Five Ways in Which Innovation Management Helps Boost R&D ROI
The ongoing COVID-19 pandemic has already triggered an economic recession, with a direct impact on production and sales. Not only that, but critical functions such as Intellectual Property foresee an impact as R&D centers expect to receive budgetary cuts on the non-product development activities. But there is a silver lining to all of this as this happens to be the right time and opportunity to focus on IP.
The process of managing innovation is often unstructured and could benefit from adopting some of the best practices that are being tested in most of the R&D organizations. The challenge is to revisit the way we recognize not only the R&D and its ROI, but to also develop and appreciate various stages of Innovation Management to measure the value created in the innovation process, thereby producing dramatic shifts in our competitive position. Managing the innovation processes and optimizing Innovation Management Best Practices Lifecycle, which has otherwise been a fragmented area for long, is more important now than ever.
In this article, we will briefly discuss five ways in which adopting the best innovation management practices will have a direct favorable result on R&D ROI. Also, these practices can bring in effectiveness and provide you some tangible measures to evaluate your existing workflows to manage innovation, often termed as ‘Innovation Management’.
1. Targeted innovation management leads to optimization of budget & talent:
Well-defined and targeted practices in innovation management could actually define the output of the effort that the complete team is going to put. Problem scouting takes into consideration inputs from all hierarchies such as customers, industry experts, IP professionals, innovators, and other stakeholders instead of just a top to down approach or announcements by CXOs which may lead to putting efforts in a misguided manner and non-utilization of potential. It is important to determine the objective and evaluate the time, effort, money, and energy that we are putting across to achieve one or more objectives of the following:
Problem scouting aligns IP strategy to the company’s business strategy, taking into consideration the abilities of the think tank, all the while thinking in terms of products that are crucial for the markets and thus puts the company in a competitive position. Problem Scouting enables us to set our foot right from the beginning, sets the vision clear for the team and identifies the right problem that is suited for that duration or that particular session that we are planning to put this process on.
2. Leads to a stronger patent plus product portfolio:
Developing a stronger product and patent portfolio becomes more significant after this economic slowdown. It’s a standard expectation from any R&D department to introduce new features and state-of-the-art products that would go into the market and bring returns on that investment. Streamlining our IP processes is important in today’s highly competitive world where every company is innovating. This puts great pressure on the innovators as their performance is being highlighted and measured when a company operates in adverse circumstances.
Companies need to have a stronger patented product portfolio so that they can market themselves in a better way and attract more customers as the market recovers. Similarly, the CEOs and CXOs want to make decisions based on the R&D effort and R&D output of the department. They just don’t want the R&D teams to be innovative; they also want them to be efficacious enough to contribute to the company’s overall growth.
3. Balanced metrics to measure ROI enables the companies to measure tangible progress:
To properly evaluate ROI from the R&D Department, we need to keep into account two different parameters. One is the type of value we are adding to the company such as new features in products, continuous improvement and development, customer-centric problem solving and the second one is the type of value we are generating through our creativity such as IP creation and contribution to intangible assets. Having well-defined metrics in place helps the companies to focus on innovation and meet the pre-decided goals. While setting up these metrics, it is important to ensure that they do not stifle the creativity of the innovators rather act as guiding parameters at different stages of innovation right from pre-ideation to invention harvesting.
3. Encourages the R&D to build an intangible asset to a company’s portfolio:
Intangible assets (IAs) are one of the most essential components of knowledge-intensive industries where the new value-added is often based on irregular, specialized, non-repetitious activities. It’s the R&D team that will generate value in terms of the intangible assets that a company owns in valuation. When talking about the IP fraternity, it’s no surprise that ninety percent of the companies derive their valuation from intangible assets. This has remarkably increased over the past 40- 45 years, and the industry has witnessed a significant shift in maintaining tangible assets with respect to intangible assets, and that is where the IP fraternity becomes relevant.
4. Properly captured, screened, and nurtured ideas have better chances of conversion: Invention Harvesting
Commonly it’s been observed that the inventors/innovators are not motivated enough to write down their ideas and follow them through the entire process up to IP approval. This can result in the loss of potentially rewarding ideas. A structured framework of Invention Harvesting, in which in-house or third-party service providers help these inventors capture and mold the ideas better.
An idea screening group or IP committee can have the responsibility of screening the ideas which are of the highest business value or technically sound inventions. Once you have decided that it is a good invention and you have enough disclosure so you can take it internally, you put it for further evaluation. When you identify an idea that is nascent but has good business value, you need to provide a support system to that inventor. A structured process of Pre-ideation, Ideation, and then protection of ideas also helps the firms in deciding the best IP filing strategy.
When all the fundamental structures have been taken care of and tested, Innovation Management, essentially, can be a self-sustaining system, where everybody knows their role, their efforts are focused, there is all-round collaboration, and good ideas are converted into good products. Also, once you implement these processes, the chances of converting an idea into a patent get increased.
