The Cost-Effective Way to Scale R&D in Fast-Growing Companies

Research and development in a rapidly expanding company pose special problems of scale. The further the businesses grow, the more they are in need of innovation, but the resources they have usually stayed unchanged. It is imperative to determine a cost effective way of growing R&D in order to remain competitive and retain long term profitability. The firm needs to implement strategies that enable them to boost the levels of innovation without an additional excessive outlay of expenses. Finding the right balance between desire of greatness and financial prudence is one of the secrets in realizing this objective.

Planning and Prioritization

Effective scaling begins with careful planning and project prioritization. High-growth firms often have many potential initiatives that they could undertake, yet not all research and development projects would bring equal value to the firms. With projects being judged on the basis of strategic fit, possible impact, and resource need, organizations are able to target those most likely to succeed. This orientation on choosing rather than spending will reduce the possibility of inefficient use of limited funds.

Implementing structured planning processes also reduces redundancy. Organizing activities among the teams and setting clear objectives allows companies to prevent duplicated efforts, eliminating the excessive use of resources. This lean configuration enables the R&D department to reap optimum productivity despite the increasing amount of projects. Moreover, the use of resources like project management tools may allow enhanced transparency and monitoring of current operations and guide decision-making on resource allocation.

Leveraging Technology and Automation

Technology is a crucial component in terms of scaling R&D. Outsourcing and automation of routine tasks like data collection, analysis and reporting can help save a lot of time and cost of labor. State of the art software packages allow teams to simulate experiments, model results and optimize procedures without necessarily even having to re-test anything physically. This will help in fast tracking innovation without spending much on both materials and labour.

Firms are also advised to look into collaborating tools that support communication processes among remote teams. There is also the real time interchange of information because the tools have been cloud based, thus enhancing coordination and eliminating delays. As a strategy, technology integration can allow organizations to scale their R&D with an overhead growth that is not commensurate. In addition to enhancing efficiency, this strategy also achieves the capacity to grow R&D functions in a cost-effective way.

Outsourcing and Strategic Partnerships

Out-sourcing some part of R&D activities can also achieve significant cost saving. High-growth organizations have little to no infrastructure to deal with all the projects that they might have. Forming partnerships with the specialist companies or tapping into contract research organizations can provide the business access to specific talent and resources as they are required. It is a flexible aspect because it allows companies to embark more on initiatives without necessarily making permanent increases in terms of staff or infrastructure.

Strategic alliances may also comprise cooperation with universities or research centres. These alliances have given access to new knowledge, state of the art technologies and expertise at a reduced cost as compared to developing them internally. Besides, programs such as SRED tax credits in some regions reduce the cost of R&D, an incentive that makes external partnerships even more cost-efficient. Outsourcing in combination with partnerships, allow companies to scale effectively without having high costs of operation.

Monitoring and Continuous Improvement

To be able to maintain cost-effective R&D growth, it is necessary to monitor and evaluate it. Monitoring the most important key performance indicators like the project completion rates, budget compliance, and time-to-market gives a picture of efficiency and areas that require improvement. Reviews help managers change the strategy and expand resources and fine-tune the process as time goes by.

There should also be continuous improvement on the input of the R&D teams. Employees who participate in the process of innovation tend to find efficiency aspects that cannot usually be shown in the reports of the top level. The accountability and transparency tradition will help managers increase operational efficiencies and scale their R&D efforts in a sustainable manner. This will, in the long run sustain an enterprise of innovation and at the same time avoid inflating costs.

Author Profile

Adam Regan

Deputy Editor

Features and account management. 3 years media experience. Previously covered features for online and print editions.

Email Adam@MarkMeets.com