 10% of their annual gross profit in product improvements, not just to meet client expectations, but also to keep up with the competition.
Every year, R&D expenditures amount to billions of dollars worldwide, with the goal of improving products to meet market demands
But the fundamental question is whether all small businesses commit resources and time to Research & Development?
Well, the answer is NO. Undoubtedly, medium and small-scale business owners meticulously organise their company’s day-to-day operations. Great efforts are being made to expand the company’s portfolio through streamlined production, marketing, sales, and finance. In fact, they keep themselves “busy” satisfying the “current needs” of the market. However, most of them believe that the R&D department is only for large corporations. It is also sometimes assumed that “continuous improvement” is limited only to the engineering industries.
Imagine a restaurant owner operating in an area who consistently serves the foods that are featured on the menu. Would we want to keep going to the same place? A small-scale cloth producer or jewel maker in town who keeps repeating the “same work” that has been “taught” by predecessors. Although some “improvements and experiments” are carried out in specific areas of business, they are not carried out in a more systematic manner that can be classified as “Innovation” or “R&D.”
Of course, limited income and earnings make resource allocation difficult for small and medium-sized firms. But is that the only reason, or is it a lack of awareness in looking ahead a few years?
Even though it appears perfectly reasonable when running the firm for the time being, it will not help in the long run when dealing with competitors. One of the primary reasons that businesses collapse after a few years or even decades of “performing well” is that they become “outdated” for this reason.
So what needs to be done?
Let us be more practical here. Obviously, a judgement must be taken based on the company’s revenue and size.
Scenario 1: If the business can afford to assemble an R&D team of technically qualified individuals who meet the needs of the business. Okay, go ahead and do it.
Scenario 2: Other small business owners should make time to explore chances for “continuous improvement.” ALWAYS!
You may own a coffee shop or saloon. It doesn’t matter. Keep in mind that R&D doesn’t always involve producing world-class products and doing cutting-edge research in laboratories. On the other hand, it’s also about transforming the company into a digital one; this may be done by streamlining operations, improving customer experiences, using data analysis and visualisation, and implementing other strategies. The “mind” should be “less busy” in order to devote adequate time and energy to conducting vital research to increase client inflows and earnings.
A successful “continuous improvement” idea should not be expensive; in fact, it should save money for the organisation.
Important conclusions for both scenarios:
- Each year, set aside a certain proportion (between 10% and 20%) of your gross profit for R&D
- When conducting research, a team or individual should be knowledgeable and perceptive enough to comprehend what’s happening in other parts of the world that are relevant to your business area
- Define KPIs (Key Performance Indicators) for the R&D team/person executing this job to keep things under control
- To prevent the spillover of time and resources, divide the task into smaller pieces and establish viable deadlines
- Above all, feel free to experiment with new ideas or develop innovative products, and don’t forget to collect feedback from your current customers
A simple idea could revolutionise your sector. However, the business owner or R&D employees must always “resonate” with the philosophy of “continuous improvement” in order to “get that idea.” Remember that a company that does not innovate new things at regular intervals will inevitably fail in the long term!
Key take away
Continuous improvement should become a company-wide culture that all employees must adhere to. It cultivates momentum and progress, makes space for creativity, and differentiates your organisation in the business world.
Keep working; Keep inspiring
Feel free get in touch if you have any feedback.
