For many businesses, the R&D pipeline is representative of the company’s future. It’s the evolution of your product line, the foundation for your growth, the secret weapon for staying at the forefront of your industry.
With that said, understanding how to efficiently and proactively manage your R&D pipeline is paramount to your business’s functionality, efficiency and technical growth.
So, in order to reap the greatest rewards, a company R&D pipeline should always be managed, measured and optimised.
How? Allow us to explain...
The importance of managing your R&D pipeline
As we’ve already touched on, your R&D pipeline is representative of your company’s future ambitions.
As a result, it’s likely that your current pipeline includes a mixture of short-term and long-term innovative projects with one shared element: a degree of uncertainty.
Often, this element of uncertainty comes in the form of both the technical development of your product and the practicality of releasing it to market. Given the nature of R&D - with a focus on innovation and exploring the new - this isn’t exactly surprising.
So, why does this matter?
Well, given that your business is likely to have limited resources but an abundance of potential research and development avenues to explore, successful R&D pipeline management is all about finding the equilibrium.
Weigh up short-term gains against long-term uncertainties and the scope for profit and innovation to ensure a pipeline that’s optimised for a worthwhile risk-reward balance.
Problems you may face
All sounding easy enough so far?
Of course, successful R&D pipeline management is dependent on the way your business operates and the types of projects you have on the backburner.
However, novices and R&D experts alike are likely to face some hurdles along the way. Often, these can include:
When looking to strike that risk-reward balance in your R&D pipeline, it’s likely that you’ll take valuation into account. After all, the potential profitability of any given product is a key influential factor in understanding how much risk you can feasibly take on.
While this all sounds well and good, it relies on one fundamental principle: an accurate valuation.
When projects near commercialisation, you’re able to utilise accurate data to arrive at a financial-based valuation. Financial-based valuations that occur earlier on in the process, however, run the risk of being inaccurate - often, this is a result of multi-factor scoring methods being used in place of unavailable data.
The need to diversify your portfolio
As we’ve said, successful R&D pipeline management is all about finding that equilibrium. We’ve already talked about striking the balance between short-term gains and long-term potential - but have you considered how these meet the needs of your business in the here and now?
Diversifying your R&D portfolio is the only way of ensuring the right balance between short-term payoff and long-term potential. Doing this requires some considered choices to achieve an optimised mix of long and short-term, low and high-risk projects that cater to the various market sectors and areas of your business.
The problem, then, becomes how to rationally prioritise and compromise to find the optimal portfolio mix for your business’s current and future needs.
Research and development management
R&D can be a long-haul process, meaning sufficient management throughout the project is vital.
While project efficiency and success are, obviously, the name of the game here, don’t underestimate the role people management has to play in the strength of your R&D pipeline.
For example, clear and transparent communication is key to fostering an in-house culture of R&D that will see the efficiency of your pipeline skyrocket. To do this successfully, however, you need to ensure you’re effectively managing your team.
For example, if you decide to cancel an R&D project before completion, how will you accommodate the frustrations and disappointments of team members who have been working on the project?
Understanding your research and development team on a human level ensures you know how to get the best out of each skilled member, to the inevitable benefit of your pipeline.
How to manage your R&D pipeline
With all the above considerations in mind, how do you successfully manage your R&D pipeline?
Develop a strategy
Strategy is a key ingredient in the recipe for successful pipeline management. Strategic, systematic approaches to R&D enable you to identify opportunities and better understand where they should be positioned in your existing pipeline.
What is this strategic approach? Focus on three goals: alignment, balance and maximum return.
Of course, these goals are subjective in nature, meaning you’ll need to develop logical KPIs around contribution, value and the potential of a return to ensure an objective approach throughout.
These KPIs should align with both internal goals and ambitions, as well as the values of internal and external stakeholders.
This approach will facilitate a more objective, considered approach to understanding how to pick and prioritise within your R&D pipeline.
Assessing, analysing and measuring
Implementing an optimised strategy is meaningless without sufficient analysis and measurement.
Utilising your established KPIs, ensure you’re consistently tracking the progress of your pipeline against your predetermined goals and requirements.
Few of us like to be inundated with numbers and data, so try to present progress in visually stimulating ways wherever possible - think risk-return grids and progress charts over spreadsheets and raw data.
Why is this important? Well, it not only makes the analysis process easier and more efficient, but it also makes it more accessible - meaning more of your team will be able to truly understand R&D’s value contribution.
Assessment, analysis and measurement shouldn’t purely focus on the internal, though. Be sure to keep a firm grasp on external roadblocks, too. This will ensure your pipeline management remains reactive, giving you the ability to adjust and redirect when and where appropriate.
Understand the context
On that note, understanding context is crucial to developing an optimised R&D pipeline.
Why? Because it allows you to get a handle on influential external factors and, in turn, the impact they could have on the progress of your R&D.
For example, perhaps you plan on increasing your R&D efforts and, as a result, hiring new staff to increase your capabilities. The knowledgeable R&D pipeline manager would recognise that this brings with it substantial risk - hire too many too quickly, and the new vs experienced ratio can become imbalanced to the detriment of internal productivity.
Understanding the context of your decisions and the longer-term impact they may have on your pipeline is an effective means of accurately assessing risk-reward.
The benefits of understanding context don’t stop at decision making, though. It can also be beneficial to your ability to manage pipeline expectations. For example, a thorough understanding of chain structures, including delays, research times and knowledge gaps, ensures a more realistic grasp on timelines and capabilities.
Be sure to be transparent in your reasoning, too - the more your teams understand the logic behind the decisions impacting your R&D pipeline, the easier it becomes to nurture an ethos of research and development within your business.
Managing your R&D pipeline is no easy feat, but it’s vital that you get this right from the off. Arm yourself with the right knowledge, strategy and understanding to ensure an optimised pipeline that allows a steady stream of research and development to flow through your business.
If you’ve refined your R&D pipeline, the next important step is prepping your claims. Need a helping hand? Get in touch with the experts at Lumo today.