Scale has traditionally mattered in business, manifesting through enterprise software, purchasing power, and other daily business aspects. Larger enterprises typically have a considerable advantage over small ones.
The arrival of the internet, e-commerce, IoT, and many other technology-driven tools leveled the playing field in a big way for small and medium-sized enterprises (SMEs). But there is still a gap between SMEs and larger enterprises when it comes to R&D.
One study found that the mean annual R&D spending gap between small and large companies grew from just under $20 million in the 1980s to nearly $120 million by 2017 when adjusted for inflation.
Many startups are still plagued with a lack of working capital, skillsets, and time. So how can they stay focused on R&D and innovation to keep pace with their competitors?
Staying in the R&D Game – Smartly
While SMEs may have limited time, resources, and scale to conduct full-blown R&D, that doesn’t mean they can’t have a precise, finely-tuned program to drive innovation and new products into their business. The key is focusing limited resources on the things that matter most.
Focus on Value
Many SMEs focus on a single product or product line instead of what brings value to the customer. But by focusing on iterations and adjusting production to match customer preferences, SMEs can increase value and drive more sales.
Iterations can take place on a production line using the Minimum Viable Product (MVP) strategy. Many startups use this technique to uncover the most information possible about customer preferences with the least effort. As each new preference is detected, the team can quickly adjust programming or production to include it in the next version.
Admit Resource Limitations
SMEs can’t compete with multi-million-dollar R&D budgets. Admitting that a gap exists will help define the goals of what an SME can do. It may be as simple as a weekly team meeting to discuss what was discovered and identify improvement opportunities. Or, it may mean a hybrid solution of contracting work on a new idea and making final adjustments in-house.
In addition, digital twin technology and additive manufacturing (like 3D printing) can help beat budget constraints for design and part production compared to the costlier iterations done at larger companies.
Expand Your Definition of R&D
Many think of R&D as a process only conducted by technicians in lab coats at a dedicated facility – but that’s not the case. A perspective shift can help drive innovation within company culture.
One of the best examples is the discovery of the microwave oven, where a self-trained engineer noted a melted candy bar after a test with a new type of vacuum tube.
Encouraging staff to work open-mindedly, learn from mistakes, and iterate on-the-fly is a valuable cultural advantage to a growing SME.
Lean on Available R&D Resources
One of the most valuable things a founding entrepreneur can discover is that people are waiting to help. While internal resources may be tight, powerful assistance – like that of the Henry Bernick Entrepreneurship Centre at Georgian College – is there to assist.
Our mentorship and entrepreneurship programs are designed to help SMEs compete with larger companies and continue developing their product strategy.
Contact us to learn more.