These days, it doesn’t seem to matter what the size of your R&D budget is, it never feels big enough. Often the biggest challenge when putting together a cost-effective budget is finding ways to save money without sacrificing on innovation.
Nikhil Murdeshwar is the principal research engineer at Olympus Surgical and previously served in a similar role at Medtronic. Murdeshwar has spent years working in the field of research and medical device design and has garnered several patents and awards for his contributions to the field.
Murdeshwar recently chatted with MD+DI Qmed about ways to identify and eliminate waste in your R&D budget, as well as a few tips to help researchers get the biggest bang for their buck — all without sacrificing on innovation.
Editor's Note: The statements and opinions expressed belong to Nikhil Murdeshwar and do not represent Olympus.
MD+DI Qmed: For starters, what do you think are some of the most important aspects to consider when looking at an R&D budget to evaluate whether or not you’re getting the most out of your spending?
Murdeshwar: I loathe metrics clutter. Therefore, I seek indications from the budget that represent past and future, and performance and revenue expectations. Things like:
- Customer satisfaction or number of innovations that return cost of capital within a reasonable time.
- Percentage of the portfolio motivated through customer needs.
- Revenue generated through product innovations.
- Growth in net present value across new products.
MD+DI Qmed: What are some ways a group can look to eliminate waste in their R&D budget, and how can they go about identifying some of those areas?
Murdeshwar: Firstly, there is no silver bullet to this complicated question. Secondly, waste is a function of poor planning and communication. There are different ways to eliminate waste in the R&D budget, but I like seeing a solid foundation that includes:
- A strong organization
- A structure
- A strategy aligned with sales
- Project categories
- An R&D process that is disciplined
- Indications of wise spending
- Metrics identifying value and waste
MD+DI Qmed: In a similar vein, how much of a challenge is it to trim an R&D budget without necessarily sacrificing on innovation? What advice do you have for those looking to trim waste without stifling innovation?
Murdeshwar: Research is risky, and predicting successful outcomes is very difficult. Striking balance between pushing the state-of-the-art, while also taking on risk is a daunting challenge. Changes to the R&D budget starts with a sensible strategy, which influences the different types of products needed, which in turn controls the number of fully-supported projects in the pipeline.
Therefore, when the R&D budget is trimmed, the exposure to bad outcomes will increase unless that strategy is either modified to account for fewer products, or the project plans are revised to account for the higher risk.
Ultimately, the best way to trim R&D budgets without stifling innovation is to have fewer, fully supported projects that are stocked with appropriate expertise.
MD+DI Qmed: What do you think is a common mistake or misconception that often leads to a bloated R&D budget, and how can research groups avoid wasting time and money on those areas?
Murdeshwar: A few common mistakes that lead to bloated budgets are:
- Budget inputs from non-technical people who are focused on minimizing spending.
- Rushed R&D budgets that use estimates from previous years.
- Parallel path investigations that are used to meet on-time deliverables.
R&D groups can avoid wasting time and money on these mistakes by:
- Seeking direct input from project teams.
- Identifying a need and preparing a business case to justify value.
- Revisiting budgets, value, and purpose at the exit of each project stage.
MD+DI Qmed: What are some cost-efficient tools that can help R&D departments enhance innovation without significantly setting their budget back?
Murdeshwar: Some cost-efficient tools that can help R&D departments are:
- Voice of customer
- Constructing need statements
- Recognizing innovation outcomes that appear simple
MD+DI Qmed: Are there any trends on the rise in the R&D field that researchers should consider when putting together a cost-effective budget?
Murdeshwar: Some of the latest trends in formulating cost-effective R&D budgets are:
- Carrying low risk into PDP projects
- Challenging parallel path investigations
- Questioning market dynamics and customer interest
- Having the courage to cancel active projects
- Placing greater importance on user inputs
- Emphasizing statistical relevant quantities
- Considering make and buy decisions
MD+DI Qmed: Finally, you’ve worked extensively in the R&D field for a few different titans of the medtech industry. What is the most important lesson you’ve learned that you could pass on to others in the field to help foster low-cost, high-impact research programs?
Murdeshwar: [The importance of] an R&D friendly environment with the right leadership, built around trustworthy and experienced people.