scientist looking at a slide
PHOTO: Science in HD

Ask yourself this question: which website, app or system feels like it was really designed and made for someone like you? Something that understands your needs, your tasks, your priorities — and meets or exceeds your expectations? Go ahead, I’ll wait. It’s hard to think of one, isn’t it? It’s harder to think of many. More often what springs to mind are all the sites, apps and services that have caused frustration.

Given the generally awful experiences customers have with so many sites, apps, systems, agents, locations and more, how can we get back to making better strategic decisions about product and service direction?

Remember R&D?

For decades, companies relied on their Research and Development (R&D) teams to research, conceptualize and test what the future of products, services and experiences (PSE) should be. The more we needed to understand customers, markets, technology and possible change, the more we looked to R&D. Any company looking to mitigate risk, predict the future, pass the competitors, invent or innovate, or more clearly strategize their PSE roadmap turned to R&D teams. They hired the best and brightest they could find, creating mixed teams of young and old, different educational backgrounds, and different angles on the issues at hand.

Does your company still have an R&D team? Some do, especially in the pharmaceutical, chemical and engineering sectors. Some of the best-known brands certainly do. But sadly, most of the companies we work at have done away with R&D teams. People heard the siren song of, “Just be Lean and Agile by doing as little as possible as fast as possible, release it as your real product, and see what people think.” Someone decided that strategically approaching PSE R&D was just not as cool as “failing fast” or unleashing guesses on the public. Anything taking more than a month was derided as not Lean or not Agile.

How many companies regret the awful products they made you suffer through? How many are calculating what these failures cost internally and externally? How many companies rushed something out only to be met by cancelled accounts, media ridicule, dropped stock prices, or other disasters? Would those companies now say, “Yes, we did the right thing rushing this out to you because — hey — we were Agile!” 

Related Article: How Customer Expectations Are Driving Product Thinking in Some Surprising Places

What Should it Cost?

On average, companies spend around 3.5% of their revenue on R&D, though many companies spend much more. In 2019, Apple’s revenue was around $260 billion, and they reportedly spent over $16 billion on R&D, over 7% of their revenue. Pharmaceutical companies might spend between 15% and 50% of their revenue on R&D since research and testing are at the core of their business model.

What is the core of your company’s or division’s business model? Do you have parity with competitors, or have they passed you by? Are you expecting your teams to “innovate” or “disrupt”? And have they? How has your company invested time and budget for experts to create this expected innovation or disruption? Or did we expect teams to guess in cycles using design sprints and MVPs?

Innovation and disruption are rare. Our customers would be satisfied if not thrilled if we actually researched, architected and released great PSE that have deep customer value, help users accomplish tasks efficiently, and are easy to learn and use. Perhaps instead of asking what it costs, we should be asking how much it will make and save our company.

Related Article: Innovation Can Be Taught. And Measured

Determining the ROI

Correctly utilizing highly-qualified CX/UX researchers and architects as your R&D team (or in collaboration with them) should yield improved ROI. Consider spending at least 7% of annual revenue on research-based initiatives aimed at guiding strategy and business goals. To determine how this investment will more than pay for itself, calculate or estimate:

  • How much revenue would your company need to gain in new business?
  • How many of your customers would have to renew, be more loyal, or purchase more from you?
  • How much money would you need to save internally by “building the right thing for the right customers” vs. burning time and money on cycles of very public guessing?

Where your company still has R&D, we in CX and UX are not looking to replace them. CX/UX would be collaborators. But where your company has cut the R&D team imagining they were too slow, expensive, non-Agile, or non-Lean, it’s time to bring those functions back. Your competitive advantage might rely on it.