Definition Research and Development (R & D) - What is mean and Concept

Research and development
The term research and development, abbreviated R&D, refers to the activities contracted by corporations or governments, for the development of new products and services, or improvement thereof.

R&D activities comprise two primary models that differ from one institution to another, either engineers who work in direct collaboration in the development of new products or those who work with industry scientists given the research applied in the fields of science and technology.

RD differs from the vast majority of corporate activities in that it does not attempt to obtain immediate benefits, and generally involves great risk and uncertainty in the return on investment . In addition R&D is crucial to extend the influences of the markets through the commercialization of new products.

Definition Research and Development

In the bibliographical sources there are several exact definitions of the term "research and development", although they are marked by the same characteristics. R & D covers all methodical and systematic activities on the basis of scientific methods with the aim of acquiring more real knowledge. This term is usually used for the description of a specific department in companies that seek innovations in their services or products.

Composition of the R & D

Regarding its relationship with its applicability, R & D can be subdivided into four activities, which can not be clearly delimited between them and which in fact overlap in an R & D project.

Basic science research
Its goal is to achieve results and experiences, without the objective of seeking practical utility. Rather, it is about expanding knowledge, that is, it is about designing and checking theories and hypotheses of laws in order to obtain a basis for knowledge oriented to the application. Since the results of this activity often can not be protected or used, it does not usually occur in the private sector, but rather in universities or other research institutions.

Technological development
Technological development deals with the acquisition and development of knowledge and skills whose goal is the solution of practical problems with the help of technology. For this, it uses the results of basic science research, application-oriented knowledge and practical experiences. The objective is the creation and care of potential technological benefits or technological competence that allow direct practical applications. The term of technological development is similar to the term applied science research in the natural sciences and engineering.

The pre-development is the preparation of the serial development of the product oriented to the market. It is checked if new technologies can be implemented in products and processes. The concepts of the products are designed and functional samples are created. The pre-development aims to mitigate the risks of the projects they develop for series production. In pre-development, it is checked whether the principles of action of the research (non-industrial) can be transferred to the own range of products. This activity focuses on the components and products with the most risk when launching the product.

The management of innovation with its derivation of the company strategy takes place in the pre-development. With a systematic management of ideas under the use of creative techniques, pre-development has an impact on the entire company to generate new product ideas. The so-called innovation scouts have contact with external networks to be aware of relevant technological changes.

The pre-development also involves a series of financial analyzes with the aim of knowing: 1. What is the price that we are going to put our product on the basis of a previous market research. 2. That price accepted by the potential user public of our product, how much profit will it generate if we sell the average sales in units within the market? That is, what will be our sales projection? 3. We must perform a return analysis of the investment and profitability of our product development, product restructuring or new service. (Gitla Hochman)

Development of products and processes
In this last phase, all the potentials created until then (knowledge, capacity, processes, prototypes) are transformed into concrete products that can be placed on the market. The goal is to introduce a new or improved product to the market.

Debate on R & D policy
For the scientific world, politics is especially important, the focus given to Research and Development. A specific industrial policy could have an impact on the promotion of applied science, giving priority -both in the agenda and allocation of financing funds- to a "mission- oriented " science (aimed at attacking certain areas considered more pressing or profitable) instead of a science driven "out of curiosity" (that motivated by the simple desire for discovery). However, both approaches are not exclusive and it is perfectly possible to design a policy that integrates or balances them. 5 The discovery of grapheneIt is an example of science out of curiosity that has shown great economic and industrial potential.

How to Manage Business Research and Development

The research and development is related to investments for research in technical and scientific knowledge. In particular, the developments of these technologies are aimed at obtaining new products, processes or materials. Likewise, the generation of knowledge is pursued. In fact, it is essential that creativity and innovation are implicit in these activities.

Therefore, one of the primary objectives of research and development in the company, is to achieve innovations that drive the increase in sales. In such a way that, in order to achieve this objective, the quality of the product or service can be improved, as well as reducing the price by reducing costs. Even, innovate with products aimed at new market niches. Consequently, the organization will thus be achieving some competitive advantage.

The element that has been most recently treated in the work of research and development is innovation. Basically, at the country or nation level, it is the states or governments that provide certain tax advantages to facilitate the companies' expenses in this matter.

Advantages of Research and Development

The advantages offered by these activities are varied, highlighting the following:
  • The technological independence of the company.
  • The exclusive knowledge of the technology that is generated.
  • It facilitates access to tax benefits for companies that invest in these activities.
  • It gives the organization the opportunity to exploit innovations in a commercial way (usufruct of trademarks and patents ).
  • Produces the experience effect, by generating knowledge in the specific area of ​​the business.

However, the benefits of research in this activity, there are some drawbacks such as those mentioned below:
  • These are activities that generally require large investments of resources.
  • The results with the fruits of the activity are obtained in the long term.
  • They are subject to high levels of risk.
Importance of research and development
The importance of this activity can be seen in the effects that the new technologies generated have on the following aspects:
  • The increases in productivity.
  • The reduction of costs.
  • The improvement in the quality of the products offered by the company.
  • The expansion of the markets where the business ventures.
So it is stated that research and development is very important for the permanence of the company over time, guaranteeing its continuity.

How to decide which projects to carry out?
The factors to be considered by the company to decide which innovative projects to execute, or which research investments are:
  • The volume of financial resources available to the company.
  • The total costs of the project. It includes fixed costs, variables, as well as exchange rate parity and inflation.
  • The capabilities of the company to manage the projects. In such a way, you must ensure that you have the necessary team of people and infrastructure.
  • Have a project management model that includes an adequate control and monitoring system.
On the other hand, for research and development activities to be properly managed, a department must be structured for such purposes. Therefore, it is recommended that this function have the rank of management or direction, reporting to the general management of the company. In the same way, it is necessary to define the functions of said department.

Research and development department

This is an instance with which large multinationals count. What makes it a valuable example to follow. Because no company tries to conquer a market without knowing that its products have the necessary attributes to position themselves well. Anything else is known in marketing as commercial suicide.

The main responsibility of this department is the promotion of the development of scientific activity within the organization. In the same way, it is responsible for its application in the production processes of products and / or services. Therefore it must:
  • Coordinate actions to process agreements and agreements with scientific, technological and research institutions, nationally and internationally.
  • Manage actions aimed at managing the resources necessary for the development of investigations.
  • To direct the activities of revision and formulation of the offer of scholarships oriented to the investigation.
  • Organize and direct the development of normative documents and procedure manuals based on developed research.
  • Direct the activities with other business areas to study the research needs and prepare the respective plans.

Phases of research and development

Basic science research
With this type of research we seek to expand knowledge, that is, design and test hypotheses and theories of laws. This in order to achieve a knowledge base oriented to the application. In such a way that, it does not pursue a practical utility, but rather results and experiences. In particular, these investigations are developed in universities or in other institutions destined for research.

Technological development.
The objective of these investigations is based on the development and acquisition of skills and knowledge to solve practical problems. In fact, it uses the results of basic science research, application-oriented knowledge and practical experiences. Technological development is also known as "applied science research", typical of the natural sciences and engineering.

Based on the results of basic research, we proceed to look for practical applications. In this way, the knowledge obtained is used to produce practical objects. Consequently, all these results may be patented and marketed.

Pre-development research.
As the name implies, it is the preparation for the serial development of the product with the target market in mind. In such a way that it is verified if new technologies can be applied in products and processes. Consequently, the concept of the product is designed by creating functional samples. Therefore, the pre-development allows to mitigate the risks in the projects to produce in series. Innovation management also takes place in this type of research, being able to apply all the creative ideas to generate new products.

Development of products and processes.
All the potentials achieved in the three previous phases, such as knowledge, capacity, processes and prototypes, are transformed into concrete products. In this way, they can be placed in the market to which the company is oriented. In fact, the objective of introducing a new or improved product can be fulfilled.

Innovation is the process that is most treated when referring to research and development . In particular, it comprises several stages:
  • The creation of knowledge.
  • The application of that knowledge to turn it into a product or a service that incorporates new advantages for the market.
  • You can also search with this application, the improvement of production processes.
  • It also helps to facilitate the introduction of the resulting product or service in the market.
Likewise, improvements can be made in processes and products, in people and in strategies.

The area of research and development is very important for companies of the nineteenth century. However, it has been observed that in Latin America it has been undervalued. According to the Organization for Economic Cooperation and Development (OECD), member countries invest 2.4% of gross domestic product (GDP). While the region only dedicates 0.84%.

In fact, only Brazil stands out with an investment of 1.2% of GDP, seconded by Argentina (0.65%) and Costa Rica (O, 48). This latest information comes from World Bank reports on the ranking of countries with investments in research and development .

However, SMEs should not rule out the advantages of scientific input, simply because they can not be included in their processes. The option of outsourcing or contracting research and development services to third parties can provide solutions of interest. In this sense, it is important to maintain a comprehensive perspective that supports decision-making even in research and development.

The importance of R & D in the company

New technologies have allowed to achieve important increases in productivity. On the other hand, companies have managed to reduce costs, improve the quality of the products offered and expand markets. That is why its survival and continuity is strongly linked to research and development.

The decision of which projects will be developed in the company depends on the following factors:
  • Volume of financial resources available.
  • Project costs.
  • The company's capabilities to deal with projects.
To verify the achievement of the project it will be necessary to establish a control system (GANTT, PERT).

The budget allocated to the research and development department will be prepared as follows:
  • Application of a coefficient to the total budget.
  • Application of a percentage on the total budget that is similar to that of the competing companies.
  • A percentage on the turnover volume.
  • Based on the established objectives.