What is R&D?

R&D, which stands for research and development, is defined as a set of activities companies undertake to create new products, introduce new services, and make their existing offer innovative and better. In contrast to other business activities, R&D is not expected to bring immediate profit – it works as an innovation engine for the whole enterprise and aims at giving long-term advantages to the whole organisation.

Why is R&D so important?

R&D provides businesses with knowledge and insights that facilitate innovation and growth. Given the competitiveness of today’s market, being innovative is vital for every company that wants to stay ahead of their competitors and create products and services that sell.

According to McKinsey, in 2019 alone businesses around the world spent $2.3 trillion on R&D, while the annual investment in R&D activities has been growing at approximately 4% per year over the last decade.

This huge investment in research and development is characteristic for all companies, no matter which sector they represent. The industries that spend most on their innovation are pharma, high tech, and telecom, but all others are also doing what they can to make their R&D effective.

What does it take to make your R&D strategy effective?

Having a research and development team and investing in it is not enough. Businesses often fail in their R&D ventures because they lack an effective R&D strategy that helps them achieve their goals. But making R&D strategy effective is not as simple as it looks. Apart from having enough funds to facilitate it, it is crucial to make it a central part of the organisation’s mission and strategy. Only such a holistic approach will bring tangible results, giving businesses clarity and agility to make their projects come true.

The main challenges for a successful R&D:

1. The speed of the innovation cycles
   
   As you read this text, millions of dollars around the world are being put into research, making it one of the most competitive activities businesses can go for. The speed of innovation cycles keeps growing, so becoming competitive on time is simply tricky.
   
   
2. The lack of connection between the R&D groups and the customers
   
   R&D departments tend to be isolated from customers, while the most important factor of a successful R&D is to be always in touch with the end-clients to come up with solutions that respond to their needs.
   
   
3. The difficulty in measuring the success
   
   As R&D work is complex and does not bring immediate results, it is often difficult to measure its success. It is therefore worth keeping a close eye on the progress of the R&D team and apply clear metrics when it comes to evaluating it.

Things to take into consideration when planning to introduce an R&D strategy

When you start thinking about introducing R&D into your business, there are several things you should take into consideration. The most important of them are as follows:

1. Create a strategic framework
   
   Implementing an R&D strategy requires a framework you will stick to. Think which aspects of the business you need to focus on, decide on your goals and deadlines. That’s done, concentrate on your approach and the way you are going to achieve your goals, measure your success and report the milestones.
   
   
2. Assign a team
   
   You cannot have a successful R&D if you don’t have a team responsible for developing it. If you are a smaller business, you can start with adding some additional R&D tasks to your existing employees’ workload. Another good solution is to outsource your R&D to an external and experienced partner. Such a collaboration should start with a discovery workshop which allows to evaluate, design, and plan your project. Another great option is to organise product design workshops, which will help you transform your idea into a product that attracts users.
   
   
3. Test your solutions
   
   No matter what kind of innovation you introduce, you need to regularly test new ideas on your customers. Such an approach will allow you to understand how to go ahead with your research and which of the innovative solutions are worth pursuing.
   

R&D has massive potential for businesses across all industries. But the ever-growing competition coupled with rapid changes in technologies and in customers’ expectations make it a pretty complex job. If you want to chat about how to get it right, get in touch with our team!