Research and development is known as R&D or research and technological development (RTD). It is the way companies develop new services or products through innovative activities.
The way a company or institution performs R&D will vary from place to place, but the fundamental goal remains the same.
How research and development is performed
People often wrongly think that R&D is a simple case of conversations and focus groups, but it is more complex than that.
Engineers or industrial scientists will often be tasked with the research, after all it is experts who are needed to properly conduct such an important task.
Many large companies have incredibly large research and development departments whose jobs solely revolve around R&D of new products or services.
Research and development can be financially risky as it doesn’t necessarily lead to profit or indeed a product or service. There are many cases where significant amounts of money have been invested in R&D only to discover that the original idea wasn’t actually viable. The risk shouldn’t put companies off performing it, however, as it prepares for success through marketing of new products.
The importance of research and development
R&D, while costly, can be invaluable. As well as developing a new product or service, part of the research aspect will teach companies about their potential customer base, marketplace and facilitate the launch of a successful marketing campaign to target buyers in the right areas.
Research and development if conducted correctly means that a company or institution should have foreseen every possible aspect relating to their product and service and are 100% prepared to launch it in a professional manner.
It also teaches a business about any rival product. Knowledge of how another company has created and launched a product similar to theirs can be valuable and should help to avoid any pitfalls or mistakes others may have made.
Research conducted into research and development shows that organisations who invest heavily in R&D outperform those who don’t, which shows how important it actually is. Technology firms rely even more on R&D than other businesses.
Profit, profit, profit
While we have said that R&D can be risky, it certainly has its advantages. The negative side as well as if it doesn’t lead to a successful product being launched is the cost. It is often impossible, particularly with brand new ideas, to budget effectively. Experience can tell a company what it should cost, but it won’t be exact and there is no point in cutting corners in this regard.
Successful R&D will lead to a successful product and a successful business. Profits will increase as will share prices and it’s all thanks to research and development.
In many countries there are government subsidies available for R&D and it’s something which is taken very seriously. After all, successful and booming businesses within a country are great for its economy and many people will benefit from it through employment, product availability and dividends, so the power of research and development cannot be underestimated.