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Honey, they shrunk the R&D department. Now what?

by Nick Milanovich 


External innovation partners can build up your project portfolio, amplify your R&D capabilities, and increase your odds of project success even when resources are tight. It comes down to putting a dedicated team of top innovators onto a single project.


Many R&D departments have lost the resources to actually innovate. Budget and personnel cuts are leaving managers scrambling to do more with less. And fewer risks on truly innovative projects can be taken when failure is punished and new ideas come with outsized sticker shock for development. From there, viable innovation options quickly dry up and the focus of R&D managers shifts from creating something new to project-managing features or add-ons.

In a restaurant analogy, innovation is thus reduced to adding or subtracting salt until everything’s either bland or inedible. But the world is salivating for fresh ideas, and that leaves many R&D managers in a precarious position. 

What’s the big idea?

Honey, they shrunk the R&D department. Now what?Wacky stuff happens when companies lose the ability to innovate but try to go it alone anyhow. I witnessed one once-innovative company follow the wrong path in search of new ideas. They were a major customer for one of my previous employers and I had many interactions with them. Lay-offs and budget cuts had depleted their R&D department and they were increasingly leaning on us, their supplier, to come up with innovations for them. Their menu was barren.

Their desperation for innovation became all too clear when we were asked to participate in a brainstorming session on skin health innovations for them. Well, not just us. 

Their other suppliers would join as well. These other companies were not our competitors; that would have been another level of crazy. They supplied other components for the same products our material was used for. But direct competition or not, this screamed of desperation.

As a supplier, I would never give away ownership of a technology to a customer without appropriate compensation. My customer would then have leverage over pricing and, even worse, they could “give us the business” by cutting us out in favor of our competitors. This issue concerned me from the start, so I had several conversations with our patent attorneys as part of my preparation and stayed clear of giving our customers any truly new idea. Most of my contribution ended up being a pitch for how our commercially available products would satisfy the skin health theme. As suspected, the other suppliers in the session did the same. 

Our customer was clearly starving for innovation but lacked the capacity to do it themselves. If only they’d known there is a better way to reach beyond their organization to keep innovation on the menu. 

Menu 2.0: Made from scratch with total focus

Building up that menu is partly a question of skill and diversity, but largely one of dedicated attention. The more focused the team is on solving a problem and advancing a project, the better their ideas will turn out and the more efficient their results will be. R&D people virtually never focus on just two or three projects—much less one–as they grapple with the typical day-to-day distractions of meetings and emails and reports. 

It takes a lot of work to innovate, starting with ideation. There’s a Hollywood mythology about invention where a lone genius effortlessly thinks of something, the lights get brighter, and then poof, an amazing invention materializes. In reality, invention is an exhaustive process demanding creativity, failure, existential pain tolerance and persistence. Successful innovators are prolific and stubbornly persistent. They are skilled at defining a problem, applying an interdisciplinary technical approach to solve it, then obsessively iterate until the idea becomes a reality. No professional sits around waiting for inspiration to strike.

Likewise, innovative companies know that having options increases the odds of innovation success. Once an innovation menu is built, the ideas can be weighed against each other to determine which one holds the most commercial promise and thus merits further development. More options, more projects. The fewer the options, the lower the odds of success. And the more diverse the innovators’ expertise, the more “out-of-the-box” are the options, in my experience. Like biodiversity in nature, diversity in innovation predicts a healthy, successful environment. 

External innovation adds new flavors to the menu 

Collaborating with the right partner amplifies R&D’s capabilities to innovate. Typically, a single individual or, if lucky, two people are tasked with tackling a problem that requires true innovation. Usually in their spare time… when the boss doesn’t need something urgently… while having to put a presentation together… or some other distraction common to corporate life. Several months later, there’s a PowerPoint slide with a list of one to two relatively new ideas and a few zombie projects to pad the list. 

Imagine what a two-person team focused entirely on cooking up ideas could accomplish. Up that to five full-time inventors attacking a single problem, and you have something that typically only exists in comic books when the fate of humanity lies in the balance. 

At Xinova, we recently did a two-month-long network-led facilitation session with five innovators in North America and Asia. Their output was jaw-dropping. Wild and utterly brilliant ideas kept populating the team’s project board. A menu of potentially viable solutions was forming in real-time for our co-innovation partners to pick and choose from. Suddenly the problem went from, How do you come up with a good idea? to, How do you choose which good ideas to pursue? That’s a good problem to have. It means innovation is back on the menu.

Usually, an R&D team will come up with two, maybe three feasible ones. But then what? Do they burn the R&D budget exploring all three of those ideas half-way? Or go all-in on a favorite idea? It’s too expensive for an R&D department to install the infrastructure to test and concept develop new ideas. Not so at Xinova. These solutions had been tested at fractional cost and were ready for development.

From the many options we showed our partner, they chose four for further concept development. Of those, we are deep into development for three.

If your R&D department is starving for innovation options, think beyond the old menu. Find a co-development partner invested in your mutual success and develop a bigger, healthier menu to choose from.

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