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Blog 07.10.2022

Become a modern-day explorer

In hindsight, it’s easy for us to understand that Columbus would not have discovered America if he and his group of explorers hadn’t crossed the Atlantic but had been content to sail only the Mediterranean. The same applies to research and development funding, which must head into uncharted waters in hopes of new conquests.
Jani Lehikoinen

Business Coach

When applying for R&D grant, one feature that needs to be assessed is the project's level of industrial research. This concept, which may sound mysterious, ultimately just means that to develop something new, you need to study that 'something' or customer behavior a little deeper than just on the surface. In other words, the end product of research is not always patentable; rather, it can be new information that leads to a competitive advantage.

Industrial research can be understood differently in different industries. Research is not limited to physical products; a service business can also be research-based.

It's also good to remember that the end product of research and development projects is rarely a market-ready product. Instead, the commercialization process often requires a separate project, which cannot be funded as a research and development project, but you can, for example, apply for a loan.

Tune your navigator to peak performance – New information is central to research in service companies, but customer research alone is not enough

A service company may know that America lies beyond the seas, but to navigate there safely, they need instructions. A general guide isn't enough for seafaring; instead, you need a plan to navigate the reefs on your particular journey. Thus, for example, a market survey alone is not quite enough, as it usually brings together existing data. A project's starting point must be that it seeks to produce completely new information. In addition, it’s essential that the project itself will not produce a market-ready product but that the potential euros from the project will pour into the coffers later.

You should bear in mind that each project is unique, so there's no universal recipe for an approved application.

Even basic customer research is not quite sufficient for research and development grant funding. However, if you're looking to develop a new business model or concept or gather research-based, scientific evidence for marketing, it may meet the necessary criteria for funding.

Product development or research? In the digital sector, the boundary is often fuzzy and changes over time

Sometimes it can be difficult to tell when an explorer's ship is getting routine repairs and when that ship is being developed. The same challenge arises in the technology industry, where agile development practices are built into the sector's DNA, and development is constant without clear limits on what research is. That fuzzy line is further blurred by the fact that technologies develop rapidly. For example, a 5G implementation project completed a year ago might already be normal product development within a year. In this case, when determining the project's level of industrial research, it's important to understand how unique the object of that research is, and it must be justified in the application.

However, for technologies, research projects may involve applying knowledge to a new industry. Also, using previously acquired research data, i.e., its applications, often requires research. For example, quantum computing, in itself, will not guarantee benefits for any activity without applying that knowledge.

Development doesn't always need to be about new features, but it can be, for example, research into capabilities and, thus, a competitive advantage.

You can also approach industrial research by, for instance, thinking about how to build software quickly or how to account for a service's scalability to ensure fast delivery.

Understanding your customer's business can be a competitive advantage

Sometimes you have to equip your ship to cross the seas smoothly. When developing physical products, materials and patents often emerge from the discussion.

The result of research-driven product development doesn’t always have to be an invention that revolutionizes the market. It can be, for example, a competitive advantage developed in response to customer needs for lifecycle management support.

For example, a company manufactures hydraulic components that can be used in various product lines and machines. The need for research begins with the company understanding its customers’ business. They have observed that when components break, the customer company’s entire production line stops. They may wait for repairs for up to a week, and no new products will be created on the line, but other fixed costs will continue to run.

In this case, the research and development project predicts and plans the component’s lifecycle so that any possible repairs and maintenance are predictable, resulting in financial savings for the customer when they choose components from this particular company. This project doesn’t produce a finished product for sale but only provides information on how to predict component wear.

Find a new direction for your growth

Check out development ideas for sustainable growth in different industries, or test your idea's eligibility for funding from the Sustainable Growth program from Finland.

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