How important is R&D for your business?
R&D refers to research and development – and it’s crucial for your business. The goal of R&D is to innovate and produce new ideas for a company’s products or services.
Without forging ahead with R&D, companies can easily stagnate and get overtaken by other businesses.
Below, we explore the importance of R&D and the companies that have benefited the most.
What constitutes R&D?
R&D is distinctive from the normal day-to-day operations of a business. R&D is instead, all about innovation and coming up with new ideas for the company.
These new ideas and products can lead to patents, trademarks and copyrights. It’s in this regard that it’s distinctive from general research activities within a company – R&D is focused on making profitable discoveries for a company.
Why is it important?
R&D helps businesses stay ahead of the competition.
If a company produces cleaning products, for instance, then it’ll need to constantly innovate and improve upon its designs, or it’ll fall behind other businesses.
But it isn’t just important for companies that design products. R&D can help with abstract ideas too. In the case of a consultancy business, it might help discover a new efficient way to help a client.
Ultimately, staying ahead of the competition helps drive profitability and staves of stagnation.
Businesses who have ineffective R&D will eventually lose their market share and, in this situation, might have to rely on a merger to survive.
Techtronic is one business where R&D has been hugely important. Their chairman, Horst Julius Pudwill, told Forbes:
“We made a lot of bold decisions [in 2020]. When our competitors were furloughing people, we made the decision to invest further in our business, to build up inventory to support our customers [and] to invest in R&D.”
And it paid off. The company announced in June 2020 that profits had risen 16 per cent for the year, despite the pandemic.
Their emphasis on R&D was crucial to this. With market leading Milwaukee batteries (lithium-ion batteries that are smaller, lighter and have longer holding power) they were able to maintain a competitive market advantage thanks to continued R&D.
What areas can R&D help with?
Obviously, R&D is hugely important for developing new products and services, as well as improving processes and coming up with new ideas. But there are other areas that enjoy benefits from R&D too.
Innovative companies can attract better talent for a start: skilled job hunters tend to be more excited about joining ambitious projects, rather than joining a complacent environment.
Innovation also boosts brand awareness. If your business is consistently coming up with interesting ideas, it gives your marketing and PR teams plenty to work with.
On top of all this, effective R&D can also capture the interest of potential investors and help you gain external finance.
What companies benefit the most?
Pretty much any company can benefit from R&D, but it’s particularly important for tech companies who are underpinned by improving our lives with fresh innovations.
In retail, it’s important in a different way – customers are looking for constantly updated products in their relationship with a company.
Ultimately, R&D is hugely important for your business in the long term. Any progressive, upwardly-mobile company should be looking to forge ahead with research and development as one of their main goals.