Your (nonexistent) R&D budget

Here’s my plan:

I will run my first marathon this year, but I’m not going to train more than a few minutes each week.

I will retire early in a multi-million dollar home on a golf course, but I’m just going to set aside a few bucks here and there when I get around to it.

I will give an inspirational, deeply admired and widely viewed TED talk next year, but I won’t spend any time crafting my message or practicing my presentation.

My guess is that your reaction is probably something like: “oh yeah, well good luck with that.”

Yet, pull back the curtain on your company’s strategic growth plans and here’s what you are likely to find:

You say you are focused on being customer-centric, but spend almost no time or money on garnering actionable customer insight and testing its implications.

You say you want to be THE leader in your industry, but more often than not you sit on the sidelines watching others bring new products and services to market and then flail desperately trying to play catch-up.

You say you are deeply committed to innovation, but don’t devote any meaningful resources to active exploration of new ideas.

For every company like Nordstrom that is putting tangible research and development in motion–through entities like their Innovation Lab or by placing small bets in hyper-growth companies like Bonobos–there are 100 that say they want innovative growth, yet spend very little time and money on it.

Sure, every once in a while a game-changing idea emerges quickly with little investment or without the benefit of a structured innovation process. Every now and then someone wins the lottery too.

If you really want a difficult outcome worth achieving, you have to make the investment. No R&D budget almost certainly means no future innovation.

If your real plan–when you cut through all the posturing, inspirational messages and denial–is to hope to get lucky, can we all agree that you really don’t have a plan?

Well, good luck with that.

3 thoughts on “Your (nonexistent) R&D budget

  1. Excellent post. For an interesting comparison, I’m told that in the UK in order to qualify spending as an “R&D” expenditure for tax purposes a certain percentage must lead to failure. Whether that’s exactly true or not, it’s a smart concept. R&D means risk – and that means digging far deeper than hoping an accidental good idea or two trickles out of daily operations.

  2. Great post Steven. So easy for people to talk about creating a customer centric solution, yet another to execute. To figure out a solution takes real time and thoughtful analysis with so much “noise” out promising to be the next big thing. R+D is not only an investment in identifying new technologies, but just as importantly, hiring people who “understand” new technologies and have an experienced frame of reference to make a recommendation. In the years I have been involved with retail, it seems retailers are only as confident in themselves as their last flash. Retail is a mature vertical that is quaking under the pressure to incorporate or develop technologies to personalize their customer experiences in an Omni-Channel world of millennial’s and grandparents who are all shopping differently now, due to mobile and online shopping. Nordstrom is thinking outside the box in developing customer centric solutions. They work at it, know the field and let people run their own show. Now for a shameless plug… The area of personalization will be morphing into technologies that incorporate Preference Science and Neuro-Ecomonics. Current Personalization is generalized. Preference recommendations are specific to an individual. To learn more about Preference Science and why it is a game changer, visit My company, Prefeye launches in early 2014. Prefeye is the “Pandora” of Personalization for Retailers. The First Preference Recommendation Platform.

    Steven, I look forward to an opportunity to connect with you and discuss our mutual passion in customer centric experiences and technologies. All the Best, Cynthia

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