How Startups Should Build and Manage an R&D Team

As a founder, you know that having a rockstar R&D team is what it takes to develop an innovative product or service that solves customers’ problems and positions you as a leader in your industry.

However, it takes more than just hiring scientists and engineers to get an R&D team off the ground. Your R&D team is a crucial part of your broader R&D strategy, so their success depends on the quality of that strategy. 

It’s also just as important to know how to manage this group of experts to ensure they have everything they need to do their best work.

Building an R&D Team

When creating an R&D team, it’s essential to have the foundational elements in place before you start hiring. Who you bring on board and why will depend on the goals you set for your R&D project.

1. Define Your R&D Strategy

Because a good strategy is the backbone of every R&D team, there needs to be one in place before you start filling R&D roles. McKinsey describes a winning strategy as one that is clear around three elements:

• What you aim to deliver: Is it a new technology or product? What is the purpose of your R&D team? How does R&D fit into the company’s goals on a high level? 
• What you need to deliver it: What kind of capabilities will you need? Who are the people you will need to hire? What kind of R&D technology will you need to invest in?
• How you will deliver it: How will you execute your strategy? What kind of role will technology play in the strategy’s execution?

Once you align on an R&D strategy, McKinsey recommends clearly communicating it across your startup as well as with any external stakeholders.

2. Define Roles and Team Structure

The R&D strategy will influence the roles and structure of your R&D team. An R&D team typically consists of:

• Scientists who perform experiments and other types of research to support the development of new services, products, or technologies.
• Engineers who design and build services, products, or technologies. They also handle product issues and the redesign process of existing services or products.

• Product managers who own the product development cycle according to their vision for the product or service.

• Market researchers who analyze market trends and gather data on the target market and audience.

• Technical writers who work with the R&D team to create product documentation. They also write manuals for end users.
• R&D managers who are responsible for managing R&D projects, monitoring the budget, and supervising the R&D team.

You will also need to decide whether to bring in external partnerships, such as with universities or other companies, to boost your R&D efforts. In the pharmaceutical industry, for example, big pharma companies often partner with smaller biotechs to expedite the R&D process and discover new treatments.

As you’re defining roles and building the team structure, be careful not to create silos that cause complications in collaboration across R&D teams. According to McKinsey, R&D organizations often coordinate around individual product components rather than user functions — an approach that frequently causes complications. 

In this organizational setup, a car manufacturer developing a lane departure warning system would organize the R&D team based on the individual components they’re developing, such as steering and braking systems. Siloed teams would only coordinate later on in the development process, making it difficult and expensive to solve problems. If you work in silos, enough attention can’t be given to how individual parts will work when connected to the whole. But a team built around the user function wouldn’t encounter such issues as they would collaborate throughout the design and development process.

3. Build a Specific Hiring Process

When building an R&D team from scratch, the standard way of hiring via job boards or networking might not suffice. For highly specialized roles, you may need to invest in a specialized recruiting agency to help staff your startup. This is especially true for roles such as engineering, where there is a significant talent shortage.

Specialized recruiters understand what your ideal candidate is looking for and the specific skill sets needed for the role. They also have a wide network of potential candidates they can tap into, which reduces the time it takes to fill the position.

If you’re looking to hire top performers, a specialized recruiter will know how to frame the opportunity to attract them. Top talent rarely has to visit a job board to find a new role as recruiters reach out to them on a regular basis, so it’s important to stand out with an opportunity that speaks to their individual skill set and career goals.

Managing an R&D Team

Effective R&D team management will not only improve project success but also ensure employee retention for your startup now, and as you continue to grow.

1. Encourage Autonomy

Micromanagement takes up valuable time, prevents employees from feeling empowered to do their best work, and makes them feel like you don’t trust them. Instead, encourage employees to take initiative.

Blaise J. Arena, a research chemist, project manager, and author of over 50 patents and publications, says, “Make it clear that you expect members to take the initiative on tasks within their domain. Do not require them to get your approval for everything. They may make mistakes or approach things differently than you would. Accept that; don’t criticize or blame — teach.”

Team members will feel more comfortable taking initiative if they are led by enthusiastic and empathetic project managers. Excessive criticism and authoritarian leadership will make teams feel like they are unable to give feedback, voice their concerns, or be autonomous in their work. Worse, it will damage the team’s psychological safety, which research shows has a significant impact on their performance.

2. Stay on Top of Project Updates

Without effective communication, it’s easy to get off track, miss important project deadlines, and go over your budget. Regular project updates will ensure issues are communicated and handled on time. To facilitate this process, establish guidelines for clear communication, such as meeting cadence, where and with whom to share project updates, and what kind of information should be a part of these updates.

Be sure to follow through with any issues brought up during the meetings and create a plan to address them. Otherwise, the meetings won’t be helpful to the team and you won’t meet the goals of your R&D project.

Depending on the project's complexity, you might need to invest in a tool for project management to make it easier to track different tasks. For remote teams, using a single communication channel like Slack is essential for everyone to be on the same page.

3. Accept Failure as Part of the Process

Innovation cannot happen without failure. As University of Arizona astrophysicist Erika Hamden explains, “Discovery is mostly a process of finding things that don’t work, and failure is inevitable when you’re pushing the limits of knowledge.” When you create an R&D environment where failure is normalized, team members are going to have high morale even when things don’t go according to plan.

You can do this by discussing failure openly and treating it as a learning opportunity rather than a sign of incompetence. Focus on understanding what went wrong rather than whose fault it is. Although analyzing failure can be uncomfortable, members of leadership should make a conscious effort to uncover lessons and not just move on as quickly as possible to the next project.

Creating this type of environment is especially important for team members who are new to R&D. For oncology researcher Eileen Parkes, failure was the biggest shock she encountered after moving from medicine into research. Without adequate encouragement, team members could become disheartened and leave the organization altogether, not realizing failure is par for the course in R&D.

Support Your R&D Team with Tax Credits

As a startup investing in R&D, you’re eligible for the US government’s R&D tax incentive (or SR&ED if you’re based in Canada). When you file for tax credits, you can get a portion of your R&D investment back and use it to fund additional research projects. Or, perhaps you’re still developing your R&D strategy for your startup and you need some help getting things off the ground – either way, Boast can help. 

With an AI platform like Boast, you can automatically compile all the documentation you need to file for a tax credit, saving time and maximizing your claim.

Schedule a call with an R&D tax expert to ensure a maximum tax return on your R&D efforts.