Invest in R&D Strategically and Reap Huge Rewards, Says Jim Tully
CREST | 9 October 2013
Jim Tully, Chief of Research of Gartner, surprised and enlightened participant of the CREST Symposium 2013 on succeeding with research and development (R & D). It was not about pouring billions into R & D, but being strategic and funding the strategy in the R & D that made it successful.
“Spending millions in R & D, just to spend, is not the way to go,” Tully said. Spending more on research, sans strategy may actually affect business. He presented an example of the semiconductor industry, which showed a huge drop in revenue, despite the increase on R & D expenditure. While this was not a usual case of unfettered spending, the example demonstrated that all organisations must do more than just pour in money. Funding has to be strategic.
Organisations and researchers must lead with R&D. Study the competition and market, to out-innovate and out-spend competitors. Understand the needs of consumers and customers, Tully said, adding that Intel, Qualcomm, Samsung, and TSMC are examples the sector should emulate.
Industry collaboration in pre-competitive stages is very important and that the sector as well as universities should view the relationship as long-term, and not for one off projects. Work with government agencies too, as these relationships benefit countries. The E & E sector must also look at the broader picture; sometimes research work focusses on micro issues. Investing in ecosystem development is another strategy that must be undertaken and some of the companies that have done well are Apple and Google. These two companies have also inspired a work culture that employees want to be a part of, and a healthy human capital is a great investment to have.
Many companies and researchers feel intimidated by the competition. Put them aside, Tully said. “Focus on becoming best in class in a narrow area.” This gives them the edge over competition and a name renowned for their creativity.
There are many other strategies that can be applied, he said. Some of them are licensing from others, and encouraging flexibility and develop stretch targets for R&D success. One strategy that will cement or break the ties between the sector and clients is getting them deeply involved in high stakes risky R & D, but at most times, success is gained. “Focus on maximising profits. Don’t spend on anything that’s not essential – including on more R&D.”
He advised corporations to consider start-ups, which need considerably less funding but are hungry to prove themselves.
“Startups are more efficient in R&D, and they are faster in developing products and placing them in markets. They are also increasingly funded by larger vendors who believe in their work and have assessed them to be viable options. However, startup numbers are falling; there are not enough to go around.”
Corporations and research companies have to be creative then — they would need to scour places like Kickstarter and other incubator schemes to find startups.
In short, the sector must be strategic and creative at work.
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