10 ways to develop a culture of R&D within your business

For a business to be considered truly innovative, its functions, people and objectives need to hinge on effective research and development. The planning and deployment of R&D is seen as a core function by most market-leading businesses around the UK and the rest of the world – it’s what gives them a competitive edge.

We have discussed the definition of R&D for the purposes of tax relief in another recent article. It is not merely enough to bring in external expertise, off-the-shelf solutions or third-party research and call yourself an innovative, R&D-heavy business, as this approach will not satisfy HMRC’s high barriers to entry for the R&D tax relief schemes.

To undertake eligible R&D activity, truly innovate and push the boundaries of your market requires buy-in at all levels of the corporate management structure, from the C-suite to administrative staff. All too often, R&D functions operate totally isolated from the rest of the day-to-day operations, meaning neither party have any clue about each other’s function and modus operandi.

It must be baked into your company’s culture.

It might seem obvious to many, but for the purpose of enlightenment on this topic, it helps to remind ourselves what a ‘culture’ actually is. The dictionary defines it as:

“the ideas, customs, and social behaviour of a particular people or society”.

The ‘people or society’ is your business, and their ‘customs’ are the widely accepted ways of doing something. If you’re reading this, you may think, “we don’t have an accepted way of doing R&D, it just kind of happens…”

If this is you, let’s dive in.

1) Encourage collaborative working

This is the most important aspect of the entire article and your future R&D endeavours. It is often said that your people are your biggest asset. Bring them together to collaborate in R&D-specific meetings or breakouts. The results of your R&D depends on it.

Each department or team brings its own unique viewpoint and solutions, and it might be the team you least expect it that comes up with a gem of inspiration for your next project. Identify a correspondent from each department to act as the primary conduit of information in and out of the R&D team to ensure consistency.

2) Focus on the ‘why’

After exchanging pleasantries on our first R&D tax credit exploration call, one of the first things our team will ask you will be about your R&D project, specifically what it was you are – or were – trying to achieve. This should always be driven by the ‘why’; why are we innovating? What problem are we solving? Why does this problem need addressing?

The way can be answered in several ways, such as ‘because the currently accepted way it is done is too onerous/expensive/polluting’ and so on. It could also be ‘because we have noticed a gap in the market that we can exploit’.

Be sure to involve key stakeholders identified in point 1 above.

3) Clearly define your objectives

R&D must be treated as a business within a business and consequently must have its own objectives, budgets, and resources. By setting clear objectives, your R&D teams will know exactly what they aim for. All future budgeting, resourcing and sub-goal settings will know what they need to work towards, and you will start to witness a harmonious team in action.

4) Hold regular meetings

We’ve all known those meetings, the type held once, hailed as the meeting-to-end-all-meetings by promising greater efficiency and solution-driven conversations – only for it to never happen again, the only remnant of which being an unaccepted diary invitation from six months ago.

Don’t let the same happen with your R&D conversations. If you properly identified the ‘why’ and set the objectives as above, you have already established a strong cause to undertake R&D. The key to effective business is effective communication, so it ought to be at a frequency that works for all parties considering their workloads, but also for the project and its objectives. These can often be opposing forces and is where the designated department spokespeople come into play to manage the diary.

5) Encourage experimentation

Whilst the overall R&D plan should follow a critical path to reach its objectives and the ‘why’, your team must be allowed to flex its talent muscles. Whilst care should be taken to ensure business cases are diligently created before diving straight in, if upon review a team’s request to undertake an experiment holds water and could yield results, find the budget and resources for them.

Ideally, the budget would have been pre-identified when agreeing on the project’s core objectives – or at least utilising an agreed contingency fund – however, your team might come up with left-field ideas here and there, which ought to be encouraged.

If the experiment wasn’t as successful as you’d hoped, look at the positives; at least you know that one solution doesn’t work. Every experiment brings you one step closer to your end goal.

6) Celebrate innovation

‘Nothing ventured, nothing gained’.

Don’t stop by just allowing experimentation; celebrate the results, even if they weren’t exactly what you expected or hoped for.

Celebrating and encouraging experimentation holds a secondary benefit in that it will make your business far more appealing to prospective talent withing to join your ranks and can form the basis of a great recruitment campaign.

7) Invest in up-skilling and education

R&D and education are, in many respects, one and the same. Allow your business and staff to invest in themselves, and your R&D efforts will thrive. Think of education as mini sprints within a larger project; your R&D projects need increasingly capable teams to administer them. Remember, we’re trying to achieve an objective that few have done or are capable of.

8) Contact academics

Seek out institutions with a shared interest in your endeavours; it will facilitate collaborations that can significantly improve the quality and speed of your project’s output. Collaborative investment with academia gives your project high levels of credibility, supporting the marketing and saleability of the results, as well as great supporting evidence to provide to HMRC for your tax relief claim.

9) Make sure R&D and Marketing collaborate

Marketing needs to know what the R&D team are undertaking, why, and how it will benefit the intended customer or user group. Conversely and just as critically, R&D needs to understand what marketing challenges your business faces to facilitate the solution-driven conversations that spawn R&D in the first place.

When these two teams work harmoniously – then you will be a business to be reckoned with!

10) Simplicity rules

In all our experience of reviewing R&D projects, it is overwhelmingly the simple solutions that succeed, both in terms of the project success itself and for their associated tax relief claims.

Of course, there are exceptions – some R&D projects are extremely complex – though where possible, try and simplify everything you do. It makes you more efficient, helps buy-in and ensures participation from all business functions.

If R&D conversations are kept limited to your engineering team, proposed paths and solutions could burgeon into ever—more complex work patterns and could go well beyond the understanding of the rest of the business, causing a divide in the business that is difficult to remedy.