When we hear the words “research & development” (R&D), we commonly picture a laboratory environment with scientists in white lab coats conducting experiments among shelves full of test tubes and other equipment. Or we might visualize a new fighter aircraft wheeled out of a hangar in a secret location, the product of a years-long “skunkworks” program.
In both cases, the ideal result is the development of unique intellectual property, which in turn enables some form of new technical capability. This may be a more effective treatment for disease or perhaps the ability to fly faster and higher than before.
Both these outcomes would be considered “innovative,” and in many cases, we see R&D and innovation as one and the same – when in fact R&D is only one aspect of innovation.
Life sciences – from R&D-centric to innovation-centric
Many successful businesses have been built by leveraging newly developed, proprietary technologies discovered through fundamental research. The life-sciences industry is one of the prime examples, however, with ever-increasing time horizons between new blockbuster treatments drastically increasing R&D investment requirements and shareholder expectations, competitive cost pressure from generic pharmaceutical manufacturers, and increasing regulatory processes reducing returns on investment, the industry sees R&D as only one important component of successful innovation.
Consider the reliance many life sciences businesses have on acquisitions to source and incubate (rather than research and develop) new complementary ideas for commercialization, and the change in business models from pure drug discovery and supply through to health outcome-based models. This has been driven by rising basic research costs coupled with markedly different market conditions, including the economics of single-payer national healthcare systems.
Think back from the business, not forward from the technology
For successful innovation, it is critical to think “back from the business,” rather than only thinking forward from the technology. The strategic approaches outlined above through which the life sciences industry has transformed to achieve growth and cost efficiency all reflect innovation; the business impact has been the core focus of these approaches, rather than the underlying technical capabilities developed through scientific research efforts.
Analysis of the current business environment and impacts is the starting point of any innovation initiative. Without this fundamental understanding, technical capabilities are often developed in isolation, at great expense, and which eventually either significantly overstep user needs or lack alignment with the strategic factors the business needs to address.
Ultimately, innovation needs to enable the relevant corporate and business strategies, and in turn drive the scope of the technical capabilities and resources of the business, internal and external.
R&D as a component of innovation – making effective digital investments
This same concept also applies to digital. As businesses undergo digital transformation, the role of innovation compared to R&D is becoming clearer.
If we consider the exciting field of emerging software technologies, much of the business success these powerful new technical capabilities enable comes through their adroit application as part of innovation initiatives, rather than their research and development. This recognition allows businesses to plan and implement their innovation investments much more effectively.
For example, by partnering to understand and access the latest and greatest technology solutions, rather than having to develop (and maintain) these from first principles in-house and incurring substantial expense, internal resources can instead be used to develop relevant and accurate business insights to drive growth, find cost efficiencies, and delight customers.
In any case, a comprehensive approach to investigating and defining future business opportunities, in conjunction with understanding the opportunities presented by new technology, is critical to successful innovation, rather than solely investing in R&D in the hope of achieving these outcomes.
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