This week I have been finalizing our new annual CEO research survey. One of the questions asks about investment intent for next year, in various areas of the business – marketing, operations, capital equipment etc. In my generic list of these high level areas, I include “R&D”. It has been interesting to watch intent towards R&D change in recent years. Its relative position has fluctuated but overall it remained fairly well protected even in the depth of the recession.
Like all research work at Gartner, my survey questionnaire gets thoroughly reviewed and I rely on the eagle eyes of my colleagues to spot flaws in my work. One person with a sharper eye than most, is my analyst colleague David Furlonger. He pointed out that in banks, insurers, financial services companies and indeed most services industry – there isn’t a function called R&D. What does exist is “innovation”. Doh! Of course he is right. Sometimes innovation is a diffuse activity – but it can be formalized into a central function and location. For example, earlier this year I had the pleasure of very briefly visiting the wonderful BBVA Innovation Center in Madrid.
But here’s a thought. We are moving very quickly into a world where information and communication technology innovation will become very physical. The internet of things is coming, so are the robots and the 3D printers. The digital business world of the Nexus ++ is about to become a very wide field of sensor and mechatronic creativity. You will need your soldering iron and a supply of Arduinos, Lilypads, Makerbots and robot development platforms - plus the staff to get hacking and the space to work creatively. You might say “we are an information industry” – but such industries will have to intersect the real world too. What if you need detailed data, quickly, about what’s really going on in a street protest or at a flood site – before you start calculating the insurance cost, or changing your media strategy? Maybe you’ll rely on video drones one day (by the way if you doubt the awesomeness of drones – check out this recent video from Dominoes Pizza ). Wondering what might happen when all lawnmowers stream data and how that might change the way you think about extended warranty services? Well hacking a few lawnmowers now to create a test data-set might just give you a competitive insight to the future.
Its all part of a digital business future you are going to have to invent. Its going to involve some fairly gutsy and original experimentation. It won’t be about just adopting and adapting pre-packaged ideas from vendors and often it won’t be about incremental tweaking. Moving your website to a mobile app – that’s innovation. But Square payments and Renew Smart waste bins – they are the outcome of physical R&D. Yet those two examples are both in information business model, services businesses.
So just maybe your bank / insurance / media / advertising or other services industry company should be investing in a proper R&D function – and naming it so.
A Uniliver R&D Center in Bangalore
(image: DSWati, wikimedia commons)