Sunday, January 25, 2015

Fixing the R&D guessing machine


One of the best ways to work less and produce more is to make sure you are working on the right things. Time is wasted on projects that never make it to market. Rather than spending effort on a guess we should make sure we are spending our time on things that will produce value. This post explores how traditional research and development methods are wasteful and inefficient. The internet provides a solution that will make R&D more effective at solving problems people will pay for.

Fortune 500s have based success on guessing for decades. When I worked at 3M they loved to market how their engineers were encouraged to innovate. 3M promoted 15% time, which allowed engineers to pursue their own projects using company resources. There were many successes from 15% time, but 15% time was never scaled to a repeatable method that would produce predictable results.

Each of the 15% time success stories have a common story. An engineer has a personal problem. The engineer also has the skill to solve that problem, so she uses the company's resources to create the solution. The solution is presented to management who recognizes the market potential and turns the prototype into a product. Marketing creates a campaign and sales are a success. 

The problem is that the 15% time is more of a darwinian guessing machine than a good business method. If every engineer at a large company pursues many small projects, then statistically some of those will be successful. All the unsuccessful projects just waste resources and time. 

 The successful projects show us a common pattern that we can use to create a reusable, reliable method for developing new products. I’m proposing that we can turn the 15% time into a reusable method with predictable results. R&D doesn’t have to be an expensive necessity. Research and development should consistently produce solutions that people are willing to pay for.

The successful 15% time relies on four steps that I will explain in detail. The steps are research the problem, market a solution, sell the solution, and finally develop the solution. By marketing and selling a solution before developing it we eliminate risk and can calculate our costs. 

Research

Traditionally research is applied to the solution and not the problem. I believe that it is more important to research and understand the problems consumers will pay to solve. The 15% time success stories all start with an engineer solving her own problem. This initial research step was proposed and completed within the mind of a single individual. Scaling the initial research requires creating funnels that find consumer pain points. The technology for collecting and distilling the research is now available.

Market

After researching and finding a pain point, a proposed solution needs to be presented to people who are asked to pay money for it. During this stage ideas and improvements are proposed and a conversation is started with potential buyers. Marketing is not a billboard anymore, it is now a living conversation between brands and consumers. The potential buyers essential design the solution by giving feedback and suggesting features. By getting consumers involved with solving their own problems you create trust and loyalty. This also nearly guarantees the solution will be the right one.

Sell

Once the solution is designed it is time to ask for money. Pre-sales are a perfect way to create momentum and funding. Pre-selling an idea, both validates that its a good idea and gets people excited to promote and cheer for you. During the 15% time successes, the engineer answered the question of wether people would pay money for the solution by not only investing her own money, but also her time. It is important to collect real money at this step and not just verbal agreements. If people are willing to pay money for the proposed solution, then and only then, should development work begin.

Develop

Once the proposed solution is pre-sold then development work can begin. During development the most important task is to get the right skills together. The consumers have already said what they want, now it is a matter of finding the people who can make it and brining the talent together. R&D becomes a catalogue of talent. R&D is tasked with working on the right things instead of the things it is most skilled at.

This method wasn’t scalable till recently because it requires a lot of communication between disciplines. Social media experts need to converse with engineers, who need to talk with MBAs who need to listen to customers who need to engage with the social media experts... All this communication was limited to the mind of a single individual working on a 15% time project. We now have platforms for sharing and developing ideas and plans. 

Tools are available to converse with consumers, develop prototypes and share solutions. The internet has given us a massive opportunity to create meaning and connections with people. It is easier than ever to find niche markets with huge revenue. It is also easier to bring together groups of people who have common interests and common problems.

R&D doesn’t have to guess what products will be successful, it is now possible to simply ask the world what they want and create it.

- Work on the right things.