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research and development , in industry , two intimately related processes by which new products and new forms of old products are brought into being through technological innovation .

Research and development, a phrase unheard of in the early part of the 20th century, has since become a universal watchword in industrialized nations. The concept of research is as old as science; the concept of the intimate relationship between research and subsequent development, however, was not generally recognized until the 1950s. Research and development is the beginning of most systems of industrial production. The innovations that result in new products and new processes usually have their roots in research and have followed a path from laboratory idea, through pilot or prototype production and manufacturing start-up, to full-scale production and market introduction. The foundation of any innovation is an invention . Indeed, an innovation might be defined as the application of an invention to a significant market need. Inventions come from research—careful, focused, sustained inquiry, frequently trial and error. Research can be either basic or applied, a distinction that was established in the first half of the 20th century.

Basic research is defined as the work of scientists and others who pursue their investigations without conscious goals, other than the desire to unravel the secrets of nature. In modern programs of industrial research and development, basic research (sometimes called pure research) is usually not entirely “pure”; it is commonly directed toward a generalized goal, such as the investigation of a frontier of technology that promises to address the problems of a given industry. An example of this is the research being done on gene splicing or cloning in pharmaceutical company laboratories.

Applied research carries the findings of basic research to a point where they can be exploited to meet a specific need, while the development stage of research and development includes the steps necessary to bring a new or modified product or process into production. In Europe , the United States , and Japan the unified concept of research and development has been an integral part of economic planning , both by government and by private industry.

The first organized attempt to harness scientific skill to communal needs took place in the 1790s, when the young revolutionary government in France was defending itself against most of the rest of Europe. The results were remarkable. Explosive shells, the semaphore telegraph, the captive observation balloon, and the first method of making gunpowder with consistent properties all were developed during this period.

The lesson was not learned permanently, however, and another half century was to pass before industry started to call on the services of scientists to any serious extent. At first the scientists consisted of only a few gifted individuals. Robert W. Bunsen, in Germany, advised on the design of blast furnaces. William H. Perkin, in England, showed how dyes could be synthesized in the laboratory and then in the factory. William Thomson (Lord Kelvin), in Scotland, supervised the manufacture of telecommunication cables. In the United States, Leo H. Baekeland, a Belgian, produced Bakelite, the first of the plastics. There were inventors, too, such as John B. Dunlop, Samuel Morse, and Alexander Graham Bell , who owed their success more to intuition , skill, and commercial acumen than to scientific understanding.

While industry in the United States and most of western Europe was still feeding on the ideas of isolated individuals, in Germany a carefully planned effort was being mounted to exploit the opportunities that scientific advances made possible. Siemens, Krupp, Zeiss, and others were establishing laboratories and, as early as 1900, employed several hundred people on scientific research. In 1870 the Physicalische Technische Reichsanstalt (Imperial Institute of Physics and Technology) was set up to establish common standards of measurement throughout German industry. It was followed by the Kaiser Wilhelm Gesellschaft (later renamed the Max Planck Society for the Advancement of Science), which provided facilities for scientific cooperation between companies.

In the United States, the Cambria Iron Company set up a small laboratory in 1867, as did the Pennsylvania Railroad in 1875. The first case of a laboratory that spent a significant part of its parent company’s revenues was that of the Edison Electric Light Company, which employed a staff of 20 in 1878. The U.S. National Bureau of Standards was established in 1901, 31 years after its German counterpart, and it was not until the years immediately preceding World War I that the major American companies started to take research seriously. It was in this period that General Electric , Du Pont, American Telephone & Telegraph, Westinghouse, Eastman Kodak, and Standard Oil set up laboratories for the first time.

Except for Germany, progress in Europe was even slower. When the National Physical Laboratory was founded in England in 1900, there was considerable public comment on the danger to Britain’s economic position of German dominance in industrial research, but there was little action. Even in France, which had an outstanding record in pure science , industrial penetration was negligible.

World War I produced a dramatic change. Attempts at rapid expansion of the arms industry in the belligerent as well as in most of the neutral countries exposed weaknesses in technology as well as in organization and brought an immediate appreciation of the need for more scientific support. The Department of Scientific and Industrial Research in the United Kingdom was founded in 1915, and the National Research Council in the United States in 1916. These bodies were given the task of stimulating and coordinating the scientific support to the war effort, and one of their most important long-term achievements was to convince industrialists, in their own countries and in others, that adequate and properly conducted research and development were essential to success.

At the end of the war the larger companies in all the industrialized countries embarked on ambitious plans to establish laboratories of their own; and, in spite of the inevitable confusion in the control of activities that were novel to most of the participants, there followed a decade of remarkable technical progress. The automobile, the airplane, the radio receiver, the long-distance telephone, and many other inventions developed from temperamental toys into reliable and efficient mechanisms in this period. The widespread improvement in industrial efficiency produced by this first major injection of scientific effort went far to offset the deteriorating financial and economic situation.

The economic pressures on industry created by the Great Depression reached crisis levels by the early 1930s, and the major companies started to seek savings in their research and development expenditure. It was not until World War II that the level of effort in the United States and Britain returned to that of 1930. Over much of the European continent the depression had the same effect, and in many countries the course of the war prevented recovery after 1939. In Germany Nazi ideology tended to be hostile to basic scientific research, and effort was concentrated on short-term work.

The picture at the end of World War II provided sharp contrasts. In large parts of Europe industry had been devastated, but the United States was immensely stronger than ever before. At the same time the brilliant achievements of the men who had produced radar, the atomic bomb , and the V-2 rocket had created a public awareness of the potential value of research that ensured it a major place in postwar plans. The only limit was set by the shortage of trained persons and the demands of academic and other forms of work.

Since 1945 the number of trained engineers and scientists in most industrial countries has increased each year. The U.S. effort has stressed aircraft, defense, space, electronics , and computers. Indirectly, U.S. industry in general has benefited from this work, a situation that compensates in part for the fact that in specifically nonmilitary areas the number of persons employed in the United States is lower in relation to population than in a number of other countries.

Outside the air, space, and defense fields the amount of effort in different industries follows much the same pattern in different countries, a fact made necessary by the demands of international competition. (An exception was the former Soviet Union , which devoted less R and D resources to nonmilitary programs than most other industrialized nations.) An important point is that countries like Japan, which have no significant aircraft or military space industries, have substantially more manpower available for use in the other sectors. The preeminence of Japan in consumer electronics, cameras, and motorcycles and its strong position in the world automobile market attest to the success of its efforts in product innovation and development.

Building an R&D strategy for modern times

The global investment in research and development (R&D) is staggering. In 2019 alone, organizations around the world spent $2.3 trillion on R&D—the equivalent of roughly 2 percent of global GDP—about half of which came from industry and the remainder from governments and academic institutions. What’s more, that annual investment has been growing at approximately 4 percent per year over the past decade. 1 2.3 trillion on purchasing-power-parity basis; 2019 global R&D funding forecast , Supplement, R&D Magazine, March 2019, rdworldonline.com.

While the pharmaceutical sector garners much attention due to its high R&D spending as a percentage of revenues, a comparison based on industry profits shows that several industries, ranging from high tech to automotive to consumer, are putting more than 20 percent of earnings before interest, taxes, depreciation, and amortization (EBITDA) back into innovation research (Exhibit 1).

What do organizations expect to get in return? At the core, they hope their R&D investments yield the critical technology from which they can develop new products, services, and business models. But for R&D to deliver genuine value, its role must be woven centrally into the organization’s mission. R&D should help to both deliver and shape corporate strategy, so that it develops differentiated offerings for the company’s priority markets and reveals strategic options, highlighting promising ways to reposition the business through new platforms and disruptive breakthroughs.

Yet many enterprises lack an R&D strategy that has the necessary clarity, agility, and conviction to realize the organization’s aspirations. Instead of serving as the company’s innovation engine, R&D ends up isolated from corporate priorities, disconnected from market developments, and out of sync with the speed of business. Amid a growing gap in performance  between those that innovate successfully and those that do not, companies wishing to get ahead and stay ahead of competitors need a robust R&D strategy that makes the most of their innovation investments. Building such a strategy takes three steps: understanding the challenges that often work as barriers to R&D success, choosing the right ingredients for your strategy, and then pressure testing it before enacting it.

Overcoming the barriers to successful R&D

The first step to building an R&D strategy is to understand the four main challenges that modern R&D organizations face:

Innovation cycles are accelerating. The growing reliance on software and the availability of simulation and automation technologies have caused the cost of experimentation to plummet while raising R&D throughput. The pace of corporate innovation is further spurred by the increasing emergence of broadly applicable technologies, such as digital and biotech, from outside the walls of leading industry players.

But incumbent corporations are only one part of the equation. The trillion dollars a year that companies spend on R&D is matched by the public sector. Well-funded start-ups, meanwhile, are developing and rapidly scaling innovations that often threaten to upset established business models or steer industry growth into new areas. Add increasing investor scrutiny of research spending, and the result is rising pressure on R&D leaders to quickly show results for their efforts.

R&D lacks connection to the customer. The R&D group tends to be isolated from the rest of the organization. The complexity of its activities and its specialized lexicon make it difficult for others to understand what the R&D function really does. That sense of working inside a “black box” often exists even within the R&D organization. During a meeting of one large company’s R&D leaders, a significant portion of the discussion focused on simply getting everyone up to speed on what the various divisions were doing, let alone connecting those efforts to the company’s broader goals.

Given the challenges R&D faces in collaborating with other functions, going one step further and connecting with customers becomes all the more difficult. While many organizations pay lip service to customer-centric development, their R&D groups rarely get the opportunity to test products directly with end users. This frequently results in market-back product development that relies on a game of telephone via many intermediaries about what the customers want and need.

Projects have few accountability metrics. R&D groups in most sectors lack effective mechanisms to measure and communicate progress; the pharmaceutical industry, with its standard pipeline for new therapeutics that provides well-understood metrics of progress and valuation implications, is the exception, not the rule. When failure is explained away as experimentation and success is described in terms of patents, rather than profits, corporate leaders find it hard to quantify R&D’s contribution.

Yet proven metrics exist  to effectively measure progress and outcomes. A common challenge we observe at R&D organizations, ranging from automotive to chemical companies, is how to value the contribution of a single component that is a building block of multiple products. One specialty-chemicals company faced this challenge in determining the value of an ingredient it used in its complex formulations. It created categorizations to help develop initial business cases and enable long-term tracking. This allowed pragmatic investment decisions at the start of projects and helped determine the value created after their completion.

Even with outcomes clearly measured, the often-lengthy period between initial investment and finished product can obscure the R&D organization’s performance. Yet, this too can be effectively managed by tracking the overall value and development progress of the pipeline so that the organization can react and, potentially, promptly reorient both the portfolio and individual projects within it.

Incremental projects get priority. Our research indicates that incremental projects account for more than half of an average company’s R&D investment, even though bold bets and aggressive reallocation  of the innovation portfolio deliver higher rates of success. Organizations tend to favor “safe” projects with near-term returns—such as those emerging out of customer requests—that in many cases do little more than maintain existing market share. One consumer-goods company, for example, divided the R&D budget among its business units, whose leaders then used the money to meet their short-term targets rather than the company’s longer-term differentiation and growth objectives.

Focusing innovation solely around the core business may enable a company to coast for a while—until the industry suddenly passes it by. A mindset that views risk as something to be avoided rather than managed can be unwittingly reinforced by how the business case is measured. Transformational projects at one company faced a higher internal-rate-of-return hurdle than incremental R&D, even after the probability of success had been factored into their valuation, reducing their chances of securing funding and tilting the pipeline toward initiatives close to the core.

As organizations mature, innovation-driven growth becomes increasingly important, as their traditional means of organic growth, such as geographic expansion and entry into untapped market segments, diminish. To succeed, they need to develop R&D strategies equipped for the modern era that treat R&D not as a cost center but as the growth engine it can become.

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Choosing the ingredients of a winning r&d strategy.

Given R&D’s role as the innovation driver that advances the corporate agenda, its guiding strategy needs to link board-level priorities with the technologies that are the organization’s focus (Exhibit 2). The R&D strategy must provide clarity and commitment to three central elements: what we want to deliver, what we need to deliver it, and how we will deliver it.

What we want to deliver. To understand what a company wants to and can deliver, the R&D, commercial, and corporate-strategy functions need to collaborate closely, with commercial and corporate-strategy teams anchoring the R&D team on the company’s priorities and the R&D team revealing what is possible. The R&D strategy and the corporate strategy must be in sync while answering questions such as the following: At the highest level, what are the company’s goals? Which of these will require R&D in order to be realized? In short, what is the R&D organization’s purpose?

Bringing the two strategies into alignment is not as easy as it may seem. In some companies, what passes for corporate strategy is merely a five-year business plan. In others, the corporate strategy is detailed but covers only three to five years—too short a time horizon to guide R&D, especially in industries such as pharma or semiconductors where the product-development cycle is much longer than that. To get this first step right, corporate-strategy leaders should actively engage with R&D. That means providing clarity where it is lacking and incorporating R&D feedback that may illuminate opportunities, such as new technologies that unlock growth adjacencies for the company or enable completely new business models.

Secondly, the R&D and commercial functions need to align on core battlegrounds and solutions. Chief technology officers want to be close to and shape the market by delivering innovative solutions that define new levels of customer expectations. Aligning R&D strategy provides a powerful forum for identifying those opportunities by forcing conversations about customer needs and possible solutions that, in many companies, occur only rarely. Just as with the corporate strategy alignment, the commercial and R&D teams need to clearly articulate their aspirations by asking questions such as the following: Which markets will make or break us as a company? What does a winning product or service look like for customers?

When defining these essential battlegrounds, companies should not feel bound by conventional market definitions based on product groups, geographies, or customer segments. One agricultural player instead defined its markets by the challenges customers faced that its solutions could address. For example, drought resistance was a key battleground no matter where in the world it occurred. That framing clarified the R&D–commercial strategy link: if an R&D project could improve drought resistance, it was aligned to the strategy.

The dialogue between the R&D, commercial, and strategy functions cannot stop once the R&D strategy is set. Over time, leaders of all three groups should reexamine the strategic direction and continuously refine target product profiles as customer needs and the competitive landscape evolve.

What we need to deliver it. This part of the R&D strategy determines what capabilities and technologies the R&D organization must have in place to bring the desired solutions to market. The distinction between the two is subtle but important. Simply put, R&D capabilities are the technical abilities to discover, develop, or scale marketable solutions. Capabilities are unlocked by a combination of technologies and assets, and focus on the outcomes. Technologies, however, focus on the inputs—for example, CRISPR is a technology that enables the genome-editing capability.

This delineation protects against the common pitfall of the R&D organization fixating on components of a capability instead of the capability itself—potentially missing the fact that the capability itself has evolved. Consider the dawn of the digital age: in many engineering fields, a historical reliance on talent (human number crunchers) was suddenly replaced by the need for assets (computers). Those who focused on hiring the fastest mathematicians were soon overtaken by rivals who recognized the capability provided by emerging technologies.

The simplest way to identify the needed capabilities is to go through the development processes of priority solutions step by step—what will it take to produce a new product or feature? Being exhaustive is not the point; the goal is to identify high-priority capabilities, not to log standard operating procedures.

Prioritizing capabilities is a critical but often contentious aspect of developing an R&D strategy. For some capabilities, being good is sufficient. For others, being best in class is vital because it enables a faster path to market or the development of a better product than those of competitors. Take computer-aided design (CAD), which is used to design and prototype engineering components in numerous industries, such as aerospace or automotive. While companies in those sectors need that capability, it is unlikely that being the best at it will deliver a meaningful advantage. Furthermore, organizations should strive to anticipate which capabilities will be most important in the future, not what has mattered most to the business historically.

Once capabilities are prioritized, the R&D organization needs to define what being “good” and “the best” at them will mean over the course of the strategy. The bar rises rapidly in many fields. Between 2009 and 2019, the cost of sequencing a genome dropped 150-fold, for example. 2 Kris A. Wetterstrand, “DNA sequencing costs: Data,” NHGRI Genome Sequencing Program (GSP), August 25, 2020, genome.gov. Next, the organization needs to determine how to develop, acquire, or access the needed capabilities. The decision of whether to look internally or externally is crucial. An automatic “we can build it better” mindset diminishes the benefits of specialization and dilutes focus. Additionally, the bias to building everything in-house can cut off or delay access to the best the world has to offer—something that may be essential for high-priority capabilities. At Procter & Gamble, it famously took the clearly articulated aspiration of former CEO A. G. Lafley to break the company’s focus on in-house R&D and set targets for sourcing innovation externally. As R&D organizations increasingly source capabilities externally, finding partners and collaborating with them effectively is becoming a critical capability in its own right.

How we will do it. The choices of operating model and organizational design will ultimately determine how well the R&D strategy is executed. During the strategy’s development, however, the focus should be on enablers that represent cross-cutting skills and ways of working. A strategy for attracting, developing, and retaining talent is one common example.

Another is digital enablement, which today touches nearly every aspect of what the R&D function does. Artificial intelligence can be used at the discovery phase to identify emerging market needs or new uses of existing technology. Automation and advanced analytics approaches to experimentation can enable high throughput screening at a small scale and distinguish the signal from the noise. Digital (“in silico”) simulations are particularly valuable when physical experiments are expensive or dangerous. Collaboration tools are addressing the connectivity challenges common among geographically dispersed project teams. They have become indispensable in bringing together existing collaborators, but the next horizon is to generate the serendipity of chance encounters that are the hallmark of so many innovations.

Testing your R&D strategy

Developing a strategy for the R&D organization entails some unique challenges that other functions do not face. For one, scientists and engineers have to weigh considerations beyond their core expertise, such as customer, market, and economic factors. Stakeholders outside R&D labs, meanwhile, need to understand complex technologies and development processes and think along much longer time horizons than those to which they are accustomed.

For an R&D strategy to be robust and comprehensive enough to serve as a blueprint to guide the organization, it needs to involve stakeholders both inside and outside the R&D group, from leading scientists to chief commercial officers. What’s more, its definition of capabilities, technologies, talent, and assets should become progressively more granular as the strategy is brought to life at deeper levels of the R&D organization. So how can an organization tell if its new strategy passes muster? In our experience, McKinsey’s ten timeless tests of strategy  apply just as well to R&D strategy as to corporate and business-unit strategies. The following two tests are the most important in the R&D context:

• Does the organization’s strategy tap the true source of advantage? Too often, R&D organizations conflate technical necessity (what is needed to develop a solution) with strategic importance (distinctive capabilities that allow an organization to develop a meaningfully better solution than those of their competitors). It is also vital for organizations to regularly review their answers to this question, as capabilities that once provided differentiation can become commoditized and no longer serve as sources of advantage.
• Does the organization’s strategy balance commitment-rich choices with flexibility and learning? R&D strategies may have relatively long time horizons but that does not mean they should be insulated from changes in the outside world and never revisited. Companies should establish technical, regulatory, or other milestones that serve as clear decision points for shifting resources to or away from certain research areas. Such milestones can also help mark progress and gauge whether strategy execution is on track.

Additionally, the R&D strategy should be simply and clearly communicated to other functions within the company and to external stakeholders. To boost its clarity, organizations might try this exercise: distill the strategy into a set of fill-in-the-blank components that define, first, how the world will evolve and how the company plans to refocus accordingly (for example, industry trends that may lead the organization to pursue new target markets or segments); next, the choices the R&D function will make in order to support the company’s new focus (which capabilities will be prioritized and which de-emphasized); and finally, how the R&D team will execute the strategy in terms of concrete actions and milestones. If a company cannot fit the exercise on a single page, it has not sufficiently synthesized the strategy—as the famed physicist Richard Feynman observed, the ultimate test of comprehension is the ability to convey something to others in a simple manner.

Cascading the strategy down through the R&D organization will further reinforce its impact. For example, asking managers to communicate the strategy to their subordinates will deepen their own understanding. A useful corollary is that those hearing the strategy for the first time are introduced to it by their immediate supervisors rather than more distant R&D leaders. One R&D group demonstrated the broad benefits of this communication model: involving employees in developing and communicating the R&D strategy helped it double its Organizational Health Index  strategic clarity score, which measures one of the four “power practices”  highly connected to organizational performance.

R&D represents a massive innovation investment, but as companies confront globalized competition, rapidly changing customer needs, and technological shifts coming from an ever-wider range of fields, they are struggling to deliver on R&D’s full potential. A clearly articulated R&D strategy that supports and informs the corporate strategy is necessary to maximize the innovation investment and long-term company value.

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Start » strategy, what is research and development .

Research and development provides businesses with the information they need to successfully bring their products or services to market.

In any industry, even the most revolutionary products and services are rarely fully conceptualized on day 1. Most often, success in the market stems from extensive, effective research and development (R&D). This is especially true for small businesses, which contribute a significantly higher percentage of sales to R&D work than larger businesses.

Here’s everything you need to know about R&D and why it’s well worth the investment.

What is research and development?

R&D refers to the various activities businesses conduct to prepare new products or services for the marketplace. Businesses of all sizes and sectors can partake in R&D activities, though the amount of investment can vary. For example, technology and health care companies tend to have higher R&D expenses , as do enterprises with larger budgets.

Typically the first step in the development process, R&D is not expected to yield immediate profits. Rather, it focuses on innovation and setting up a company for long-term profitability. During this process, businesses may secure patents, copyrights, and other intellectual property associated with their products and services.

At larger companies, R&D activities are often handled in-house by a designated R&D department. However, some smaller companies may opt to outsource R&D to a third-party research firm, a specialist, or an educational institution.

[Read more: 7 Ways to Find Small Business Grant Opportunities ]

Types of research and development

R&D activities typically fall into one of three main categories:

• Basic research: Basic research, sometimes called fundamental research, aims to provide theoretical insight into specific problems or phenomena. For example, a company looking to develop a new toy for children might conduct basic research into child play development.
• Applied research: This type of research is practical and conducted with a specific goal in mind, most often discovering new solutions for existing problems. The children’s toy company from the previous example might conduct applied research into developing a toy that facilitates play development in a new or improved way.
• Development research: In development research, researchers focus exclusively on applied research to develop new products and improve existing ones. For example, a team of development researchers may test the hypothetical company’s new toy or implement feedback obtained from customers.

Small businesses have limited resources. They don’t have that endless budget that the Fortune 500 company has, which means the small business will have to get creative to conduct worthwhile research and development.

Becca Hoeft, CEO and Founder of Morris Hoeft Group

Why invest in research and development?

While R&D can require a significant investment, it also yields several advantages. Below are four specific areas where your business can benefit by conducting R&D.

New products

R&D supports businesses in developing new offerings or improving existing ones based on market demand. By conducting research and applying your findings to your final product, companies are more likely to develop something that meets customers’ needs and performs well in the marketplace.

R&D can help businesses understand their place in the market as well as identify inefficiencies in their workflows. Insights from R&D activities can illuminate ways to improve operations as well as where to most effectively allocate resources, increasing overall efficiency.

Cost reductions

While developing a well-researched product or service that performs well is likely to maximize profit, R&D aimed at improving internal processes and technologies can reduce the cost of bringing products and services to market.

Businesses that invest in R&D may be eligible for specific tax incentives. For one, the federal R&D tax credit offers a dollar-for-dollar reduction in tax liability for businesses that partake in various research-based activities. Eligible companies can apply for this credit by submitting Form 6765 with their business taxes.

[Read more: How to Seek Funding for Your Invention ]

Overcoming the challenges of small business R&D

According to Becca Hoeft, CEO and Founder of Morris Hoeft Group , small businesses may face numerous challenges related to R&D that their larger counterparts might not experience.

“Small businesses have limited resources,” said Hoeft. “They don’t have that endless budget that the Fortune 500 company has, which means the small business will have to get creative to conduct worthwhile research and development.”

While R&D funding is available through various government grants, university programs, and research institutions, Hoeft noted that it may take some time and strategic planning to obtain it. She recommended that small business owners start talking publicly about what kind of research they are doing and what they need to conduct it.

“Don’t hide under a rock and expect money to magically appear,” Hoeft told CO—. “Get on a stage at a relevant conference [or] start a blog series about your idea.”

Keep in mind that once you start sharing your ideas and what you want to research, “it’s out there in the universe,” said Hoeft. Therefore, protecting your intellectual property before you begin and during the research process is extremely important.

“Ensure your trademarks, patents, and copyrights are in place to protect you and your small business,” Hoeft added.

[Read more: How to Qualify for and Claim the R&D Tax Credit ]

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What Is Research and Development (R&D) and Why It's Important for Businesses

Rebecca woolf.

The practice of research and development (R&D) may help your company expand and flourish. R&D is the process of generating new, better goods and services to meet the demands of your customers after investigating your market and your client base.

Businesses with an R&D plan are more likely to succeed than those without one. An R&D plan may raise efficiency, foster innovation, and strengthen your company's competitive edge.

In-Depth Understanding of Research and Development (R&D)

Importance of research and development (r&d) for business.

R&D is frequently used to refer to innovation in the business and public sectors. It enables a business to maintain a competitive edge. Without a R&D program, a business might not be able to exist on its own. Instead, it may need to rely on alternative innovation methods, such as collaborations or mergers and acquisitions (M&A). Through R&D, companies can produce new products and improve their existing offerings.

Most of a corporation's operational tasks are distinct from R&D. Normally, research and/or development are not carried out with the hope of making money immediately. Instead, it is anticipated to help a firm become more profitable over the long run. Companies that focus to set up and employ entire R&D departments commit a sizable sum of money to the project.

There is no immediate payout, and the return on investment (ROI) is unpredictable. Thus they must estimate the risk-adjusted return on their R&D investment, which inherently entails capital risk. Although, R&D requires a considerable investment, so the level of capital risk increases.

The ability to do research and development (R&D) is not limited to large enterprises. R&D is another tool that small businesses may use to enhance operations, develop fresh, superior goods and services, boost profits, and become more competitive. Here are seven ways that R&D may help you realise an original concept for a new good or service:

Improve Productivity and Differentiate Products

Businesses get a competitive edge by outperforming their rivals in a way that is difficult for them to imitate. It is simpler to outperform competitors if R&D activities result in an enhanced business process—reducing marginal costs or raising marginal productivity.

R&D Tax Credits

The IRS began providing tax advantages to businesses in 1981, so they could spend money and hire people for research and development. Along with a special 20-year carry-forward provision for the credit, such costs may be applied to reduce tax liability.

Mergers and Buyouts

By offering their outstanding ideas to well-established companies with ample resources, many small company owners and entrepreneurs have amassed substantial sums of money quickly. Although buyouts are more frequent among Internet businesses, they can occur wherever there is a strong incentive for innovation.

R&D Advantages in Marketing and Advertising

Advertising is rife with boasts of ground-breaking new methods or previously unseen goods and technology. Customers frequently desire new and improved items only because they are brand-new. In the proper market, R&D departments may serve as advertising wings.

Leveraging R&D initiatives, companies may develop very successful marketing plans to introduce new products or updated versions of existing products. A business might develop cutting-edge marketing strategies that complement its imaginative items and boost market involvement. Innovative new things or features can grow market share by offering clients something they've never seen before.

Competitive Edge

You may get an edge over rivals and become the industry leader through research and development (R&D). The creation of new goods and services can also lead to the creation of new intellectual property for your company, which may have financial advantages for you as well.

Collaboration

R&D projects may benefit greatly from collaboration, which is frequently essential to its success. For example, your company may collaborate with another firm, a university, or a college. It enables the sharing of talents and knowledge, as well as access to resources, knowledge, and maybe fresh ideas that would not otherwise be available to your company.

Your brand and reputation may be strengthened by participating in R&D. The economic success of the ensuing goods and services might gain from the engagement of a reliable, trustworthy partner or a powerful scientific organisation.

Companies invest in R&D for various reasons, including improved market participation, cost management advantages, improvements in marketing capabilities, and trend-matching. A corporation may stay current by using R&D to track or stay ahead of market trends. While resources must be set aside for R&D, the innovations developed via this research can help to save costs by resulting in more efficient goods or production methods.

Given the degree of competition and the constant advancement of manufacturing techniques and procedures, research and development are crucial to a business. It is particularly critical in marketing, where companies maintain a sharp watch on competitors and clients to stay on top of current trends and assess their clientele's requirements, requests, and preferences. The outcomes are certain to be positive if a business has contributed significantly to R&D, but more R&D investment does not equate to increased inventiveness, profit, or market share.

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Utilizing research and development (R&D) to drive innovation

In 2019 alone, organizations around the world spent $2.3 trillion on research and development (R&D). Companies know that research and development is essential for growing as a business. Choosing to avoid R&D practices can easily become the choice between a successful or unsuccessful product.

R&D is not an optional phase for organizations. It provides numerous benefits like gaining a competitive advantage, responding to customer needs, and driving success. R&D also helps minimize product development errors since all choices are data-driven.

In this article, you will learn what research and development is, the role it plays in product development, and how you can implement it within your product team.

What is research and development (R&D)?

Research and development provides insights into how the market is responding to your product and helps you discover gaps in an industry that could be leveraged to create a competitive advantage. It’s a crucial part of aligning customer needs with your product capabilities.

R&D can also ensure that your company is creating value that aligns with your organization’s goals. Strategic alignment between the company vision and R&D will create innovative products that drive your company forward.

What is the role of research and development in product development?

R&D lays the foundation for product innovation and development. R&D activities help create new products, improve existing ones, and drive a company’s competitiveness.

The first step of the product development lifecycle is research and development (R&D). If you don’t have high-quality R&D, it affects the entire lifecycle of a product. Your organization could end up spending resources on an idea that’s not verified by accurate research.

R&D provides the necessary and actionable insights to inform and guide product development. Meanwhile, product development focuses on bringing validated ideas to market. Ultimately, R&D lays the groundwork for creating new or improved products while product management encompasses the entire lifecycle of a product.

Does product management fall under R&D?

Product management and R&D have separate, but interconnected functions within an organization. Product management covers many responsibilities including creating and selling the product. On the other hand, research and development hones in on identifying trends in your industry and target audience and using that information to help you adapt to the changing market.

Despite the connection between product development and R&D, product managers aren’t usually heavily involved in both spheres. You might find that your own bias affects research. Because of this, PMs often use skilled researchers who take charge of the R&D process and provide them with their findings.

What are the expenses of R&D?

Many organizations may look at the bill for research and development and hesitate to approve it. Labor expenses alone cost organizations $372 billion in 2020.

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But if you’re not willing to pay for R&D, you risk giving up a competitive advantage. Many industries reinvest as much as 30 percent or more of their earnings before taxes, interest, depreciation, and amortization (EBITDA) into innovation research.

While R&D expenses may seem costly, your organization can’t afford to let competitors become more successful than you.

Research and development steps

Every organization will approach R&D differently. In general, though, research and development for product management may include the following steps:

• Define the objective — Determine the objectives of your research to guide the data collection process. Some examples include validating product ideas, testing the user experience, or finding gaps in the market
• Data collection — Whether it’s qualitative or quantitative data collection, ensure you are using unbiased methods to receive accurate results
• Analyze data — Data analysis looks for trends and other patterns that get turned into actionable insights
• Communicate results — Key stakeholders like executives and investors will want to know the R&D results, so it may be necessary to share a presentation with them
• Prototyping and MVP testing — Create prototypes or minimum viable products (MVPs) of your product idea and share them with users to gather feedback

How do you develop a R&D strategy?

Try to adopt a willingness to be bold with your R&D strategy. Oftentimes, organizations have a growth goal, but only approve “safe” projects. By doing so, you may limit yourself to your current market share, instead of discovering new possibilities for innovation.

Ultimately, an R&D strategy is what ensures innovation is happening at a company. Aligning the R&D strategy with product management goals is crucial to the overall success of an organization’s vision.

Developing a research and development strategy involves a few key considerations:

• Align company’s goals with R&D — What goals will R&D support? This may require executives to stay in communication with R&D to receive data-driven insights and evolve as needed
• Let R&D discover what the best capabilities are for building a product — R&D teams tend to have a better understanding of emerging technologies and how they can improve the organization and the products
• Focus on investing in the R&D team — You may want to emphasize attracting or training top talent to be part of your R&D team

Research and development example

R&D fuels product innovation and provides organizations with a competitive edge. Many organizations share their R&D strategies and insights with consumers. One example is at Proctor and Gamble (P&G).

Let’s take a closer look at how R&D informed P&G’s creation of Verso Vita. P&G wanted to reduce the use of fossil-sourced plastics and use more recycled content. This goal came out of a problem with recycling polypropylene (PP), since it often kept the color and smell of the previous product.

R&D needed to create a solution for this issue and created the Verso Vita process to restore PP to its original quality. The resulting Verso Vita process uses less energy than it takes to create a new PP.

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With this new product, P&G moved closer towards its sustainability goal of having 100 percent recyclable or reusable packaging by 2030.

Key takeaways

The ability to make bold decisions with data-driven insights can help ensure your R&D expenses are creating value for your business and customers, but gaining those insights requires strategy.

Ensuring your R&D strategy aligns with your company goals is fundamental to success. Research and development is the first phase of a product life cycle, and it creates the foundation for creating an impactful product.

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What Is Research and Development (R&D)? Definition and Guide

Learn the definition of research and development, the types of R&D, and the benefits and risks of investing in research and development for your business

When it comes to the products and ideas that revolutionize and reshape our world, it can be tempting to imagine them springing from a singular moment of inspiration (think Isaac Newton and the apple).

The truth, however, is that in any industry, the most innovative and successful products are typically the result of years of study, experimentation, and hard work. That process is known as research and development—and whether you're running a high-tech Fortune 500 company or a small online store, it can be the first step to incredible success.

In this guide, you'll learn the definition of research and development, as well as the potential benefits and risks of investing in the practice.

What is research and development?

Research and Development is a systematic activity that companies undertake to innovate and introduce new products and services or to improve their existing offerings. 

Many people think of pharmaceutical and technology companies when they hear “R&D,” but other firms, including those that produce consumer products, invest time and resources into R&D as well. For example, a spaghetti sauce brand's many variations on the original product – “Chunky Garden,” “Four Cheese,” and “Tomato Basil Garlic”– are the results of extensive R&D.

Any business that creates and sells a product or service, whether it's software or spark plugs,  invests in some level of R&D .

Basic vs. applied research

Research and development comes in two main types: basic, and applied.

Basic research

Basic research (also known as fundamental research) is focused on improving our understanding of a particular problem or phenomenon through exploration of big questions. Some examples of basic research questions are:

• Why do mice get caught in traps?
• Why are some people allergic to gluten?

While basic research can certainly help a company acquire new knowledge, its focus on research for its own sake means that the financial benefits are uncertain. Consequently, this type of research and development is primarily performed by large corporations, universities, and government agencies.

Applied research

Applied research is also done to acquire knowledge. But unlike basic research, it's done with a specific goal, use, or product in mind. Where basic research is theoretical, applied research is practical, with a focus on finding workable solutions for current problems. Some examples of applied research questions include:

• How can we build a better mousetrap?
• What combination of flours will produce the best gluten-free pie crust?

Why invest in research and development?

While the overarching goal of research and development is to add to a company's bottom line, companies undertake R&D for a variety of reasons.

• Create new and improved products: Whether you're starting a new company, or looking to expand your existing offerings, innovation research can help you meet customer demands for new and better products that solve their problems more quickly and easily.
• Increase business efficiency: R&D can help you gain knowledge about your production processes, business structure, and place in the market, providing insights that increase productivity by eliminating time-consuming inefficiencies and allocating resources to the most impactful projects.
• Reduce costs: Profits aren't the only way that research and development can pay off. In fact, many companies focus their R&D on improving existing technologies and processes for internal use, reducing the overall cost of bringing your products to market.
• Remain competitive: Research and development is a great way to stay ahead of the competition . By investing in emerging technologies that improve your products, you can gain a competitive edge over even the most established firms.
• Secure investment: Even if your research efforts aren't immediately profitable, they may point to future innovations or developments that investors are excited to support.

Who handles research and development?

Often, research and development is handled in house by an internal department in a company, but it can also be outsourced to a specialist or a university. Large multinational companies might do all three, and some of the outsourced work might be done in another country so that the company leverages both the talent and local market knowledge there.

Outsourced R&D is especially appealing to the small business owner who has a new product concept but lacks the design or engineering staff needed to create and test options. Solopreneurs who offer software as a service are an example on the smallest scale, as they sometimes outsource the R&D and resulting software development.

R&D and accounting

There are no guarantees when it comes to research and development, and it's very unlikely to lead to an immediate profit. Often, a company will spend a large amount of money in search of a better method, material, or medication, and never see a return on the investment. In this sense R&D is not an asset: it's a business  expense . For that reason, general  accounting  standards and practices dictate that most (but not all) costs associated with research and development be charged to expense as incurred.

That said, businesses can mitigate some of the impacts of research and development by leveraging federal tax breaks and deductions focused on promoting R&D.

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Research and development FAQ

What does r&d stand for, why is research and development important, what are the challenges of research and development, what is the difference between r&d and product development.

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• Research and Development (R&D) | Overview & Process

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Companies often spend resources on certain investigative undertakings in an effort to make discoveries that can help develop new products or way of doing things or work towards enhancing pre-existing products or processes. These activities come under the Research and Development (R&D) umbrella.

R&D is an important means for achieving future growth and maintaining a relevant product in the market . There is a misconception that R&D is the domain of high tech technology firms or the big pharmaceutical companies. In fact, most established consumer goods companies dedicate a significant part of their resources towards developing new versions of products or improving existing designs . However, where most other firms may only spend less than 5 percent of their revenue on research, industries such as pharmaceutical, software or high technology products need to spend significantly given the nature of their products.

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In this article, we look at 1) types of R&D , 2) understanding similar terminology , 3) making the R&D decision , 4) basic R&D process , 5) creating an effective R&D process , 6) advantages of R&D , and 7) R&D challenges .

TYPES OF R&D

A US government agency, the National Science Foundation defines three types of R&D .

Basic Research

When research aims to understand a subject matter more completely and build on the body of knowledge relating to it, then it falls in the basic research category. This research does not have much practical or commercial application. The findings of such research may often be of potential interest to a company

Applied Research

Applied research has more specific and directed objectives. This type of research aims to determine methods to address a specific customer/industry need or requirement. These investigations are all focused on specific commercial objectives regarding products or processes.

Development

Development is when findings of a research are utilized for the production of specific products including materials, systems and methods. Design and development of prototypes and processes are also part of this area. A vital differentiation at this point is between development and engineering or manufacturing. Development is research that generates requisite knowledge and designs for production and converts these into prototypes. Engineering is utilization of these plans and research to produce commercial products.

UNDERSTANDING SIMILAR TERMINOLOGY

There are a number of terms that are often used interchangeably. Thought there is often overlap in all of these processes, there still remains a considerable difference in what they represent. This is why it is important to understand these differences.

The creation of new body of knowledge about existing products or processes, or the creation of an entirely new product is called R&D. This is systematic creative work, and the resulting new knowledge is then used to formulate new materials or entire new products as well as to alter and improve existing ones

Innovation includes either of two events or a combination of both of them. These are either the exploitation of a new market opportunity or the development and subsequent marketing of a technical invention. A technical invention with no demand will not be an innovation.

New Product Development

This is a management or business term where there is some change in the appearance, materials or marketing of a product but no new invention. It is basically the conversion of a market need or opportunity into a new product or a product upgrade

When an idea is turned into information which can lead to a new product then it is called design. This term is interpreted differently from country to country and varies between analytical marketing approaches to a more creative process.

Product Design

Misleadingly thought of as the superficial appearance of a product, product design actually encompasses a lot more. It is a cross functional process that includes market research, technical research, design of a concept, prototype creation, final product creation and launch . Usually, this is the refinement of an existing product rather than a new product.

MAKING THE R&D DECISION

Investment in R&D can be extensive and a long term commitment. Often, the required knowledge already exists and can be acquired for a price. Before committing to investment in R&D, a company needs to analyze whether it makes more sense to produce their own knowledge base or acquire existing work. The influence of the following factors can help make this decision.

Proprietariness

If the nature of the research is such that it can be protected through patents or non-disclosure agreements , then this research becomes the sole property of the company undertaking it and becomes much more valuable. Patents can allow a company several years of a head start to maximize profits and cement its position in the market. This sort of situation justifies the cost of the R&D process. On the other hand, if the research cannot be protected, then it may be easily copied by a competitor with little or no monetary expense. In this case, it may be a good idea to acquire research.

Setting up a R&D wing only makes sense if the market growth rate is slow or relatively moderate. In a fast paced environment, competitors may rush ahead before research has been completed, making the entire process useless.

Because of its nature, R&D is not always a guaranteed success commercially. In this regard, it may be desirable to acquire the required research to convert it into necessary marketable products. There is significantly less risk in acquisition as there may be an opportunity to test the technology out before formally purchasing anything.

Considering the long term potential success of a product, acquiring technology is less risky but more costly than generating own research. This is because license fees or royalties may need to be paid and there may even be an arrangement that requires payments tied to sales figures and may continue for as long as the license period. There is also the danger of geographical limitations or other restrictive caveats. In addition, if the technology changes mid license, all the investment will become a sunk cost. Setting up R&D has its own costs associated with it. There needs to be massive initial investment that leads to negative cash flow for a long time. But it does protect the company from the rest of the limitations of acquiring research.

All these aspects need to be carefully assessed and a pros vs. cons assessment needs to be conducted before the make or buy decision is finalized.

BASIC R&D PROCESS

Foster Ideas

At this point the research team may sit down to brainstorm. The discussion may start with an understanding and itemization of the issues faced in their particular industry and then narrowed down to important or core areas of opportunity or concern.

Focus Ideas

The initial pool of ideas is vast and may be generic. The team will then sift through these and locate ideas with potential or those that do not have insurmountable limitations. At this point the team may look into existing products and assess how original a new idea is and how well it can be developed.

Develop Ideas

How Does Research and Development Influence Design?

How does research and development influence design? Research and development (R&D) is an integral part of any product design process. From concept to completion, R&D teams help bring ideas to life by testing the feasibility of new products and features.

In this blog post, we will explore how research can be used to inform decisions throughout a project’s lifecycle as well as discuss best practices for maximizing the impact that R&D has on design outcomes. We’ll also look at how technology can enhance traditional methods of conducting research, allowing teams to gain valuable insights faster than ever before. So let’s answer: how does research and development influence design?

Table of Contents

The Role of R&D in Design Processes

Market research, user testing, prototyping, leveraging technology to enhance research and development efforts, data management, collaboration, analytics and insights, challenges of leveraging technologies, best practices for maximizing the impact of research and development on design outcomes, conclusion: how does research and development influence design.

Research and development help to identify problems, develop solutions, and create new products or services that meet customer needs. R&D can also be used to improve existing designs by identifying areas for improvement or creating innovative approaches to problem-solving. Let’s look closer and answer: how does research and development influence design?

R&D plays a critical role in the design process by providing insights into customer needs and preferences, as well as technological advancements that could impact product performance.

Through research activities such as market analysis, surveys, prototype testing, and data collection from competitors’ products or services, designers gain valuable information about what their target audience wants and how best to deliver it. This knowledge can then be used to inform decisions about product features, materials selection, and manufacturing processes, resulting in improved designs that better meet user requirements.

Market research is a critical component of product development as it provides insights into consumer behavior and preferences. Through market research, designers can gain a better understanding of their target audience’s needs and wants which allows them to create more effective designs that appeal to customers.

For example, if a company wanted to launch a new line of clothing they could use market research data such as surveys or focus groups to determine what type of styles people prefer so they could tailor their designs accordingly.

User testing is another important aspect of product development as it allows designers to get feedback from real users on how well their products perform in practice. This information can be used by designers when making decisions about features or functionality so they can ensure that the result meets user expectations.

For instance, if an app was being developed, then user testing would help identify any potential usability issues before it was released so adjustments could be made accordingly.

Prototyping is also essential for successful product development as it allows designers to test out ideas before committing resources towards full-scale production. By creating prototypes early on in the process, designers can quickly iterate on concepts until they find one that works best for their intended purpose without having wasted time or money on something that may not have been viable in the long run anyway.

For example, if an automotive manufacturer wanted to develop a new car model then prototyping would allow them to experiment with different body shapes and materials. This will help them find one suitable for mass production at scale while minimizing costs associated with trial-and-error approaches.

Key Takeaway: R&D is an essential part of the design process, providing valuable insights into customer needs and technological advancements that can be used to inform decisions about product features.

Now that we’ve answered “how does research and development influence design,” let’s look at how to enhance R&D efforts. Leveraging technology for research and development (R&D) efforts can be a powerful tool to help teams achieve their goals. Technology can provide access to data, facilitate collaboration, and enable faster decision-making. Here are some of the benefits of leveraging technology for R&D efforts:

Technology provides access to large amounts of data that would otherwise be difficult or impossible to obtain. It also allows teams to collaborate more effectively by enabling them to share information quickly and easily across multiple locations. Additionally, technology enables faster decision-making by providing real-time insights into trends in the market or industry as well as competitor activities.

Organizing data is a key part of research and development. Leveraging technology can help streamline the process, making it easier for teams to access and analyze data quickly.

For example, Cypris provides an integrated platform that centralizes all the data sources R&D teams need into one place. This allows them to easily search through their information without having to switch between multiple systems or manually compile reports.

Technology also helps facilitate collaboration among team members who may be located in different parts of the world. By leveraging cloud-based tools such as Google Docs or Slack, researchers can work together on projects from anywhere with an internet connection.

These tools allow users to share documents, have conversations in real-time, assign tasks, and more – all within a single platform. Additionally, they provide version control so everyone is always working off the same document or set of instructions at any given time.

Finally, technology makes it easier for teams to uncover insights from their research by providing powerful analytics capabilities right out of the box. With the right analytics, teams can quickly identify trends in their data, make informed decisions about future projects, and develop new products faster than ever before.

That’s why R&D teams need to have a platform that provides comprehensive insights into their data.

One challenge is ensuring that the right technology is selected based on an organization’s specific needs and objectives. Another challenge is ensuring that the chosen technology integrates seamlessly with existing systems within an organization’s infrastructure so it can be utilized efficiently without disrupting operations or introducing security risks. Finally, there may also be challenges related to cost considerations when implementing new technologies such as software licensing fees or hardware costs associated with deploying new systems or upgrading existing ones.

Key Takeaway: Technology can be a powerful tool for R&D teams to help them achieve their goals by providing access to data, facilitating collaboration, and enabling faster decision-making. However, organizations must consider cost considerations when selecting the right technology that integrates seamlessly with existing systems without introducing security risks.

Research and development (R&D) is an essential component of any successful design process. To maximize the impact of R&D on design outcomes, teams should focus on integrating research into their processes early and often.

This includes setting up a feedback loop between research and design to ensure that insights from research are informing decisions throughout the entire process. Additionally, teams should strive to create a culture where experimentation is encouraged, as this will allow them to explore different solutions quickly and efficiently.

Apple is one company that has successfully leveraged best practices for maximizing the impact of R&D on design outcomes. By creating a strong feedback loop between their research team and product designers, they have been able to rapidly develop innovative products such as iPhones and iPads.

Similarly, Amazon has also used its in-house research team to inform its product designs; by leveraging customer data collected through its platform, Amazon has been able to create highly personalized experiences tailored specifically to each user’s needs.

One challenge with implementing best practices for maximizing the impact of R&D on design outcomes is finding ways to effectively communicate insights from research back into product development cycles without sacrificing speed or efficiency. Additionally, it can be difficult to find ways to incentivize collaboration between researchers and designers so that both groups are working together towards common goals instead of operating independently from one another.

Finally, there may be organizational challenges associated with establishing an effective feedback loop between these two groups if they exist within separate departments or silos within an organization’s structure.

Key Takeaway: To maximize the impact of R&D on design outcomes, teams should focus on creating a feedback loop between research and design that encourages experimentation. Challenges may arise from communication issues or organizational silos, but with proper planning. these can be overcome.

How does research and development influence design? Research and development is an essential part of the design process, as it provides valuable insight into customer needs and preferences which can be used to inform decision-making throughout the entire product lifecycle.

By leveraging technology to enhance R&D efforts, teams can maximize their impact on product innovation and ensure they are making informed decisions based on data-driven insights. Ultimately, understanding how research and development influence design is key for any organization looking to stay ahead of the competition in today’s ever-evolving market landscape.

Are you an R&D or innovation team looking for a platform to accelerate your time to insights? Cypris is the perfect solution. Our research platform has been specifically designed with teams in mind and provides easy access to data sources that can help take your projects from concept to completion quickly. Take advantage of our innovative technology today and see how much faster your ideas become reality!

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What is the Research and Development (R&D) Process?

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The role of human agency in entrepreneurship.

• Keith M. Hmieleski Keith M. Hmieleski Neeley School of Business, Texas Christian University
• https://doi.org/10.1093/acrefore/9780190224851.013.452
• Published online: 21 August 2024

Human agency stands as a foundational element of entrepreneurship, embodying individuals’ proactive ability to shape their destinies, innovate, and navigate the complexities of new venture creation and development. Rooted in social cognitive theory, this concept underscores the interactive interplay between personal characteristics, behaviors, and environmental influences in driving entrepreneurial endeavors. Within this framework, agentic personal characteristics, comprising both socially admired attributes (e.g., entrepreneurial self-efficacy, dispositional positive affect, grit, and locus of control) and socially deviant features (e.g., narcissism, Machiavellianism, and psychopathy) provide the motivational force and resilience needed to tackle entrepreneurial endeavors. These personal characteristics are associated with engagement in a range of agentic behaviors (e.g., improvisation, transformational leadership, learning, and personal initiative) that embody entrepreneurial action exhibited by business founders as they work to effectively shape and adapt their ventures. Situational factors (e.g., institutional forces, political barriers, and industry-specific dynamics), in turn, can positively or negatively impact the expression of agentic personal characteristics and behaviors. Thus, understanding human agency in entrepreneurship necessitates a holistic examination of the intertwined dynamics between personal characteristics, behaviors, and contextual factors. Despite significant strides in comprehending human agency in entrepreneurship, numerous avenues for exploration remain. These include investigating gender disparities in agentic versus communal orientations among entrepreneurs, the impacts of artificial intelligence on entrepreneurial agency, trajectories of entrepreneurial agency over time, strategies for fostering collective agency in new venture teams, and exploring the darker (or unproductive) aspects of entrepreneurial agency. Developing a deeper understanding of human agency in the realm of entrepreneurship not only enriches the comprehension of the new venture creation and development process but also lays the groundwork for crafting more impactful strategies, policies, interventions, and educational initiatives to cultivate and leverage the full potential of business founders and their ventures.

• entrepreneurial behavior
• human agency
• new venture creation
• self-efficacy
• social cognitive theory

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Microsoft advances ai innovation with phi-3.5 small language model.

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Microsoft’s latest AI release, the Phi-3.5 series , is a remarkable development in the world of small language models. The series consists of three models—Phi-3.5-mini-instruct, Phi-3.5-Mixture of Experts-instruct and Phi-3.5-vision-instruct—each of which offers specific capabilities designed to enhance AI performance across a wide range of tasks. This release highlights Microsoft’s dedication to advancing AI technology while maintaining efficiency and accessibility.

Overview of the Phi-3.5 Series

The Phi-3.5-mini-instruct model, which contains 3.8 billion parameters, is optimized for quick reasoning tasks. This model excels in areas such as code generation and solving logical or mathematical problems. Despite its relatively small size compared to other models, it competes effectively with larger models like Meta’s Llama 3.1 and Mistral 7B on various performance benchmarks. Microsoft’s focus on making this model both powerful and efficient demonstrates the company’s commitment to producing high-quality AI tools that can be deployed in resource-constrained environments.

The second model in the series, Phi-3.5-MoE-instruct , is the largest of the trio, with 42 billion parameters. However, thanks to the Mixture of Experts architecture, only 6.6 billion of these parameters are active during any given operation. This design allows the model to handle complex AI tasks across multiple languages with great efficiency. The MoE approach enables the model to activate only the most relevant “expert” submodels for a given task, resulting in improved performance and resource utilization. The model is particularly effective in tasks that require multilingual capabilities, outperforming even some larger models from competitors like Google’s Gemini 1.5 Flash.

The third model, Phi-3.5-vision-instruct , expands the capabilities of the series into the realm of multimodal AI. With 4.2 billion parameters, this model can process both text and images, making it suitable for tasks such as optical character recognition, chart analysis and even video summarization. The ability to handle complex visual tasks places this model on par with larger multimodal models in the industry.

Advanced Features of Phi-3.5

One of the most impressive features of the Phi-3.5 series is the extensive context window of 128,000 tokens available across all models. This feature allows the models to process and generate large amounts of data, making them suitable for real-world applications that involve lengthy documents, complex conversations, or multimedia content. The ability to maintain coherence and context over such long sequences of input is a crucial capability for many modern AI applications.

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Training these models required significant computational resources. For instance, the Phi-3.5-mini-instruct model was trained on 3.4 trillion tokens over a 10-day period using 512 H100 GPUs. The Phi-3.5-MoE model, which had a more extensive training regimen, was trained on 4.9 trillion tokens over 23 days, also using 512 H100 GPUs . Finally, the Phi-3.5-vision-instruct model was trained on 500 billion tokens over six days with 256 A100 GPUs . This intensive training on high-quality, reasoning-dense, publicly available data has contributed to the models’ impressive capabilities.

Open Source and Accessibility

In a move that aligns with its commitment to open source, Microsoft has made the Phi-3.5 series available under an open-source MIT license. Developers can access these models through the Hugging Face platform, where they can download, modify and integrate the models into their projects without restrictions on commercial use. This open-source approach is likely to spur widespread adoption and experimentation, particularly in fields that require advanced AI capabilities but may not have the resources to develop models from scratch.

Competitive Landscape and Impact

Microsoft’s strategy with the Phi-3.5 series is to develop smaller, more efficient AI models that can outperform larger models in specific tasks. This focus on efficiency offers several advantages, including reduced computational requirements, faster inference times and potentially lower environmental impact due to decreased energy consumption. These benefits make the Phi-3.5 models attractive for deployment in edge computing scenarios where resources are limited, as well as in large-scale cloud environments.

One of the most noteworthy aspects of this release is Microsoft’s claim that these models can outperform larger models from competitors like Google, Meta and even OpenAI in certain tasks. If these claims hold true in real-world applications, it could signal a shift in the AI landscape, where model efficiency becomes as important as raw size and parameter count. This approach challenges the traditional view that bigger is always better in AI, potentially leading to a new era of AI development focused on sustainability and accessibility.

The Phi-3.5 series represents a significant step forward in Microsoft’s AI research and development efforts. By focusing on creating smaller, more efficient models that can handle a wide range of tasks, Microsoft is addressing the growing demand for AI solutions that are both powerful and resource-efficient.

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Research and Development (R&D) Expenses: Definition and Example

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Investopedia / Julie Bang

What Are Research and Development (R&D) Expenses?

Research and development ( R&D ) expenses are associated directly with the research and development of a company's goods or services and any intellectual property generated in the process. A company generally incurs R&D expenses in the process of finding and creating new products or services.

As a common type of operating expense , a company may capitalize R&D expenses.

Key Takeaways

• Research and development (R&D) expenses are direct expenditures relating to a company's efforts to develop, design, and enhance its products, services, technologies, or processes.
• The industrial, technological, health care, and pharmaceutical sectors typically incur the highest degree of R&D expenses.
• The IRS offers tax breaks for R&D expenses, and these may also be capitalized as business expense.

Understanding Research and Development Expenses

Research and development is a systematic activity that combines basic and applied research to discover solutions to new or existing problems or to create or update goods and services. When a company conducts its own R&D, it often results in the ownership of intellectual property in the form of patents or copyrights that result from discoveries or inventions.

An essential component of a company's research and development arm is its direct R&D expenses, which can range on a spectrum from relatively minor costs to several billions of dollars for large research-focused corporations. Companies in the industrial, technological, health care, and pharmaceutical sectors usually have the highest levels of R&D expenses. Some companies—for example, those in technology—reinvest a significant portion of their profits back into research and development as an investment in their continued growth.

Large companies have also been able to conduct R&D through acquisition by investing in or subsidizing some of those smaller companies' costs or acquiring them outright.

Real World Example of R&D Expenses

Tech companies rely heavily on their research and development capabilities, so they have relatively outsized R&D expenses. In a constantly changing environment, it's important for such a company to remain on the bleeding edge of innovation. For example, Meta ( META ), formerly Facebook, invests heavily in the research and development of products such as virtual reality and predictive AI chatbots . These endeavors allow Meta to diversify its business and find new growth opportunities as technology continues to evolve.

Meta's 2014 acquisition of Oculus Rift is an example of R&D expenses through acquisition. Meta already had the internal resources necessary to build out a virtual reality division, but by acquiring an existing virtual reality company, it was able to expedite the time it took them to develop this capability.

Reasons to Conduct R&D

Businesses conduct R&D for many reasons, the first and foremost being new product research and development. Before any new product is released into the marketplace, it goes through significant research and development phases, which include a product's market opportunity, cost, and production timeline. After adequate research, a new product enters the development phase, where a company creates the product or service using the concept laid out during the research phase.

Some companies use R&D to update existing products or conduct quality checks in which a business evaluates a product to ensure that it is still adequate and discusses any improvements. If the improvements are cost-effective, they will be implemented during the development phase.

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Rural Development

• Living reference work entry
• First Online: 31 July 2024
• Cite this living reference work entry

• Hualou Long 2 , 3  

Rural restructuring ; Rural transformation

Rural development is a process in which the economic form, social structure, ecological environment, space utilization, and territorial functions of rural areas continue to evolve under the interaction between the rural system composed of natural resources endowments, geographical location, ecological environment, economic development, and social development and the peripheral urban system composed of regional development policy, industrialization, urbanization, globalization, and informatization. This is accompanied by the constant exchanges of material flow, energy flow, and information flow between the rural system and the peripheral urban system.

Introduction

In contemporary developmental discourse, the urban realm is typically characterized as advanced and visionary, whereas the rural domain tends to be juxtaposed as stagnant, regressive, and entrenched in conservatism, forming a stark dichotomy with the city. The...

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Hualou Long

School of Public Administration, Guangxi University, Nanning, China

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Long, H. (2024). Rural Development. In: Warf, B. (eds) The Encyclopedia of Human Geography. Springer, Cham. https://doi.org/10.1007/978-3-031-25900-5_95-1

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DOI : https://doi.org/10.1007/978-3-031-25900-5_95-1

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Moult cycle and setal development of the Atlantic ditch shrimp Palaemon varians Leach, 1814

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The Atlantic ditch shrimp Palaemon varians Leach, 1814 is a common estuarine and brackish water species on Northern Atlantic coasts. P. varians is an appealing model organism for studying arthropod developmental processes, such as moulting (ecdysis). Detailed morphological information on its moult cycle is still lacking, hence we have characterised the changes in the setal features corresponding to the moult stages of P. varians grown under laboratory conditions. The stages of the moult cycle were differentiated and described using microscopic analysis of the setae in the uropods of P. varians based on Drach's classification system. Moult stages were defined as early and late post-moult (A and B), inter-moult (C), early-, mid- and late pre-moult (D0, D1 and D2), as well as ecdysis stage (E), the actual shedding of the exuvia. Average moult cycle duration was 8.7 days, where pre-moult accounted for the longest duration of 4.4 days on average. This study provides a morphological reference for determining the moult stage of P. varians without the use of invasive techniques, and thus it is well suited for repetitive observations of an individual to track the entire moulting process.

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The Necessary Work of Character Development for Pastors

Insights | Personal Development | Aug 22, 2024

What can pastors learn about their own character development from Jesus’s Sermon on the Mount? What are you doing to become more like Jesus?

By Steven Blake

Reviewing Shepherding Like Jesus: Returning to the Wild Idea That Character Matters in Ministry , two questions came to mind. “Why me? I’m just a small church pastor.” And the second question: “What if I don’t like the book?” It would be difficult to know how to write the review knowing it might impact someone else’s reading of it.

I’ve been in ministry for 40 years, mostly in a small church setting. And most churches have fewer than 100 people in attendance. So, I read this book asking myself, “Will it apply to the minister regardless of the size of his congregation?” As I finished reading the book I didn’t need to be concerned any further with my second question concerning whether it would warrant a bad review. I have two books in my library that I read each year for encouragement in my life— Spiritual Leadership by Henry Blackaby and The Pursuit of God by A.W. Tozer. I now have a third.

Although currently pastoring a larger congregation in Texas, Andrew Hébert, author of Shepherding Like Jesus , was seasoned as a small church pastor. So, he knows the struggles pastors face whether in a small or large fellowship. Hébert’s inspiration for writing this book came from the belief that every pastor needs to read a book that addresses a minister’s character at a rudimentary level and developed out of the continuing personal challenge of his own growth in ministry.

Becoming like Jesus

Hébert takes a unique perspective, applying the words of Jesus Himself to a shepherd’s character in pastoring his people. This book is written based on the lessons Hébert has learned from the master Teacher Himself in His most famous teaching, the Sermon on the Mount—particularly the Beatitudes.

Jimmy Draper states it well in his forward to the book: “In other words, character really matters. The pastor cannot make it for God until he is real with God!”

Upholding the passage in its context, Hébert applies the lessons Jesus sought to teach the disciples to the character development of not only Jesus’s original hearer but also to those of us who would later read His words. In particular, Hébert is addressing the minister and his character development— becoming like Jesus .

Learning from the Beatitudes

Hébert takes readers on a journey through Matthew 5:3-12, discussing each character trait chapter by chapter, beginning with our own salvation and leading to the place of endurance in ministry.

He adds a unique perspective to each chapter by including a “Pastoral Reflection.” These portions are written by various pastors who have been examples to him by their own character in life and ministry. He includes the reflections from not only well-known men in ministry whose names we recognize like Draper, Mac Brunson, Michael Catt, and Clint Pressley but also ones we have possibly never known before reading this book.

In the following chapters, Hébert discusses the character traits pastors ought to develop from the Beatitudes as well as how these traits should affect our roles as shepherds to our people and the community. Hébert doesn’t just give positive examples from his life and others’ but also shares his shortcomings and how he’s learned from them, making him a better minister and shepherd to his church. He also gives practical insights on how to apply these traits to our lives.

Shepherding Like Jesus

I would’ve liked to have seen Hébert further develop the link he suggested between the Beatitudes and the rest of the Sermon on the Mount. That section left me wanting more. Perhaps he might write a follow up book on the subject.

I interact with a number of younger ministers on an almost weekly basis. I learn from them probably more than they do from me. Yet when I have the opportunity, I will recommend books that will help them with the challenges they’ll face in ministry and family life. I don’t take these recommendations lightly. I only suggest books for their reading I believe will better help them as they grow in their roles as shepherds, husbands, and fathers. This is one I feel should be an addition to their library, as it deals with the most important element in a minister’s life—character.

For permission to republish this article, contact  Marissa Postell Sullivan .

Steven Blake

@stevenblake

Steven is the Pastor at First Baptist Church in Bloomingdale, Georgia. He is married to DeLynn, and they are the proud parents of three daughters and 11 grandchildren.

Shepherding Like Jesus: Returning to the Wild Idea that Character Matters in Ministry

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