R&D ain’t just for the big guys…

I work for what many would consider a ‘small’ technology company.  When you compare us to the likes of Google and Apple, we’re a minnow swimming in the larger technology pond. And yet what we do for the UK and our global clients is considerably more important than our diminutive stature might imply. We sit at the centre of the UK internet, processing billions of DNS queries to millions of computers around the world. It’s a role and responsibility that we take very seriously, and for the last twenty years we’ve been quietly managing this important function, acting as a key layer in the internet infrastructure of the UK.

Just because we’ve been doing the same thing successfully for the last twenty years, it doesn’t mean that we’ll continue to do this for the following twenty. The technology landscape is littered with the broken remains of companies who  held dominant technology positions and, just when they felt invulnerable, along came a newer, shinier or cheaper technology to knock them from their perch. The phone manufacturer Nokia is a great example of this. In the early 2000s you’d have been crazy not to buy a Nokia phone – they were reliable, technologically advanced and affordable phones that just about everybody had. Nokia’s market capitalisation reflected this, with a value of nearly $300bn in early 2000. But then along came Steve Jobs and his funky glass iPhone and suddenly Nokia’s business model of cheap robust little phones seemed outdated. By 2005 the market value of Nokia had fallen to below $50bn and by 2010 they were virtually bust. They had banked on continuing to do the same thing in a new era, and it failed.

I’m lucky to work for a business that doesn’t fall into the Nokia trap but rather understands  and accepts the Darwinian evolution of technology. Over the past five years we have invested  in a skilled Research and Development team whose job is to try and peer into the future. They are tasked with understanding what might happen to the internet and its many protocols, and review the disruptive tech that will change the way we all use and interact with the internet. So far, their work has led us into areas as diverse as flood monitoring, rural broadband, drone regulation and autonomous cars, and we’ll continue to explore more areas as we seek to find the answers.

Our approach has not always been met with support however. There are many who see little point in innovating as a small business, suggesting that because Google or Amazon are working in the same space, they will simply dominate the landscape with whatever product they release.

I disagree.

When you dig under the skin of these tech giants, you see a slighter different picture. Certainly these companies are are great thinkers and innovators – that’s what has taken them to the deserved heights of success – but they’ve often reached these heights by  working with or acquiring smaller companies (or intellectual property)  to accelerate their own mission. As of December 2016, Google had acquired 204 smaller companies since its formation. In the same period, Amazon has acquired over 70.

We tend also to focus on the success stories, but Google and Apple openly admit that they’ve had many less than successful ideas and products (Apple Newton, or Google+ anyone?). In a capricious and evolving market like tech, many ideas will fail but are necessary steps on the path to progress.

Smaller enterprises should view innovation and R&D as a vital part of their business plans. If you still need convincing, how about these five great reasons for innovation:

  1. Innovation gives you a competitive edge in often crowded marketplaces. If you have unique products, you’ll stand out from the rest.
  2. Innovation gives you something to talk about and a compelling narrative for your company. We’ve attracted serious interest by talking about the journey and our findings, and that has led to commercial deals.
  3. If you innovate, there’s a good chance that others will want to collaborate and partner with you. Show up on Google’s radar and you never know what might happen…
  4. In the UK (and many other countries) you can obtain tax relief on your R&D activities. It’s clear that governments value innovation and wish to support companies who try.
  5. Innovation makes your company attractive to talent. Good people want to work for an organisation that has an interesting future.

At Nominet, we’ll continue to forge our path and try to create an exciting future for the company that goes beyond its DNS roots. We know that there will be some hard times along the way, but the green shoots of success we’ve already enjoyed will be nurtured in order to provide genuine new areas of business for us in the future. Don’t make the mistake of sitting still in a changing landscape – innovate and the future will be brighter than you can evisage.

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