Research and development – When is a good time to invest?

Businesses have limited resources. How to efficiently manage them is an art. A key controversial area of spending is always research and development (R&D). As a start-up we are even more constrained than a regular well established business. Therefore the question I often encounter: Is that a great idea to invest in research and development.

I have given some thought to that question. My answer is a resounding yes. I am pitching this idea on top of Amar G. Bose’s vision of role of research and development in business. A trendy approach for most corporations is to keep the research and development efforts to a bare minimum, mostly in the name of shareholder or investor value. Most business doesn’t view themselves as flag bearers of innovation. They orient themselves to protect the status quo of their commercial enterprise. When going gets tough, these enterprises cut spending from R&D to shift the blame from having a poor product portfolio in the first place.

This is a counter-intuitive, yet, widely adopted practice in the world of business. Amar Bose had a very different take. According to Bose, when the economy is going through a recession or when a company is struggling to find a better place in the market, it is the best time to invest in research and development. His reasoning being, cutting money from R&D wouldn’t provide the oxygen for coming up with newer products and innovations that a company needs in the first place. By the time the recession is over, or when customers realize there is a gap in what their expectations are and what the product delivers, the company will no longer be in a position to deliver the increased expectations of the customers or the business environment. New competitors will fill-in the gap.

My suggestion is: always invest in R&D and be bullish about those investments. Even if the business is just a mom and pop store in a highly popular tourist neighborhood, R&D will work. Especially in an era when social media and data sciences have become the life blood of businesses, all types of businesses, whether small or large, need to invest in R&D. By R&D I don’t mean running a lab with a bunch of scientists with white coats. The research and development includes, how to improve supply chain efficiency, how to improve communication and PR, how to improve cash inflow, how to better develop a targeted marketing, so on and so forth.

Science and business goes hand in hand. Science has an empirical view of the world. Businesses need to have an empirical view of financial performance. When these two merge together, it is a recipe for growing into a great business. An approach of R&D heavy investments will help businesses understand the emerging blind-spots in the market place and solve them as quickly as possible.

A great example is Exxon-Mobil. Despite having a heavy investment in fossil fuels, the company invested billions of dollars into scientific research on climate science. When the results of the research started coming out, it turned out to be a completely unexpected outcome for the executives initially. But, it still provided a valuable tool to foresee the evolving energy market. How Exxon-Mobil dealt with the unexpected results is highly controversial, but, I admire the ability of an organization to fund scientific research that had far-reaching consequences to their traditional business model.

My view of R&D is: it is the stethoscope of the market place. It will allow us to listen into small shifts in rhythm, way before those shifts change into a disastrous event. This listening tool will help enterprises survive from being blind-sided by large scale disruptive changes in the market place.

This work is done as part of our startup project nanoveda. For continuing nanoveda’s wonderful work, we are running a crowdfunding campaign using gofundme’s awesome platform. Donation or not, please share our crowdfunding campaign and support our cause.

Donate here: gofundme page for nanoveda.

(The picture of the International Space Station (ISS) taken on 19 Feb. 2010, backdropped by Earth’s horizon and the blackness of space. This image was photographed by a Space Transportation System (STS) -130 crew member on space shuttle Endeavour after the station and shuttle began their post-undocking relative separation. Undocking of the two spacecraft occurred at 7:54 p.m. (EST) on Feb. 19, 2010. The picture was obtained from public domain via nasa.gov)

Published by

Rahul Remanan

Doctor, Scientist, Entrepreneur.