Investment In Research & Development: Key To a Sustainable Startup While the need to innovate is synonymous with startups these days, it is still a far cry from reality and limited to probably a few sectors only

What makes a business successful? While the obvious answer might be profitability, that is not all. Any business primarily exists to solve a problem or fill a gap; only once it does that, it can be a successful venture in the long term. Today, India is a hub for many new startups and enterprises that have emerged on the premise of addressing a challenge. Some have thrived initially but probably faded away or realigned their business objectives. This is not an undesirable trait per se, but quite telling of the situation at hand that startups need a culture of rigorous R&D if they want to be sustainable. R&D is akin to innovation!

It's a misconception that R&D is primarily valuable for and meant for bigger organisations. R&D does not generate immediate profit; however, it helps with long-term profitability and the future creation of patents, trademarks and copyrights. A business, big or small, has an objective in hand that needs to be fulfilled. In fact, the first step for any business or enterprise, even before its commencement, should be to indulge in a comprehensive R&D process to test the waters and improve the efficacy of its product or service. It is as vital as doing a market survey to understand customer needs. Moreover, due to constant changes happening in all fields, startups must also innovate and be one step ahead of the market trend. The competition is also astute enough nowadays and catches up with every innovation at their disposal, so there is constant pressure to give something new. Here, R&D plays the role of a catalyst by spurring proactive measures.

While the need to innovate is synonymous with startups these days, it is still a far cry from reality and limited to probably a few sectors only. Take, for example, food and beverages (F&B). There are limited opportunities for R&D in this sector due to its fast-moving nature and need for scalability. However, on the contrary, this is the sector that needs maximum investment in R&D due to the consumer's ever-changing lifestyle and taste preferences. In the F&B industry, taste fatigue always occurs, and consumers carve for more varieties. In the aftermath of the COVID-19 pandemic, an average customer has become more health conscious and is looking for solutions that can boost energy, help build immunity and invigorate their lifestyle. In short, startups in the field of F&B must deliver something new, wholesome, fresher, tastier, hygienic, appealing, cost-effective and deliver much faster than others all without compromising on quality to address taste fatigue. Hence, constant research for newer products is the need of the hour.

R&D is necessary to improve and maintain the delivery of products or services. It will help to reach out to a customer in the shortest period. It will also ensure quality and efficiency of service and will lead to better profitability by lowering the cost of service.

Besides technological advances, R&D also helps improve the back-end or production process. For the manufacturing sector or sector dependent on machines for delivery of products/services, it is important to invest in R&D to improve the overall functionality of the machines, making them more intelligent and energy efficient. Companies need to think in the direction of machines for every pocket and every industry, including MSMEs, as this will ultimately maximise their potential. This also contributes to the Make in India initiative and helps in the availability of cost-effective yet technologically ahead machinery for Indian businesses.

Startups today are an essential driver of the country's economic growth. The effect of initial R&D on a firm's growth is crucial as they enable the exploitation of external knowledge. Initial R&D also helps keep the momentum of new product development, which is more strategic than reactionary. Research and development gives a brand a greater chance of growth and success. With an R&D process, the business will work productively and efficiently to meet the changes in the market. In turn, customers will be satisfied with the constant innovations, resulting in greater profits.

Startups need to place a strategy for R&D rather than making it an add-on as it is a sign of changing times. Competition is as intense as ever and staying ahead of the curve is crucial.

Having a research and development team and investing in it is not enough. Businesses often fail in their R&D ventures because they need an effective R&D strategy. That said, making the R&D strategy effective is more complex than it may sound. Apart from having enough funds to facilitate it, making it a central part of the organisation's business goals is crucial. Only a holistic approach will bring tangible results, giving businesses clarity and agility to complete their projects.

While many factors are elementary to a start-up's growth, innovation remains a critical enabler today. And innovation can be achieved through R&D.