Microsoft spends a significant proportion of its revenue on research and development. It has more than 850 researchers operating in labs around the world.

Investing in R&D can be very valuable. It can create sustainable competitive advantages, especially if backed by IP protection like patents, and it can differentiate your products from your competitors’. It’s also a defensive measure that protects incumbents from the risk of being outflanked by innovative start-ups and rivals.

In fact, in a tough economic climate, it may be even more valuable. A McKinsey study of the 1990-91 recession found that companies that the companies which invested in R&D, acquisitions and advertising during the tough times emerged ahead of their competitors who cut back.

So, even if you can afford Microsoft’s R&D budget, how can you emulate their commitment to breakthrough research? Here are some suggestions:

  1. Get help. The Government’s Technology Strategy Board can help with grants, knowledge transfer and innovation centres. Check out NESTA’s Creative Enterprise Toolkit. Talk to your local university. They all have business liaison departments.
  2. Harness your employee’s creativity. 3M famously let its staff devote a proportion of their paid hours to innovative side projects. One led to the commercialisation of Post-it notes. Perhaps your team’s pet project might create a billion-dollar business for you?
  3. Allocate a budget. At a senior level, decide on a budget and a commitment to R&D and defend that investment. It’s an easy thing to cut if the numbers are looking bad but that’s borrowing from the future to pay for the present.
  4. Take the long view. Don’t expect every project to pay dividends in the next quarter. Allow time for exploration and serendipity.
  5. Pivot fast, kill quickly. However, you don’t have to back every project and if something’s not working, kill it. Manage your R&D projects like an investment portfolio.
  6. Failure *is* an option. The difference between R&D and product development is that sometimes failure is an acceptable outcome. You can learn from an experiment that doesn’t work out. Just fail quickly, don’t assign blame, learn from it and move on. In the words of Samuel Beckett: “Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.”
  7. Seek inspiration. What you already know is not a good place to start R&D. You need to look for new pastures. So get inspired! Stay in touch with Microsoft Research and check out other online resources, such as TED and Phil McKinney’s Killer Innovations blog.
  8. Find a community. Just as Microsoft works with universities, you can find a community to support your R&D projects. Organisations like NESTA, the British Library’s Business and IP Centre and the RSA can help you link up with like-minded people from different disciplines and get help.

To find out more about how Microsoft technology is supporting innovation in the Enterprise visit www.microsoft.com/en-gb/business/enterprise

By Matthew Stibbe, Microsoft Enterprise