Industries all over the world are putting a lot of their resources into research and development (R&D), but they’re not all seeing the returns they expect. By some estimates, 2 percent of the entire world’s gross domestic product (GDP) goes into R&D, which is over 20 percent of some companies’ annual earnings. At the same time, less than a quarter of company executives think their companies are doing well in regards to innovation.
Clearly, a lot of resources are going to waste. Of those industries spending billions of dollars every year on R&D, chemical companies, including both pharma and agriculture, are on the higher end. With that, consider why so many companies are failing at efficient R&D and discover some tips on how to improve your chemical R&D strategy.
The New Chemical R&D Method
One of the many reasons for the discrepancy between resource allocation and return on investment is the way R&D has changed in recent years. It used to be that a chemical company could develop one breakthrough product and not have to worry about intensive R&D for some time afterward. Unfortunately, these kinds of breakthrough compounds—like Kevlar and nylon—are becoming less common.
Instead of focusing on discovering one major breakthrough compound, chemical companies must now invest in continuous R&D to find innovations that set them apart. Rather than only working to develop brand-new products, they’re also looking for new applications and adaptations for existing compounds.
The Impact of R&D Misconceptions
Remember how we said that less than a quarter of executives think their companies are innovating well? Two-thirds of those same executives still believe that R&D is vitally important to a chemical company’s success. So, what’s going on? Well, many executives seem to think R&D only works with the old model. They don’t realize that quality R&D produces a more constant stream of optimizations and innovations, rather than intermittent big breakthroughs.
Ways To Improve Your R&D Strategy
What can companies do to improve their chemical R&D strategies? Consider these top tips to help you get your strategy back on track.
Lose the R&D Misconceptions
We’ve already mentioned how misconceptions about R&D can hurt a company financially, but there’s another angle to this problem. One reason R&D is often inefficient is that research teams lack proper leadership from executives, who may have unrealistic expectations. This means that research teams have a difficult time prioritizing new directions, and they may choose areas that interest them over what is most likely to appeal to customers. Research teams desperately need oversight from people who can keep them focused on the right goals for the company.
Focus on the Customer
Many R&D innovations fail to drive the returns a team might promise. When that happens, it’s often because there’s a disconnect between expectation of value and what customers are really looking for. By prioritizing customers to start with, R&D teams can more efficiently utilize the resources allocated to them. Then, companies will see higher returns and be in better financial situations, allowing further research and development.
Pro Tip: Products, Not Patents
When you work in R&D, it’s easy to pursue fresh projects that you think will create new patentable compounds. Too often, R&D departments think creating patents is a sign that they’ve been successful. However, innovation for the sake of innovation won’t make a company more money. Those patents need to be useful in some way; otherwise, they’re just a distraction.
Run an R&D Diagnostic
If you’re looking to gather hard data about where your company’s innovation budget is going, it’s time to run a diagnostic. This is a comprehensive review of not just where the money is going, but also where the ideas are coming from, which skills your research team has to offer, and the insights that sales and marketing can tell you about customer demand.
Use a Stage-Gate Model
The stage-gate model is extremely popular in project management across many industries. It’s particularly useful in large companies where there may be a lot of people with decision-making rights. Essentially, a single research project proceeds in clearly defined stages, with a checkpoint at the end of each stage. At these points, certain people approve or reject the project’s ability to continue.
It’s important to note that too many decision-makers can make the stage-gate system a nightmare. In a worst-case scenario, innovation gets bogged down while people who aren’t deeply connected to the project quibble over details they don’t fully understand. By minimizing the number of people authorized to make decisions, you can make sure your R&D teams still have oversight without slowing them down.
Implement Digital Tools
Automation seems to be in every industry these days, and there’s a good reason why. Automation allows companies to do more while using fewer resources and personnel, as well as less time. In chemical R&D, automation might mean using content analytics to see what your customers are searching for online, computerized data analysis for faster insights, and machine learning to quickly search large volumes of unstructured information.
Find an R&D Partner
Working with a third-party R&D contractor can be an ideal solution for making your innovation processes more efficient. Manufacturers like Capital Resin work with companies to develop new applications for their proprietary compounds and to develop new products.
Bringing on a contractor or toller has many advantages. Not only do we possess expert knowledge of chemical manufacturing, but we also have the means to make your ideas a reality. Our facilities are capable of a broad range of processes, and we have experienced staff to run them. When you work with us, you greatly reduce resource waste from time lost hiring and training new staff, from purchasing and assembling equipment, and from the expenses of trial-and-error research.
The Chemical Experts
If you’re looking for contract research and development, reach out to the team at Capital Resin. We work with partners from all kinds of industries, including agriculture, pharma, automotive, beauty and personal care, and many more. We’re confident that our high-efficiency methods will help you create winning products your customers will love. Contact us today for more information.