Invest in R&D, it’s vital for your business’ survival
If your business is running smoothly and if you have some great products that sell like hot cakes, should you stop investing in R&D? Maybe reduce the investment in R&D and reap the profits that is generated from your cashcow products? The answer is “No”. You should keep investing in R&D, you should keep coming up with great innovative products. Because success lies in continuous innovation, not in one-time innovation.
If Xerox stopped investing in Research & Development, it would be earning 60% less revenue:
More than 2/3rd of Xerox’s revenue comes from products launched in the past two years. source
Some companies like Sony believe in innovation so much, that, they would introduce new products even if those new products are going to kill its own current (cashcow) products. Because, Sony believes in creating “new markets” and not creating products for the existing markets.
Between 1950 and 1982 Sony successfully built 12 different new-market, disruptive-growth businesses. These included the original battery-powered pocket transistor radio, launched in 1955, and the first portable solid-state black-and-white television, in 1960. Plus: videocassette players, portable video recorders, the now-ubiquitous Walkman and 3.5-inch floppy disk drives, launched in 1980. source
So, as you can see, continuous investment in R&D is very important. Unfortunately, many small-to-medium businesses and some startups are usually stuck with few products. After developing few successful products they simply stop investing in R&D and stop coming up with new products. Rather, they resort to fixing and polishing the existing products. In some cases, years would past and the company would be still working on the existing products. What a sad situation that is.
If you start your own company don’t make this grave mistake of not investing in R&D!
Sign up for RSS to read more business related articles.
Related Posts
- Wallop.com
- Yahoo! Mindset
- One Microsoft Employee’s switch to Ubuntu from Windows
- Jakob Nielsen: Time Lag Between Visiting and Buying
- Ohloh.net - open source projects directory
By Jayson on Mar 5, 2008
Definitely agree - I think I read some where years back that 3M actually gave their employees time everyday to think up new ideas and they gave them a percentage of profits if the ideas went big.
Recognizing and believing in innovation is a first big step - if you rely on your current cash cow too much the new innovative companies are going to take your cow and milk it for you.
By Eddie Poh on Mar 6, 2008
R&D is what separates the boy from a man, this is especially true in highly competitive industry. Big ‘uns like Intel, AMD virtually dumping at least 10% of turnover in it. However, small enterprise in less competitive industry should always look at ways to add values and upgrade existing products.
By Make Money Online on Mar 6, 2008
It does all depend on the scope or the market and size of the business. Me investing R&D for a small business ran from home would consist of no more than setting aside some time to read up on search for the latest news/info.
By Dining Tables on Mar 6, 2008
You are right in that R&D is very important. It need not however be something specially set up for living in ivory towers. Constant innovation, what the Japanese call Kaizen is quite sufficient if you do not have the resources of a large corporation. In this case, every member of the company becomes a researcher and developer.
By Ades on Mar 6, 2008
Make Money Online, you are exactly right. Investing in R&D does not always means spending huge amount of money in innovative products. As you have put it nicely, setting aside few hours of your weekly time can be a great investment in itself.
By Jay | Innovation Guy on Mar 6, 2008
Disruptive Innovation is key. Simple, accessble, affordable innovation instead of just focusing on taking what already exists and making it better. Creating new markets are a necessityin todays market.
By Jayson on Mar 6, 2008
you are correct. R&D is important.
By Dining Tables on Mar 7, 2008
This is taking on a momentum of its own in that from R&D we have now taken off into innovation! A small addition to what I had commented earlier. There are a number of commercial R&D, as well as government and academic R&D labs that will do work on assignment basis. This is a much more economical way for smaller companies to get into R&d based on feed back received from employees, customers etc.
By seo on Mar 9, 2008
Is there much research and development a blogger can invest in? :p
By Ades on Mar 10, 2008
If you are pure blogger then maybe you can invest your time, but most of the successful bloggers are not just bloggers, they are entrepreneurs who run few businesses.