Where does R&D fit within your business strategy?
Because you are already on your export journey, you will be gaining invaluable market information. This knowledge, combined with market research, will help you to identify new opportunities for your products and services.
Once you’ve identified them, R&D will help you realise these opportunities.
How will international trends drive your R&D decisions?
As an exporter it is important that your products meet future market wants and needs. For example, the global trend in smart phone usage, or the adoption of cloud-based technology may mean you need to find a new way to deliver your product or service.
It is also important to stay one step ahead of global trends so that you don’t keep producing a product or service for a market that no longer wants or needs it.
How much should you budget for R&D?
Entering a new market usually means spending more on market research and less on product development. If you are already established in a market you may be looking to produce the next generation of product to meet market needs.
Innovative companies continue to conduct R&D to stay ahead of their competitors and a general rule is to spend 3-5 percent of revenue in this area.
Conducting R&D in an overseas market
All R&D carries a certain degree of risk because you are, by definition, trying to solve a problem that hasn’t yet been solved. The challenge is to ensure you are getting regular and accurate updates, and measuring the results as you progress. The earlier you can spot a project that is not going to result in a workable solution, the less impact on your business financially.
If you are undertaking product development for customers overseas, it is often easier to keep an eye on progress if you use a New Zealand-based research company. However, it is essential that you have people in your target country who can inform the project from a market perspective.
You could also consider using a research company within your target market, but be prepared to spend regular time there to stay engaged with the project. It is usually more financially viable to use a company at home.
Before you try to do R&D in an offshore market, you need to have experience of doing it at home in order to anticipate the pitfalls. You could consider recruiting this experience at leadership or Board level.
Avoiding the pitfalls, at a glance
- Recognise the risks of R&D and don’t bet your whole business on the outcome of a project.
- Stay engaged - set goals and measure success / failure regularly.
- If you use an overseas R&D company, visit the country regularly.
- If you use an New Zealand based company, keep the project in touch with your target market.
- Start local – undertake smaller-scale projects at home first.