Like businesses in every industry, technology-based companies are constantly subject to change. If anything, because of the very nature of their business, tech companies face changes that are more frequent, more rapid and often more dramatic. Below Geir Bryn-Jensen, CEO at Nevion, discusses the essentials of R&D and the differentiation between the R and the D.
Sometimes that change is driven by transformations happening in their own customers’ environments. Sometimes that change is the result of new technology developments. One thing is sure: tech companies need to adapt, or face the prospect of their business shrinking or disappearing altogether – often at a very rapid rate! Think for example what has happened to the once mighty tech companies like Polaroid and Nokia who revolutionized and “owned” their respective markets.
It goes without saying that the key to surviving change is to anticipate it. Instead of being shaped by change, successful companies are driving it. But how can tech organisations ensure that they are among the pacesetters and not left trailing in their wake? One answer is good research and development (R&D).
When it comes to R&D though, the attention is often drawn to the research part. For example, people are fascinated by Google’s AI software calling a restaurant to make a table booking. But pure research is very expensive and really the preserve of companies with deep pockets. The vast majority of tech companies are comparatively small in size, and simply cannot afford to conduct research for its own sake.
Instead, they must focus on better understanding where their chosen markets are heading and ensuring they are ready for the changes when they happen. R&D must go hand in hand with business intelligence. In that sense, the development element of R&D should be seen as the primary element of the two.
The research part should be the exploratory work that will help develop specific products and solutions that the business has anticipated its markets will need. It should be about trialling new ideas, sandboxing, finding out what works and what doesn’t, so that by the time the company needs to go ahead with development, it is in the best possible position to make it a success technically. This also emphasizes how important it is that a company works as a complete unit: R&D needs to be given the time to be successful, and that means the whole company needs to recognise change well ahead of when its needed, and make the right choices.
Good R&D in any sector is also about being open to lessons from other related industries. Often, there are strong parallels to be drawn from what others have done. For example, the broadcast sector, in which Nevion specializes, faces many of the same challenges that other industries have faced: a rapid change in their customer’s consumption driven largely by mobility and the Internet, leading to pressures on the organisations to find ways to deliver more using fewer resources. Other industries have responded by investing in software, IT and IP (Internet Protocol) technology, and making greater use of virtualization (e.g. Cloud solutions). That is exactly what we are seeing is now happening in broadcasting: a move from specialized hardware to software, from industry-specific network technology to IP, and from dedicated resources to virtualization. Some broadcast suppliers have anticipated that move, investing R&D in that area, but some others haven’t. As a result, now we now are seeing a big shake up in the supplier industry.
These kinds of major transitions inevitably take time to gain traction in commercial terms, whatever industry you are working in. Once you understand the way the industry is going, you can start to evangelise about the change in direction, helping raise awareness and understanding across your prospective customer base – and stoking future demand. Once the demand is in place, however, you need to ensure that you are ready to start fulfilling it.
Taking Nevion as an example, the company’s proportion of R&D investment that is IP- and virtualization-based went from 20% six years ago to 99% today, with R&D teams across the world now making up around 40% of the total workforce. By investing internally, the company was quick to react to the industry adoption of new technologies and has continued to focus on developing new IP-based software applications in line with this.
To build this strong emphasis on R&D and use it to keep one step ahead of the competition needs a breadth of vision – ideally across more than one industry sector. It also requires a focused effort not just on keeping on top of market trends but also on innovating to take advantage of them. It will be those businesses that combine the two most effectively that are best placed to stay ahead of the pack as the move to digital picks up speed.