Telling the truth about SME life today

How does your company carry out R&D?

Now evolutionary is safer and normally requires less tool-up investment toestablish the new production but step-changes in company performance typically needbigger, more bold ideas and for that you may need to look outside your organisation.

The “Lead User” concept was pioneered by Eric von Hippel of MIT Sloan School ofManagement in 1986. It refers to a specific type of user of a product or service having twocharacteristics: (1) They are at the leading edge of important market trends and; (2) theyhave a strong incentive to find solutions for the novel needs they encounter at the leadingedge. In the everyday business world these can often be found within your existingcustomer base. Your products are taken into the real world and sometimes into extremesituations that push the parameters of efficacy.

It is these users who from necessity aredriven to innovate in some ways they know your technology and its limitations better thanyour research team tough to accept, I know. And an often highlighted example is the development of advanced braking systems within theAerospace industry. Faced with a paramount need to stop aeroplanes before the end of therunway there was in effect more incentive to improve braking in that sector than in the autoindustry. The new technologies of course later made their way into car manufacturing oncethe expensive R&D had been done.

Professor Hippels innovation was to propose involving such users routinely in the R&Dprocess. Teams are set-up with in-house R&D personnel combined with selected lead users. There are typically then three phases of the development:

  • Go into a defined market place to “look for challenges needing a solution”;
  • Upon return, establish workshops with experts in the field to come up withideas that could potentially resolve the identified challenges; and
  • Finally, set-up design teams to working on the concepts identified in phase IIin order to fine tune to a finished product.

Companies such as 3M are great exponents of the lead user approach and have accreditedmarket-leading developments in areas such as aseptic drapes within the medical surgicaldivision to such an approach.

Read about R&D tax:

Lead users are fanatical and frankly will find ways to adapt your product to better fit theirlocal requirements even when not prompted to do so. This can be seen in IT with theexplosion of freeware materials that can be found online to tweak existing commercialsoftware and improve performance in certain areas. Some of the people behind theseprogrammes are developing a business but often it is interested (and skilled) users whohave simply developed the item for their own use.

It is a matter of numbers, withpotentially millions of individuals interested in the application of your product or productslike it, this “community” is better at spotting new trends/requirements that will becomebroadly recognised much later the trick is to find a way of harvesting the ideas! Today with the internet this is a realistic option and “Crowdsourcing” a term coined in 2005describes exactly that reaching out to the wider community of users to solicit ideas. Onsuch a large scale the mechanism employed is usually a competition or innovation contest.

It is unpredictable and not very controllable but it is extremely low cost, quick and couldtake your R&D in a completely different direction. At the very least you will effectively holdA mass market survey by hearing the views and ideas of a large constituency of interestedusers… valuable in itself!

As a footnote it is always worth widening the scope of participation in R&D. My favourite
tale is of Swan Vestas the match makers who asked all employees to suggest cost savingmeasures. The winner was a guy on the production line who proposed that each box ofmatches only required one strip to strike the match not two. This simple change saved thecompany thousands upon thousands of dollars.

Furthermore, Brian Williamson suggests that tax credits can help boost cashflow among innovative SMEs.

Andrew Low, who has 26 years in the Agri-business sector,is managing director of JE InvestAnd the ownerof

Image: Shutterstock




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