Why does R&D matter to me and what’s the balance vs. bread & butter income work?

Research and development (R&D) matters for many reasons but in particular it should be the work that feeds you intellectually and without which you’ll go stale. Structure your client relationships right and they might even pay for or partner you in the development. The good news is that from what we can see in the 2008-9 MyCake benchmark data sets there is profit enough to be funding at least some of your R&D plans – it’s running at an average of about 28% across all MyCake users (high in services, lower in the bottom half of product based businesses).

In deciding where the balance lies between bread and butter income and time spent on R&D there are a couple of related things to consider that are beyond your control yet influence success … in particular the speed with which the market (and technology) are changing and therefore the speed which you need to be able to move in order to stay ahead of the game. When the market is moving slower than your ability to develop, you retain the window of opportunity. If however the market moves faster than your ability to invest in your own development then you risk getting left behind. In these circumstances either you don’t bother to invest in R&D, stick to delivering client projects and just make sure you keep up to speed with what others are doing or you seek investment into your R&D pipeline so that you can move further faster. So the simple question is – do you work in a sector full of innovation? (and is everyone who leads the sector doing R&D in some form?) Innovation is an early indicator of growth in the sector as well as in companies and suggests that the pace of change is or will be increasing.

For more on this subject see the MyCake benchmark bulletin #4 which is designed to help you work out how to build R&D activities into your business regularly.

Leave a Reply

Your email address will not be published. Required fields are marked *