Prepare a R&D strategy for your company

Continuous R&D is the life force of a SME

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Writuparna Kakati | 28 Mar, 2008
A business, if it wants to continue its growth and success, must improve its products, services and business processes so that it can cater to the changing needs of its customers. Research and Development (R&D) activities undertaken by a business organization refers to the efforts for discovering new knowledge about products, processes, and services, and then applying that knowledge to develop new or improved products, processes and services that meet changing market needs. In other words, R&D involves the systematic study and application of knowledge aimed at the production of better products, devices, systems or methods.

Why you need Research & Development (R&D)?
Research and development, together with the development of new products, services and business processes, plays a very important role in keeping a business competitive in the market. The key to success of any business lies in the ability to understand the requirements of it existing and potential customers. Delving deep into the current and future needs of both customers and suppliers by asking their views, analyzing their feedback and carrying out extensive market research helps in recognizing-

The potential modifications you need to incorporate into your products, or services.
Whether a new product or service would commercially viable or not, and
What type of improvement your business processes require.

After research, you have to undertake the development process to test your ideas. The development process includes various steps like recognizing the potential risks, checking whether a new product or service will meet the market requirements or not, and whether the product will sell at the price needed to make profit, etc. For effective implementation of the development process, it requires proper planning as well as good project management skill. It is also necessary to put appropriate resources in place before getting into the development process. If you get all these things right, your investment of time and money into the R&D activities is most likely to result in increase in sales and profitability, expansion of your business into new markets, and elevation of your business status in the industry. In addition, improvement of your business processes may help you in reducing cost, improving quality of your products and services and to speed up the product delivery process.

Look before you leap!
More often than not, businesses plough money in R&D projects becoming overenthusiastic about new and exciting ideas. And, as a result, most of them fail after investing a lot of money in products that will never sell or can't realistically be produced. It is therefore better to review your decision carefully before starting any R&D activity in your company. Ask yourself the following questions before finalizing your decision to start any R&D operation-

Will the product or service you are going to develop or improve satisfy your customers' requirements and expectations?
Does your decision fit into your business strategy? What type of risks your decision involves?
What type of addition technology or expertise will be required for improving your products, services or business process?
Are you going to develop a innovative product? Or you are just going to launch some type of product is which is already being produced by your competitors?
Will the R&D activities fetch you some good result in terms of profit and business reputation?

Invest carefully: R&D should fit in to your overall business strategy
There is no hard and fast rule on how much one should on research and development. The following factors largely defines how much a company should invest on research and developments its products, services and business processes-

The size of a business and the sector it is engaged into.
The commercial potential of a R&D project.
The extent of competition a business is facing.
Expected duration and importance of the R&D project in terms of a business' future success.

It must always be remembered that your decision regarding how much you want to invest in R&D should fit into you overall business plan and strategy. Research and development activities always carries an element of risk, and therefore, you should be extremely careful while investing your money in it. On the other hand, returns from research and development can be much more, in comparison to, from other investments. A planned approach, combined with good skill and a little bit of common sense, can be most helpful in defining further success of your company, and even ensure future survival of your business.