What is Research and Development (R&D)?

Research and Development is a process implemented by the companies or governmental organizations to innovate or improve its products and services. The Research and Development activity may involve both the basic research and applies research. Companies use this method either to innovate new products or to improve the effectiveness of the existing products. It may also aim at solving a specific issue regarding a product or service.

Why is R&D so Important?

Organizations spend a substantial amount of their cost in conducting Research and Development as the process is crucial for the development and growth of the company. Producers of consumer goods use this process to improve their product offerings and develop the existing products. Typically, pharmaceuticals, technology companies and semiconductors spend most on R&D. In Europe, the process is known as Research and Technological Development (RTD). 

The process of R&D differs from one company to another, it also largely depends on the industry it belongs to but all of them follow the standard primary models. There are mainly two existing models that are implemented in conducting an R&D. Generally, the big corporate houses do have a separate department dedicated to R&D activities. The first model involves engineers who develop new products. The entire department is staffed with engineers engages in extensive research. The other model involves industrial scientists or researchers. The department is engaged in applied research in technical, industrial or scientific fields for developing new products or improving the existing offerings. It also may aim at improving a procedure or solving a problem identified. 

The Research and Development process does not guarantee an immediate profit, rather it is performed for long-term growth. There is a certain amount of risk associated with this activity as it doesnt bring a profit immediately. Research can fail for a number of times before the team reaches the desired goal, so the general return of investment is uncertain to an extent. Risk adjusted return must be estimated by the companies. Companies spend billions of dollars in R&D activities with of aim of introducing innovations and offer the newest technologies. The R&D team consists of skillful, knowledgeable and experienced staffs who can offer the best solutions and innovative ideas.