On a regular basis, I run into engineers who refuse to talk about business, monetization, customer value and related topics. All they want is to get a requirement specification, put on their headphones and start building. Their perspective is that business is the responsibility of others and that their job is to build what they’re told to build.
Anyone who has read my posts and articles may be aware of the fact that I think that the aforementioned is a fundamentally flawed point of view for at least three reasons. The first reason is that, in practice, R&D sets business strategy. It often takes years for R&D decisions to be fully materialized in the product or system architecture. Consequently, if architects and engineers take the wrong decisions, business opportunities and strategic options that occur sometimes years later are impossible to realize. As I’ve written about this before, I don’t want to deep dive into this reasoning, but for R&D staff to make decisions resulting in the largest set of business strategy options requires a deep understanding of the business the company is in as well as a visionary outlook.
The second reason engineers need to understand the business has to do with R&D effectiveness. Many R&D organizations focus on efficiency in terms of developing as many features per unit of R&D resources. However, building many features that are never used by customers is, obviously, a colossal waste of time and effort. Instead, the focus in R&D should be on generating as much business value per unit of R&D and this is best achieved by building highly differentiating functionality rather than commodity. Unfortunately, our research shows that many companies spend north of 80 percent of their R&D resources on commodity functionality. Although some of that investment is unavoidable, a significant part if driven by engineers who don’t know what functionality is differentiating and what is commodity.
The third reason is that it leads to missed business opportunities. Typically, those in the company with a business background are unaware of opportunities offered by new technologies. Even though the ‘lean start-up’ and broader entrepreneurial community is concerned with problem/solution fit and product/market fit and is focused on the customer, the fact remains that new business opportunities are initiated by technology breakthroughs. Engineers and R&D staff, in general, understand technology and find it easier to hypothesize new and relevant applications that benefit customers.
As engineering is moving from a requirement specification oriented way of working to focusing on quantitative outcomes, it’s critical that everyone in R&D is aware of these desired outcomes as these – often through a hierarchical value model – are derived from what we’re looking to accomplish in the business. Consequently, as an engineer, architect or R&D manager, you can no longer afford to be ignorant of the business your company is in.
Of course, there’s a similar message for those on the business side: even though you may think that you’re in control of the company, in practice it’s decisions made in R&D sometimes years ago that will dictate your success today. Hence, ensuring that your colleagues in R&D understand what the business entails and what is coming in terms of customer, user and business trends is a critical part of your job. View it as an investment in your future success!