SME CLINIC With Kola Owolabi
The United States of America is the world’s largest economy and it spends well over 3% of its GDP on Research and Development. In a recent report only about 2-3 countries of the world spend a higher percentage of their GDP on Research than America. America has maintained its economic dominance in the world due to its heavy investment in research. If you check the research spend (annual expenditure on research) of companies all over the world, American companies are head and shoulders above their counterparts in other countries of the world. That is why you have many American companies with market capitalization higher than the GDP of some advanced countries.
Coming to the level of small businesses, most people will think that research is not that important. Small business owners think they know everything about their businesses and so they will just be fine with that. Growth in business is what everyone is after and if you want to grow you will need to acquire greater market share. That is, you must be better positioned than your competitors.
Acquiring greater market share means that you must have competitive advantage over people who are doing the same thing with you. But how do you gain competitive advantage over them if you don’t know what they are doing?. So finding out what others are doing in their businesses is what is called research.
Business is like war that takes place between countries. For a country to prepare to execute a war against another country, that nation must go searching for reliable information on the strengths and weaknesses of the nations they are warring with. You can’t mobilize with dane guns to confront another country armed with AK 47 assault rifles. You will all be dead on arrival. When you find out what the other country has in stock in terms of arms and ammunition, particularly sophisticated missiles and projectiles that wreak havoc over long distances, then you are better positioned to know what to do in order to improve your chances of success in the eventual confrontation.
In the same vein, absence of reliable information on what others in the same market space with you are doing will significantly hurt your chances of success in that business. If you enter the market with a wrong price, that may result in early demise of the venture. The same thing will happen if you take your business to the wrong market,
China is struggling to take over the position of the largest economy in the world today to displace America because it is commiting huge resources to research and development. It was a deliberate effort by the government of the country some years back. They sent students to study in US universities to understudy the secret of the success of the American system. When the students graduated and returned to China, they were motivated to sit down and clone everything they saw there. What they also cloned was the heavy emphasis America had on Research and Development. Although still below that of the US in terms of absolute figures, China has seen a higher percentage growth in its Research and Development spend than US over the last 22 years. What has this rapidly increasing commitment to research fetched China? China has become the manufacturing capital of the whole world, producing about 50% of what the entire world consumes today.
The virtue of research in business is in the fact that it breeds a more informed entrepreneur. With your eyes wide open you are like a car travelling at night with very bright headlights. It is able to move faster and overtake others with poor headlights. That is faster rate of success and more market share at the end of the day.
Kola Owolabi. Fellow of the Institute of Management Consultants, 08023203198, is the Executive Director of Centre of Entrepreneurial Research and Development based in Igbesa, a surburb of greater Lagos, in the vicinity of Crawford University. The organization has had the opportunity to execute landmark business development (business plan preparation and conduct of feasibility studies) and market research briefs for organizations both within and outside Nigeria. He can be reached by phone or WhatsApp through 08023203198.
