Over the past 10 years or so, companies have spent trillions of dollars on research and development (R&D). To remain competitive after the Covid-19 pandemic ends, companies must continue making these investments. But they need to rethink how they do that.

Before the pandemic, companies often operated their R&D efforts in a silo. That is no longer an effective model. Innovation, such as the kinds of ideas, products and improvements that come out of R&D, were the engine that drove the rapid changes the pandemic forced businesses to undertake. Silos are impractical for a business model that values agility.

To achieve a company culture that encourages innovation and agility, R&D efforts have to become part of a company’s strategy. The power of taking that step cannot be overestimated.

Pursue Ideas

Think about this: In 1974, 3M’s Post-It notes were invented as a direct result of the company’s “15 percent time” program. The program allows employees to use a portion of their paid time to pursue their ideas. Some ideas are winners and others are not, but everyone at the company buys into the fact that their input is essential to the company’s success.

The pandemic highlighted the importance of innovation. It also made companies realize that not every innovation they adopt needs to be developed internally. As long as technology is available that can interact swiftly, successfully and securely with your customers, it may not matter whether that technology is developed in-house or outsourced to a vendor.

Prioritize R&D Efforts

What are the company’s goals? What does it want to deliver to its customers and how does its R&D function fit with that? Do the company’s goals align with what it is innovating? To ensure that everyone is working toward the same goals, the R&D department needs to be working toward the same targeted goal as the rest of the company. It cannot be running on a parallel track. Are they trying to reinvent a commercially available technology for in-house use or are they focusing on developing something new that will propel the company forward?

Create a Cohesive Roadmap

Fitting these things into a cohesive roadmap for the company is not always easy. In part, it depends on the company’s culture. For example, innovations like chatbots can take over some customer service functions and the company may decide to reassign or lay off some of its customer service representatives. Another example is the use of automation and advanced analytics to determine where new opportunities lie. This may result in the restructuring of the company’s market research function. How the company handles these changes is important to different parts of its operations, such as employee loyalty and retention.

Innovation has taken on a higher priority because of the pandemic. As a result, companies need to find ways to include it in all areas. In this new era of business operations, no single area of a business can operate on its own. If you need help with innovation, contact us today.

Questions? Contact an MCB Advisor at 703-218-3600 or click here. To review our business planning articles, click here. To learn more about MCB’s tax practice and our tax experts, click here. 

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