An R&D strategy should not simply be something you check off your "to do" lists, or something developed once a year and tucked away in a drawer. The strategic process should be a living, breathing process that allows you to take facts and observations, understand them and develop insights. These insights are translated to implications for R&D, generating a portfolio of R&D projects and programs with maximum positive impact on business performance. All key elements affecting R&D performance--such as organization design, innovation, new product development, commercialization, quality stewardship, leadership and culture--flow directly from it.
Research and development is an investment in a company's future - companies that do not spend sufficiently in R&D are often said to be 'eating the seed corn'; that is, when their current product lines become outdated and overtaken by their competitors, they will not have viable successors in the pipeline. So how much is reasonable to spend on research and development? That is highly dependent both on the technology area and how fast the market is moving. Two percent of company revenue, not profit, might be enough in a fairly sedate market, but to keep up in rapidly changing markets, companies should expect to spend fifteen percent or more in research and development just to keep up with the rest of the pack.
There is considerable debate over which is the 'R' and which is the 'D' in research and development. Traditionally, research was broken into basic research and applied research, with basic research delving into basic scientific principles and applied research looking for ways to use the basic science to better human lives. More recently, there is very little truly basic research being done in the corporate world; it is mainly the province of academia, often with corporate or government funding support.
Older standards hold that research looked at least five to ten years into the future, and development one to five years, but those timeframes have shortened as the speed of technology has increased. It is always difficult, in times of tight money, to justify spending significant sums on something that may not yield returns for another ten to fifteen years, if ever. But spending on research and development is vital to continued growth and prosperity, both for a company and for a country or world.
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