How Much Do You Invest In Business R&D?

Added on by Alexander Osterwalder.

Companies that focus on business R&D will gain a competitive advantage over those who focus solely on traditional R&D.

Thoughts from a view. The stunning Matterhorn in the background. 

Thoughts from a view. The stunning Matterhorn in the background. 

Traditional R&D--focusing on tech, research, or product development--is not enough for a company to remain competitive in today’s business climate. For starters, new technology is not enough to transform your business, and traditional R&D tends to play within a company’s existing business model and value proposition.

What companies need is a greater emphasis on business R&D: exploring the right value propositions; new business models (sometimes with new tech, but not always); managing a portfolio of business models (Amazon is a great example here); and even exploring new organizational cultures. Business R&D can help materialize on research findings, existing resources, patents, or new segments (like in the case of the Nintendo Wii).

Organizations still need traditional R&D. In fact business R&D will increase the return on investment from product development and research. It’s not either or, it’s and. Traditional R&D is 20th century competition. Business R&D is 21st century competition because you compete on great value propositions and business models.

What if companies institutionalized a business R&D budget similar to how companies put aside a percent of revenue for traditional R&D? I believe that companies that focus on business R&D alongside technology, science, and product research will outperform organizations that don’t understand the importance of business R&D.