The R&D lead role at ISVs and its evolution

From my experience as Microsoft ISV lead for France and from my experience at SoftFluent working with software companies or investors, as well as per my active role in the French ISV association, I have been continuously in contact with both CEOs and their R&D lead. Whether you name him/her (I will use a feminine in the rest of the article) VP R&D, CTO or technical director depending on the size of the company, the person leading the Research & Development effort inside a software company plays a major role.

The importance of the R&D leader

Why is the R&D lead so important for ISVs? Simply put, the R&D department bears the responsibility for the long-term success of the company. Whereas the sales department is primarily focused on short to mid-term sales execution, the R&D department is supposed to build the next generation of products that will make the company successful in the future.

Of course, one could argue that the sales department is even more important, because if you do not financially survive, it does not matter whatever you prepare for the long-term. But ISVs that are just selling without managing their R&D will be swept away at the next technology wave, even if with the best sales team, and especially with the pervasiveness of Internet and the emergence of “Software as a Service” models.

Don’t get me wrong, I don’t want to underemphasize the role of sales departments, because the more you are able to sell in the short-term, the more investment you are able to make into future products. But if you do not have the right R&D team and leader to properly leverage this investment, you are not preparing the quantum leap that you may hope to achieve.

Additionally, CEOs are usually already aware that they need a good sales team, but underestimate the very specific profile they need for driving R&D, a profile that seems harder to find by the way.

According to me, it seems harder to find a good R&D lead than a good sales lead. ISV CEOs asked me countless times for advising them a good hire for R&D management, either at the top level, or for managing a team of developers. In both cases, I found the answer to be hard, as I know this job is probably one of the most challenging – though one of the most interesting for sure!

The reason why this job is hard lies in the fact that this role requires various – and often opposite – skills. My conviction is that being a good R&D manager requires technical expertise (for sure), management skills, but also strong business acumen and communication skills. And this will be all the more the case as I will explain in this article.

ISV Challenges today and what this means for R&D

Before trying to focus on what makes a good R&D manager, I would like to recall a number of key market trends that characterize the evolution of the software sector, as described by market analysts:

• Accelerating pace of evolution,
• Platform fragmentation including mobile devices,
• Middleware standardization, leading to increased specialization (horizontal or vertical),
• Internationalization and competition at the worldwide level,
• Industry move towards Software as a Service and cloud-based models.

These challenges translate into specific challenges for the R&D:

• Ability to keep up-to-date with latest technology standards,
• Building differentiation based on relevant business scenarios,
• Support for global and multicultural applications,
• Web-based delivery models including closing the loop with customer usage and support,
• Delivery aligned to shorter cycles of innovation.

What it takes to be a successful R&D manager

Of course, there are a couple of stable elements that have always been critical for managing an R&D department. First, the R&D lead must have strong technical skills to properly develop a professional engineering process to build products and have the legitimacy to drive developers, no question about it. Second, she must be a good manager, in all the classical dimensions of management, and especially in building teams, as technical developers are often positioning themselves in mutual competition. These two elements used to be critical to R&D managers’ success and I expect these to remain as relevant in the future.

But, as a matter of fact, my conviction is that you also need someone with strong business acumen and communication skills to drive the R&D effort. The good news is that this acumen can easily be developed by working jointly with the sales and marketing departments. But to do so, it is critical that the R&D manager develops communication skills, takes the relevant posture and really wishes to understand the specific business of the ISV and the faced challenges.

In our experience, without proper management, business and technical people tend to be like oil and water in a glass. They do not naturally meddle with each other. How many times did I hear technical people criticize the sales discipline? And how many times did I see sales representatives consider the technical staff as pure resources that should be aligned only to their own top objective?

Now what you need for short cycles of innovation is a real interpenetration between the business and the technology. The most relevant innovation, whatever business you are in, occurs when the technology directly serves innovative and valuable business scenarios. And to build these relevant scenarios, it is critical to have a positive and permanent cooperation between business analysts, sales people and R&D. And very often, the R&D lead (or her team) is the only person whose technology knowledge is sufficient to imagine the innovative solutions to create. And this cooperative process should be permanently sustained, even if it sometimes requires adjusting product plans to leverage a business priority opportunity.

In today’s fast changing world, it is also becoming impossible and economically inefficient for any R&D to try to invent its own solutions to any problems. On the contrary, as the need for speed increases, it is very likely that successful R&D departments will be the ones able to leverage external innovation, by buying components or licensing technology, and also able to leverage external development resources where appropriate, including potentially OffShore if it makes sense. Leveraging the web as a source of information for both technological and market trend information is also a key differentiating opportunity between R&D managers.

Schema #1 – Evolution of the R&D manager skills

So where past successes partly resided in having a strong process orientation and stable product plans to fit into long-term schedules based on a specific home-made methodology and toolbox, it is now time for the R&D lead to act quite differently. She should stay up-to-date with new technology opportunities, sorting out the hype from the real important elements that can be leveraged in the context of the ISV, depending on its specialty and the challenge of its business sector.

This work being done, the R&D lead should not be shy in leveraging external partners, either to embed innovative pieces of software that will make his R&D more competitive (and this is also an area where the R&D lead should develop business acumen), or to strengthen its development team to accelerate product delivery or buy specific skills. Signing strategic partnerships could be a key leverage factor in going fast and allowing parallelism in innovation.

She should be as comfortable with sales or marketing people as she is with technical people to act as a bridge between the departments and leverage the field and marketing knowledge to create the innovative solutions that will build the company’s future success, either by her personal involvement or by fostering this spirit inside the R&D department.

As software development gets more and more industrial, it is also critical to seize the opportunity to leverage the technology to change the development process in itself, adjusting the methodology to a fully industrial approach, both in terms of organization and tools.

We of course have a strong position about tools at SoftFluent, because this is one of our major value creation axis through CodeFluent Entities software factory. We are convinced that, whatever your own recipe is, automating your development is a huge leverage for creating value.

Doing so, the R&D lead will be closer to deserve the title of “Chief Technology Officer” than the “Chief Technical Officer” which I find too restrictive.

Possible R&D manager failures

The first and most common risk for R&D managers is to fail in managing the "product roadmap", a tricky process that requires balance.

On one side, we find R&D managers that are totally driven by customer requests and do not build real "product plans". This way of acting leads to a fragmented offering whose complexity grows exponentially with time and the absence of a real product.

On the other side, one can find R&D managers that put excessive rigidity in product planning. Of course, it is not a good idea to deeply modify product plans while in development phase. But being able to get some flexibility about the plans and to manage change should be built into the R&D methodology. Otherwise, the price to pay might be an offering which is not aligned to market needs.

A second risk is the NIH syndrome. The “Not Invented Here” syndrome is very well-known in software development and has prevented a lot of teams from leveraging major opportunities. External technologies are rejected, the R&D people finding a lot of more or less valid arguments to explain why they can do better, sometimes even unconsciously. This results in suboptimal time to market, as well as excessive cost. The team ends up with people mentally focused on technology whereas the need is to get a team that understand the drivers of their vertical market.

A third risk can be a lack of curiosity. If the R&D lead is not really interested by the business, it might happen that developers stay with what they know, just because they are comfortable about it. R&D lead really needs to have a desire to permanently evolve, read about new technology, test it and understand what is useful for the company’s business and what is not, including what may change the rules of its software development process. Otherwise, the innovative scenarios will emerge at competitors first and the company will be swept when a major technology wave arrives.

Table #1 – The 3 critical skills expected for the R&D lead

To maintain the proper culture in their R&D department, ISV CEOs should proactively:

• Monitor their competitors and hire people from other companies in the same sector,
• Send R&D people to customers when relevant, not only to solve issues, but also to make sure they see real world contexts of what is happening on the market,
• Involve field resources like consultants or pre-sales engineers to work with the R&D on some specific projects to break silos,
• Challenge their R&D department about looking at third-party opportunities on the market like existing software components or partner modules,
• Regularly leverage external resources with strong expertise in software development to assess the R&D maturity in terms of organization, processes and technology skills.

In the end, the needed reactivity and innovation is just a consequence of having one foot in the R&D and one foot in the business, so involving the R&D manager with the business should be one of the key lessons of this article.

And, to come back to the oil and water comparison, just remember what happens when you shake the glass, it should certainly give you a good hint to the solution!

Daniel Cohen-Zardi

SoftFluent CEO