Startups: As You Grow, Don’t Forget the R in R&D

Do research, identify a market gap and create a product to fill it: the classic entrepreneur’s journey.

When they start out, entrepreneurs have only words and arguments to convince potential investors that their idea is worth investing in and the market needs their product. Good entrepreneurs realize that research is the critical ingredient in building the story that will secure the capital they need to start and grow their business.

Yet, as a business develops into a fully fledged company, research increasingly becomes a lost art. The unrelenting demands of scaling while satisfying paying customers and winning new business takes the front seat, and R&D teams inevitably become reactive instead of proactive —  in fact, the whole company develops a reactive bias.

The proactive muscle of the company — innovation — atrophies. Lack of meaningful innovation, as we’ve seen countless times in tech, ultimately leads to a business getting outflanked by new entrants. Well-established businesses forget how to do what got them there in the first place.

History gives us some good perspective: not so long ago, the Consumer Packaged Goods industry was the place where “product innovation” happened. Researchers in white coats ran focus groups to identify what the next big product might be or where consumer needs were headed. It took a lot of resources to create a new physical product from scratch, so it made sense to be as conscientious as possible.  

But we now live in a world of software. It’s exponentially easier and more affordable to spin up new products. A weekend cocktail-napkin idea can be in beta testing by the end of the work week and this has forever changed the way companies approach R&D. Instead of thoughtful research, software and therefore development is seen as the starting point for innovation. Thus, a lot of thought goes into how to build software: Agile, Lean, Devops, NoOps, etc. 

Not nearly enough thought goes into what software should be built and why it needs to be built. Will it actually fill a user and buyer need? Can it offer enough value for people to open their wallets for it? 

Research is to figure out the what and the why, and a strong research program can prevent companies from falling into the trap of becoming reactive-only. That’s not to say that reactivity and proactivity are mutually exclusive — they don’t have to be. In a company with lots of employees, can’t some people focus on the reactive and others on the proactive?

Developers and Interaction Designers are great at building and improving a product, and fixing it when something goes wrong. Product Managers and Business Analysts are usually saddled with conducting the symphony of code, and in a high-growth business all these roles will be mostly reactive. You need people who can be exclusively proactive. 

Enter Research (with a capital R). Discerning what you should build and why is a job all its own, and you need to put good people on it.

Research leads to safer bets and and happier teams with clearer goals building better products.  Developers respect data more than anyone, and will greatly appreciate having the research to justify why they’re building something. Too many have been beholden to the whims of a manager with little-to-no business justification (or at least, not a well-communicated one). 

A strong research team can see what the market wants and what it doesn’t, what might work and, most importantly, what won’t. “Fail fast” has become a business cliche. The sooner the failure, the sooner the learning and the next iteration. Instead of letting product development lead to failure, we can re-engineer our process so research is instead the fast track to failure — a way of pre-failing, if you will — and uncovering those learnings without spending a dollar on developing or delivering an underwhelming product.

Smart research can predict if the next feature in your roadmap won’t matter to most of your users, or that customers don’t want to be upsold for some bell or whistle. It’s better to learn this before making a costly or embarrassing misstep in front of customers. Research also helps avoid the mistake of throwing good money after buzzword fads that aren’t what your business needs.  

What’s more, building a solid research team can help with larger strategic decisions. At Ultimate Software, our last two acquisitions were not serendipity. Our researchers’ sole job is to know the market, where it is going, and what products or services could supplement ours. They are regularly able to present opportunities to our Corporate Development team and they are a large part of why our recent additions have turned out to be wildly successful.

At the end of the day, it’s important for all companies to remember why it’s called R and D. It’s easy to lose sight of what originally drove innovation in the sea of reactive product development. So, make sure you have real talent in Research to guide that development in the directions that will have the biggest impact on your company and its long-term success. Without a healthy dose of Research, you may quickly find yourself on the wrong side of innovation.

(Image: Lucas Vasques @luvqs via Unsplash)