What is research and development?

Research and Development (R&D) is the first stage in a product life cycle. It is the phase in which product managers and their teams generate a new product concept and evaluate its viability to determine whether it is worthwhile to bring it to market.

R&D is the beginning, and the most robust foundation, of product development. Besides, at this phase, product teams begin to generate ideas for products and ideas, evaluate the risks, and determine if the product would fit the market.

R&D is a valuable tool in growing and improving all sizes of businesses. This is because uncertainties exist around what product development teams are attempting and how they will achieve their objectives in practical terms. It is safe to state that no disruptive innovations and product improvements would exist without research and development, as it’s the heart of the process.

What Does Research and Development Entail?

Every business has its approach to research and development, but here are some standard features:

●     Concept Development – It is a structured way to develop an idea that solves a problem for your ideal customer.

●     Prototyping – It is when product development teams turn ideas into tangible form. They use the prototypes to test products on users so that they can refine and validate designs to solve users’ problems effectively.

●     Management of Internet Protocol(IP) – Managing a business IP helps to protect company data and ensure that all product developments are in line with international legislation.

●     Licensing of technological innovations – Licensing is where the company agrees to develop a product after getting the idea from a third party. This also applies to minor or mid-size businesses that outsource their R&D efforts if they lack the right staff or resources.

Advantages of Research and Development in Product Development

• R&D is crucial to business growth and your ability to be a market leader in your field. A business that can innovate and adopt new technologies and improve existing products is more likely to survive in even the most competitive industry.
• By embracing research and development, businesses can create new untapped selling points by developing unique products and services. They don’t even have to be entirely new, as teams can drive product improvement with existing innovations.
• Stagnation is a significant area of concern for firms that don’t release new products frequently. Research and development have the solution to this, as it encourages production teams to develop new ideas and keep the company on top of its game.
• Successful R&D projects result in unique products that can bring financial benefits to a business. They generate new and enhanced revenue streams and attract potential new investors.

Research and development are still considered an expense despite being beneficial to a company’s bottom line. This is because companies spend significant amounts of money and resources on researching and developing new products. Therefore, these costs are recorded and included in accounting, where basic incurred research expenses are recorded as spent. Still, you can carry development costs forward to the last phase of determining the Return on Investment(ROI).