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In the product innovation space, how much time and money is spent in research and curation by product teams and what are the common tools used to perform such activities?
Hello! Thanks for your request to provide you with information about the tools most used, and the time and money spent in R&D for product innovation teams. The short version is that there is no way of determining an exact figure or estimation of the average time product teams or product managers allocate for R&D. This is because the time needed for research varies greatly depending on many factors such as, but not limited to, the type of company, the type of product, needs of the customer, recent events, and risk tolerance. I have instead provided you with case studies of how companies allocate time for R&D. Findings also suggest that The most innovative companies worldwide have been allocating an average of 3.7 percent of their overall revenue to R&D.
Below you will find a deep dive of my findings.
METHODOLOGY
I first directed my research towards targeted search strings revolving around key terms such as "Product Management", "Product Innocation", "R&D", "Research", "Time", "Spending", and "Allocation". From there, I redirected my research towards case studies about R&D and time management published by globally-recognized companies. After which, I redirected my research towards studies about the research time allocation and expenditure of companies known to lead the current innovative industries.
R&D TIME ALLOCATION
Percolate is a globally-recognized providers of enterprise software. They recently published an article about the time management of their Director of Product Management Nate Stewart. The article states that Nate Stewart typically dedicates 32 percent of his time in a week to research. This equates to roughly 16 hours a week.
According to the article, time allocation of product managers varies greatly depending on many factors which includes, but is not limited to, the type of company, the type of product, needs of the customer, recent events, and risk tolerance.
An article published by Venture Beat states that companies such as Google, Apple, LinkedIn, and Facebook have been encouraging their employees to allocate at least 20 percent of their time everyday into product innovation. The article states that this strategy has helped conceptualize certain existing products such as Gmail, Google Transit and Google News.
PRODUCT MANAGER R&D CHALLENGES
Mind The Product recently conducted a survey covering the biggest challenge for product managers. According to their findings, the majority (49 percent) believe that their biggest problem is not being able to conduct proper research to determine the market viability of their product.
PRODUCT MANAGER R&D TOOLS
Aha! Is one of the world’s leading provider of road mapping software. They recently published an article that features the top preferred and used tools by product managers. A portion of the list of products was segmented into product research. According to their list, the top 6 tools product managers used for research include Typeform, Google Forms, and Survey Monkey—which are primarily used by product managers to create online forms, surveys, quizzes, landing pages, etc. Peek was also included in the list, which is an online service that allows product managers to test websites, apps, prototypes, wire frames, competitors' sites, email campaigns, and other platforms. The list also includes User Testing, a software dedicated to collecting and analyzing customer and employee insights; and UXCam—a tool which allows the recording and analysis of how customers make use of certain software and apps.
OVERALL GLOBAL R&D SPENDING
PWC conducted a survey of the Top 100 companies of the Global Innovation 1000. The survey’s objective is to determine R&D spending and trends of the world’s most innovative companies. In addition to this, The survey also aims to determine where companies invest the most of their R&D spending and how regional spending has changed over time.
According to their findings, spending of the Global Innovation 1000 companies grew at a rate of 5.1 percent from 2014-2015 to $680 billion. Experts state that this is the highest amount of year-on-year growth since 2012. Over a 10-year period, R&D spending increased at a CAGR of 5.4 percent from $400 billion back in 2005.
GLOBAL R&D SPENDING AS A PERCENT OF REVENUE
In order to make figures more comparable, analysts often compare R&D spending to overall GDP for entire countries or revenue for companies. Findings indicate that Global Innovation 1000 spending as a percent of revenue climbed to 3.7 percent in 2015 from 3.5 percent in 2014. Over a 10-year period, R&D spending as a percent of revenue dropped from 4.2 percent back in 2005 at a CAGR of -1.2 percent.
REGIONAL TRENDS IN R&D SPENDING
Data from PWC’s report also show that Global Innovation 1000 companies used to spend the most in terms of R&D in Europe, followed by North America, and Asia back in 2007. As of 2015, this order has been reversed. Experts believe that Asia’s robust growth and domestic spending is responsible for the region’s rise to the top of R&D spending. Despite this, the US’ R&D spending has remained the highest among all other countries.
A section of PWC’s report presents data which suggests that companies that have invested in global R&D performed 20 percent better over those that invest in local R&D.
EXCESSIVE R&D SPENDING TURNS INTO WASTE
Another section of PWC’s report compares the operating profit growth of companies who spend too much in R&D with those who spend to little. Data suggests that although more R&D spending sometimes means better operating profit growth, a threshold exists where excessive R&D spending turns into a wasteful investment—which ultimately leads to less operating growth profit. In addition to this—after around 10,000 analyses—experts found no statistical relationship between R&D spending and sales growth, gross profit growth, operating profit growth, operating margin, net profit growth, net margin, market cap growth, and total shareholder return.
CONCLUSION
To wrap it up, there is no way of determining an exact figure or estimation of the average time product teams or product managers allocate for R&D. This is because the time needed for research varies greatly depending on many factors such as, but not limited to, the type of company, the type of product, needs of the customer, recent events, and risk tolerance. I have instead provided you with case studies of how companies allocate time for R&D. Findings also suggest that The most innovative companies worldwide have been allocating an average of 3.7 percent of their overall revenue to R&D.
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