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How to Create a Successful R&D Strategy for Business: 5 Steps

Importance of r&d strategy for business, challenges for strong r&d strategy for business, 5 steps to implement r&d strategy for your business.

• Define business objectives 01
• Identify current product issues 02
• Establish key requirements for the next-generation product 03
• requirements for current proposal specifications;
• weaknesses of the current product and audience reviews;
• financial opportunities and expected time to profit;
• current trends and new technologies that may be relevant to the product;
• target markets for the new product;
• long-term production/support plans;
• risks and potential problems;
• sales development model and way to generate income.
• Create a product roadmap 04
• Bring your plans to life 05

Examples of Using R&D Strategy for Business

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R&D in Business: Building an Efficient R&D Strategy and PixelPlex Pro Tips for Industry Challenges

Published: 27 September, 2023

Innovation drives a company’s competitive edge. However, the advantage isn't derived solely from access to technology but from aligning that technology with market needs. This is where an R&D strategy comes into play.

Research and development (R&D) entails testing, experimentation, and the acquisition of new knowledge driven by the goals to develop new products and services or enhance the ones that already exist.

R&D strategy is essential for business leaders looking to assess the feasibility of their project idea and determine practical steps to achieve their objectives. It’s a key tool for launching successful projects that align with market demands.

In this article, we’ll outline a step-by-step process for crafting an R&D strategy, share best practices for its implementation, highlight top R&D priorities for businesses, and offer tips to address industry challenges through research and development.

What is R&D in business?

In a business context, research and development is a set of activities businesses undertake to achieve new knowledge and find practical application of a new solution or technology.

Research and development is one of the earliest steps when developing a new product or tool. It typically consists of two main phases. The first phase involves thorough market research to determine innovative tools and technologies, while the second one focuses on implementing the ideas and technologies that drive innovation.

What are the benefits of investing in R&D?

R&D allows businesses to benefit from gaining a competitive advantage, reducing costs, and improving performance. Let’s talk about each benefit in greater detail.

Gaining a competitive advantage

By consistently creating products and services that cater to changing customer preferences and setting new industry benchmarks, you can solidify your business’s leadership position and ensure long-term sustainability. With an efficient research and development strategy, you can catch up with digital transformation trends and strengthen your brand reputation.

Furthermore, R&D initiatives allow you to present unique offerings to your customers, which opens doors to entirely new market segments.

Cost reduction

Research and development in business provides multiple opportunities for cost reduction. One of the most tangible ways R&D achieves this is through the development of efficient production methods. For instance, in the automotive industry, continuous R&D can lead to lean manufacturing techniques that minimize waste and improve process efficiency. By refining production lines and reducing defects, companies can produce more units at a lower cost.

R&D can be also leveraged to bring in automation tools. Warehouses , for example, can introduce automated robots to streamline operations, drastically cutting labor costs and increasing efficiency.

Improved performance

Incorporating R&D in business helps improve the quality of products and services. Through R&D activities, you can develop and test new technologies, products, techniques, and designs. This will ultimately enhance product performance and increase customer satisfaction.

Furthermore, R&D offers insights into your production methods, organizational structure, and market position, allowing you to boost productivity by addressing inefficiencies and directing resources to the most valuable projects.

We’ve compiled a list of the most popular digital transformation challenges that modern enterprises encounter, along with tips for overcoming them. Check it out

How to develop an efficient R&D strategy step-by-step

The development of an R&D strategy involves four main steps: defining the research problem, creating an R&D plan, collecting and analyzing data, and establishing milestones and testing the strategy.

Let’s explore each step in detail.

1. Define the research problem

First of all, you need to determine the problem you want to address through research. Your goal here is to formulate clear objectives that specify what you want to achieve, the outcomes you need to deliver, and the methods by which you will accomplish this.

Ensure that your business objectives are specific, measurable, achievable, relevant, and time-bound (i.e., SMART).

2. Develop an R&D plan

An R&D plan should outline existing problems and challenges, corrections that need to be made, specific deadlines, and budget allocations. Some of the key elements to include in your plan are:

• Current trends and technologies relevant for your product or service
• Expected time to profit
• Potential risks and challenges
• Long-term production and support times
• Project roadmap

Once these elements are in place, prioritize tasks based on their significance to the project, starting with those that are absolutely essential for building or optimizing the product and then moving on to those that are merely optional or nice-to-have.

Additionally, as you formulate your R&D plan, delineate key roles and responsibilities within your research and development team. The typical structure of an R&D team comprises engineers, scientists, and project managers, but the final lineup will depend on your specific project and business needs.

3. Collect and analyze data

The next step in the R&D process is data collection in line with your established plan. This includes conducting surveys, interviews, and observations, or using previously collected data, such as market trends, statistics, etc.

Then, you need to organize, clean, and interpret the collected data and present your findings to project stakeholders in a clear and concise manner. Using this data, you will be able to move your R&D ideas forward and start experimenting with new products, tools and technologies.

4. Establish milestones and test your strategy

You need to test your R&D strategy to make sure it is headed in the right direction. To achieve this, establish clear technical, regulatory, or other milestones. These serve as decision points for shifting resources to or away from certain research and development initiatives or experiments.

These milestones not only measure progress but also confirm that your R&D strategy execution remains aligned with your objectives.

What are the best practices for R&D strategy implementation?

For efficient implementation of a research and development strategy, our technology consultants advise the following key steps:

• Create a dedicated R&D team . Assembling a dedicated R&D team ensures a blend of diverse skills and expertise. This also promotes cross-functional collaborations that help generate new ideas and uncover valuable insights. Depending on the scale of your project, you can create an internal team, hire external consultants, or partner with a third-party R&D team.
• Leverage technology and partnerships . Utilize cutting-edge technologies and tools, such as big data solutions , AR/VR simulations, and predictive models to streamline and facilitate your R&D initiatives. Additionally, partnerships with other organizations, research centers, etc. can offer supplementary expertise and different perspectives.
• Define metrics . Establish clear and measurable metrics. These will serve as indicators of what’s working and what’s not, allowing you to timely adjust your R&D strategy and achieve better results.
• Establish R&D policy . A well-defined R&D policy offers a structured roadmap for your research and development endeavors, ensuring alignment with organizational goals and efficient resource allocation.

Implement business intelligence solutions tailored to address your business challenges and goals

What are the research and development challenges in business?

To build a successful R&D strategy, it’s essential to understand the current challenges modern enterprises face. These include lack of connection to the customer, accelerated innovation cycles, and substantial investments.

Let’s take a closer look at each challenge.

Lack of connection to the customer

R&D units seldom have the chance to engage directly with end users. Consequently, product development leans heavily on fragmented feedback about customer preferences and needs. This negatively affects the R&D results.

To address this challenge, enterprises should prioritize creating channels for direct communication between R&D teams and customers. Regular feedback sessions, customer involvement in pilot projects, and cross-functional teams that include marketing and sales personnel can foster a clearer understanding of customer needs, thereby refining the R&D process.​​

Accelerated innovation cycles

A significant driver behind accelerated innovation cycles is the increasing reliance on software development , combined with the affordability of simulation and automation technologies.

However, established corporations aren’t the sole contributors to this fast-paced environment. Well-funded start-ups are not only introducing groundbreaking innovations but also scaling them swiftly, posing potential threats to existing business models and redirecting industry growth trajectories. This, combined with increased investor scrutiny over research expenditures, amplifies the pressure on R&D leaders to demonstrate prompt and tangible results.

To navigate this accelerated innovation landscape, companies should prioritize adaptability, promoting a culture that embraces change and continuous learning. Collaborative efforts, involving partnerships with start-ups or leveraging insights from external industries, can also help businesses stay ahead of the curve.

Substantial investments

Research and development in business demands significant investments in finances, time, and resources. Many businesses find it challenging to allocate sufficient resources to R&D, which can hinder their potential for innovation. This challenge is further compounded by the inherent uncertainty associated with R&D efforts.

The path of research can be riddled with risks, and there’s no assurance of a fruitful outcome. Moreover, the lengthy nature of R&D projects means that returns on investment might not materialize for extended periods.

To navigate these challenges, companies should consider establishing strategic partnerships and tapping into collaborative research networks. This approach can help in sharing risks and optimizing resource utilization.

Top R&D priorities for businesses

According to Gartner , in 2023, the top priorities for R&D leaders are understanding customer demands, recruiting and keeping skilled staff, and quickening the pace of their projects.

Other R&D priorities include balancing investment between short-term and long-term opportunities, optimizing R&D project resourcing, selecting technologies for investment for long-term growth, and increasing the speed to maturity for technologies within the R&D portfolio.

As for the technologies and services in which R&D leaders plan to increase their investment, the top ones include:

• Prototyping and testing
• Data analysis services
• Data collection
• Security technologies
• Power technologies

It’s also worth emphasizing that the choice of R&D priorities will largely depend on the industry your business is in and its specific challenges. Below, we added a table that includes industry-specific initiatives and how our R&D team offers to address them utilizing cutting-edge technologies and solutions.

Closing thoughts

In today’s fast-paced world, research and development plays a pivotal role in the growth and sustainability of businesses. A well-orchestrated R&D strategy allows businesses to fuel innovation and gain a competitive advantage in their business domains.

PixelPlex’s R&D team is completely equipped to partner with you in this journey. With 16 years of industry presence, our diverse expertise spans various technologies and domains. Whether it’s strategizing, creating prototypes, or testing and implementing modern solutions, we employ best practices to ensure your business remains at the forefront of innovation.

Don’t hesitate – contact us today and let’s shape the future together.

Darya Yatchenko

Lead Technical Writer

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research and development , in industry , two intimately related processes by which new products and new forms of old products are brought into being through technological innovation .

Research and development, a phrase unheard of in the early part of the 20th century, has since become a universal watchword in industrialized nations. The concept of research is as old as science; the concept of the intimate relationship between research and subsequent development, however, was not generally recognized until the 1950s. Research and development is the beginning of most systems of industrial production. The innovations that result in new products and new processes usually have their roots in research and have followed a path from laboratory idea, through pilot or prototype production and manufacturing start-up, to full-scale production and market introduction. The foundation of any innovation is an invention . Indeed, an innovation might be defined as the application of an invention to a significant market need. Inventions come from research—careful, focused, sustained inquiry, frequently trial and error. Research can be either basic or applied, a distinction that was established in the first half of the 20th century.

Basic research is defined as the work of scientists and others who pursue their investigations without conscious goals, other than the desire to unravel the secrets of nature. In modern programs of industrial research and development, basic research (sometimes called pure research) is usually not entirely “pure”; it is commonly directed toward a generalized goal, such as the investigation of a frontier of technology that promises to address the problems of a given industry. An example of this is the research being done on gene splicing or cloning in pharmaceutical company laboratories.

Applied research carries the findings of basic research to a point where they can be exploited to meet a specific need, while the development stage of research and development includes the steps necessary to bring a new or modified product or process into production. In Europe , the United States , and Japan the unified concept of research and development has been an integral part of economic planning , both by government and by private industry.

The first organized attempt to harness scientific skill to communal needs took place in the 1790s, when the young revolutionary government in France was defending itself against most of the rest of Europe. The results were remarkable. Explosive shells, the semaphore telegraph, the captive observation balloon, and the first method of making gunpowder with consistent properties all were developed during this period.

The lesson was not learned permanently, however, and another half century was to pass before industry started to call on the services of scientists to any serious extent. At first the scientists consisted of only a few gifted individuals. Robert W. Bunsen, in Germany, advised on the design of blast furnaces. William H. Perkin, in England, showed how dyes could be synthesized in the laboratory and then in the factory. William Thomson (Lord Kelvin), in Scotland, supervised the manufacture of telecommunication cables. In the United States, Leo H. Baekeland, a Belgian, produced Bakelite, the first of the plastics. There were inventors, too, such as John B. Dunlop, Samuel Morse, and Alexander Graham Bell , who owed their success more to intuition , skill, and commercial acumen than to scientific understanding.

While industry in the United States and most of western Europe was still feeding on the ideas of isolated individuals, in Germany a carefully planned effort was being mounted to exploit the opportunities that scientific advances made possible. Siemens, Krupp, Zeiss, and others were establishing laboratories and, as early as 1900, employed several hundred people on scientific research. In 1870 the Physicalische Technische Reichsanstalt (Imperial Institute of Physics and Technology) was set up to establish common standards of measurement throughout German industry. It was followed by the Kaiser Wilhelm Gesellschaft (later renamed the Max Planck Society for the Advancement of Science), which provided facilities for scientific cooperation between companies.

In the United States, the Cambria Iron Company set up a small laboratory in 1867, as did the Pennsylvania Railroad in 1875. The first case of a laboratory that spent a significant part of its parent company’s revenues was that of the Edison Electric Light Company, which employed a staff of 20 in 1878. The U.S. National Bureau of Standards was established in 1901, 31 years after its German counterpart, and it was not until the years immediately preceding World War I that the major American companies started to take research seriously. It was in this period that General Electric , Du Pont, American Telephone & Telegraph, Westinghouse, Eastman Kodak, and Standard Oil set up laboratories for the first time.

Except for Germany, progress in Europe was even slower. When the National Physical Laboratory was founded in England in 1900, there was considerable public comment on the danger to Britain’s economic position of German dominance in industrial research, but there was little action. Even in France, which had an outstanding record in pure science , industrial penetration was negligible.

World War I produced a dramatic change. Attempts at rapid expansion of the arms industry in the belligerent as well as in most of the neutral countries exposed weaknesses in technology as well as in organization and brought an immediate appreciation of the need for more scientific support. The Department of Scientific and Industrial Research in the United Kingdom was founded in 1915, and the National Research Council in the United States in 1916. These bodies were given the task of stimulating and coordinating the scientific support to the war effort, and one of their most important long-term achievements was to convince industrialists, in their own countries and in others, that adequate and properly conducted research and development were essential to success.

At the end of the war the larger companies in all the industrialized countries embarked on ambitious plans to establish laboratories of their own; and, in spite of the inevitable confusion in the control of activities that were novel to most of the participants, there followed a decade of remarkable technical progress. The automobile, the airplane, the radio receiver, the long-distance telephone, and many other inventions developed from temperamental toys into reliable and efficient mechanisms in this period. The widespread improvement in industrial efficiency produced by this first major injection of scientific effort went far to offset the deteriorating financial and economic situation.

The economic pressures on industry created by the Great Depression reached crisis levels by the early 1930s, and the major companies started to seek savings in their research and development expenditure. It was not until World War II that the level of effort in the United States and Britain returned to that of 1930. Over much of the European continent the depression had the same effect, and in many countries the course of the war prevented recovery after 1939. In Germany Nazi ideology tended to be hostile to basic scientific research, and effort was concentrated on short-term work.

The picture at the end of World War II provided sharp contrasts. In large parts of Europe industry had been devastated, but the United States was immensely stronger than ever before. At the same time the brilliant achievements of the men who had produced radar, the atomic bomb , and the V-2 rocket had created a public awareness of the potential value of research that ensured it a major place in postwar plans. The only limit was set by the shortage of trained persons and the demands of academic and other forms of work.

Since 1945 the number of trained engineers and scientists in most industrial countries has increased each year. The U.S. effort has stressed aircraft, defense, space, electronics , and computers. Indirectly, U.S. industry in general has benefited from this work, a situation that compensates in part for the fact that in specifically nonmilitary areas the number of persons employed in the United States is lower in relation to population than in a number of other countries.

Outside the air, space, and defense fields the amount of effort in different industries follows much the same pattern in different countries, a fact made necessary by the demands of international competition. (An exception was the former Soviet Union , which devoted less R and D resources to nonmilitary programs than most other industrialized nations.) An important point is that countries like Japan, which have no significant aircraft or military space industries, have substantially more manpower available for use in the other sectors. The preeminence of Japan in consumer electronics, cameras, and motorcycles and its strong position in the world automobile market attest to the success of its efforts in product innovation and development.

Creating an R&D Strategy

• A good strategy provides consistency, coherence, and alignment.
• The "game plan" for an R&D organization can be broken down into 4 strategic levers: architecture, processes, people, and portfolio. Together, decisions made in each of these categories constitute the R&D strategy.
• R&D performance results from the interaction of many different decisions and choices, including the size and location of R&D facilities, the division of labor between various groups, the choice of technologies used inside the R&D organization, the selection of personnel, the allocation of resources, the design of processes for managing projects, and other factors.

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Three steps to implementing a successful r&d strategy in your business.

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What’s the first thing that comes to mind when you think about research and development (R&D) in your business?

Most of the time, you’ll immediately go to product-based research, but R&D can (and should) be so much more than that. There are myriad aspects of your business where innovation will make a huge difference, not only with your products and services, but also in more broad terms, such as the efficacy of your customer flow and systems that can help your business run more smoothly.

At the end of the day, R&D is about taking what you have and doing the necessary research to enhance capabilities and be more efficient, and that is important to all business owners, regardless of company size or industry. In my experience, there are three important steps (and time-savers) to implement a successful and effective R&D strategy for your business:

1. Build a clear strategic framework.

As I’m sure many entrepreneurs can attest, there’s usually no shortage of good ideas being thrown around about how to improve your business.

So, the first step toward building your strategic framework is to resist the urge to "boil the ocean," and understand which aspects of your business you need to focus R&D around. Ask yourself what the current business demands are in order for you to reach your goal, then identify the limitations you’re facing and what you need to change or improve upon in order to achieve the desired result. Once you know where you are and where you want to go and have clarity on your goals and objectives, you can start drilling down on your approach, determinants of success, measurements and reporting.

I believe that strategy is all about allocation of scarce resources, so you want to be selective, test appropriately, analyze the metrics and, if something isn’t working, be able to identify where you need to pivot and make sure you have the resources available to do so.

2. Assign a dedicated R&D team to manage the strategy.

Having a dedicated team to manage R&D with carefully assigned roles and responsibilities will help determine whether or not your R&D program is implemented effectively. Everyone on the team needs to know the structure of the group and who is responsible for researching, designing, and implementing the new product, process or service; and, perhaps most importantly, they need to know how it’s being tested. You’ll also want to define who is accountable for making the "go" or "no go" decisions and ensure everyone understands those firm decision-making points. That way, you can measure when something is working or when it needs to be changed.

Now, this doesn’t mean you need 100%-dedicated roles­. If you’re a small business that isn’t big enough for a dedicated team, the important piece here is having some measure of accountability. You need to have a clear idea of who is responsible for driving the program forward and clear milestones to measure your progress against so it doesn’t become an afterthought when other aspects of the business start calling for attention.

3. Have a proper test environment.

The final step in determining the effectiveness of your R&D program is making sure you have the right test environment.

For example, if you have a restaurant and add a new menu item but people don’t buy it, that isn’t a thorough test of whether or not it was a good product. It should be about more than, "yes, we changed this service" or "yes, we tried that product." It should be about the whole package. The product could be perfectly good, but did you market it? Did you talk about it? Was the staff trained on how to promote it? A good test environment will clearly indicate where you need to make adjustments by taking all of these factors into account. Otherwise, you could end up killing off a perfectly good program simply because it needed a few tweaks.

Some business owners are hesitant about R&D because of the expense and uncertainty, but it’s also important to think about the risk of staying stagnant. Will your competitors surpass you? Will you go from a market leader to a follower? Will your customers opt for something better or more efficient?

Let me share a recent R&D program success story from one of my company's brands. Earlier this year, we followed these three steps to improve membership-program conversion. We started with a clear framework, which included a long-term approach to sales and conversion training (online and in person), simplifying the membership marketing materials and building a new online dashboard to measure our success. The results have been phenomenal: From January through July, the average membership conversion for one of our franchise brands was 16.4%. In October, the brand’s efforts yielded a 5% average-conversion-rate increase.

I've found that the risk of stagnation is always greater than the risk of innovation, especially if you implement R&D programs with a well thought out strategy, a dedicated R&D team and a proper testing environment. Innovation is the most critical component of a successful company, no matter the size or structure. Businesses with the innovative advantage are businesses that are able to scale, stand out, attract the best talent and stay top of mind in an increasingly crowded marketplace.

Bottom line: Status quo only works for so long, and if your doors open, you should keep innovating.

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Research and development (R&D) and the product lifecycle

Imagine a young boy searching through the December edition of Intertoys , the Dutch version of the Toys-R-Us magazine. The magazine has over 150 toys, including molding clay, step bikes, board games, M.A.S.K and G.I Joe action figures, Transformers, ThunderCats, and tons more.

His eyes are focused on the pages dedicated to LEGO. The boy finds himself overcome with joy, thinking about all the possibilities to expand his LEGO city. Will he ask for the police station, the gas station, or maybe the medieval castle? He tries to imagine how each enhances his city and the additional stories they can bring.

This young boy was me back in 1986.

LEGO delivered on its mission to inspire and develop the builders of tomorrow. How do I know that to be true? Well, here I am as a product leader who is curious and enjoys experimenting and trying new ways to devise, innovate, and to meet and exceed customer needs.

LEGO is a prime example of a company that recognizes the value of being customer-obsessed, researching, observing, experimenting, and trying over and over again to build what excites and inspires generations to come. It truly harnesses the power of research and development (R&D).

In this guide, we’ll explore what R&D is, the different types of R&D, and how it can inform product development. We’ll also show you how research and development influence go-to-market and help determine whether a launch is successful.

What is research and development (R&D)?

Research and development (R&D) refers to activities and investments directed toward creating new products, improving existing products, streamlining processes, and pursuing knowledge.

The main purpose of R&D is to promote innovation and, in doing so, drive growth and increase competitiveness. Additionally, by improving processes and finding efficiency gains, R&D can lead to cost savings.

In some industries, R&D is necessary for regulatory compliance and to maintain or improve product quality.

R&D example

For an example of how R&D can impact a company’s growth, let’s look a LEGO’s research and development process.

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LEGO works to create new building block shapes and designs and endeavors to improve their performance and safety on an ongoing basis. One of LEGO’s primary R&D efforts aims at developing sustainable production methods.

In 2015, the company invested nearly $150 million into sustainable materials R&D . It’s important to its mission to leave a positive impact on the planet for future generations to inherit.

We’ll refer to the LEGO examples throughout this guide to show what research and development efforts look like in the real world.

Research and development (R&D) vs. product development

It’s tempting to say that R&D and product development are one and the same, but while they overlap, not all product development is R&D.

To qualify as true, authentic, and real R&D, an activity must meet specific criteria that make it SUPA (yes, I just created that acronym).

SUPA stands for:

• Systematic — R&D must follow a systematic approach to solving problems or creating new products
• Advancement — R&D must involve either the creation of new knowledge, a significant improvement to existing knowledge, or a significant advancement in overall understanding
• Purpose — R&D must have the primary purpose of creating new knowledge, improving existing products radically, or creating new ones
• Uncertainty — There must be an element of uncertainty or risk involved in the work. This means you can’t always anticipate the outcome with confidence

As a product manager, most of the above should be familiar. As Marvin Gaye would have said, R&D and product management work together just like music .

R&D and the product development lifecycle

Research provides you with the necessary information and insights to inform and guide your product design. Development helps you bring ideas to life, validate them and then build and commercialize them.

The product development lifecycle is as follows:

• Ideation and concept development
• Design and prototyping
• Development
• Launch and commercialization

Let’s zoom in on each stage to see how R&D plays a role in every aspect of product development.

1. Research

The research phase involves systematically gathering market data, understanding the competitive landscape, and assessing customers in their current use of your product and their unmet needs. R&D helps you find the next big thing or game changer that gains you more market share.

2. Ideation and concept development

This step focuses on generating new ideas and concepts that push the boundaries of what you know. It requires looking at new ideas at a high-level and evaluating their potential feasibility.

3. Design and prototyping

Dip your toes further into the development waters — but make sure not to step on a LEGO while doing so.

The design and prototyping stage is where you create your hypothesis, conduct experiments, create designs, and prototype solutions to validate the assumptions made.

4. Development

During the development stage, any prototypes that fail to deliver advancements are abandoned. Those passing the validation are ready for development consideration.

5. Launch and commercialization

The activities described above will aid in making informed decisions about the product launch , pricing , and go-to-market strategy .

Example: How does R&D influence go-to-market?

Let’s refer back to our example:

LEGO was hugely successful through R&D when bringing the LEGO Mindstorms line to market.

This line empowers users to build and program robots using LEGO bricks and a microcomputer. The creation of the product line involved a multidisciplinary approach. It combined expertise in product design, software engineering, and electronics.

The R&D process started with research that identified the need for a product that allowed users to experiment with and learn about robotics.

LEGO then went through intensive ideation iterations and decided to work with experts in the field to design a system that would be easy to use and accessible to people of all ages and skill levels.

The design and prototypes were thoroughly tested and proved to validate assumptions .

The resulting product was a great success.

3 types of R&D

There are several types of research and development that you can pursue. Each type requires different approaches, resources, expertise, and generates different outcomes.

You can choose to focus on one or more R&D types, depending on your strategic objectives, resources, and capabilities.

Let’s have a look at the three major types of R&D:

Basic research

Applied research, experimental development.

Basic research aims to increase knowledge and understanding of a particular subject, with no immediate application in mind.

LEGO continuously explores new methods for connecting building blocks to each other. This research could involve looking into new materials or design principles that could improve the strength and stability of the connections between the blocks.

Applied research focuses on solving specific practical problems and developing new or improved processes, services, or products.

To reduce its carbon footprint, LEGO is researching a new plant-based plastic for its building blocks. This new material, made from sugarcane, replaces traditional petroleum-based plastic.

Experiment research involves designing, building, and testing a prototype to evaluate the feasibility and potential of new processes, services, or products.

LEGO is developing building sets that incorporate augmented reality (AR) technology. The R&D effort combines applied research with experimental development, as the company seeks to create a new product that utilizes AR to enhance the building and play experience.

How to incorporate R&D into the product development process

So you want to incorporate R&D into your product development process. Kudos to you!

Practice makes perfect. Before looking at a few ways to do this, it is important to remember that incorporating R&D into your product development process is a continuous endeavor and requires adjustments along the way.

The following strategies will help you incorporate R&D:

Prioritize R&D

Foster a culture of innovation.

• Embrace experimentation

Build user-centered

Collaborate with external partners.

The obvious one here is to ensure that R&D is a priority within your company and resources are freed up. This could include dedicating a portion of the budget, allocating capacity, or setting aside dedicated R&D time.

Encourage a culture in your company that values and supports innovation, experimentation, and risk-taking. It could include encouraging employees to pursue their own interests and providing them with the resources to do so.

Embrace experimentation, prototyping, and testing

R&D-ers love experimenting and testing their assumptions through building hypotheses, prototyping, and testing. It allows you to validate ideas, refine designs, identify and address any issues or limitations before bringing a product to market. As a product manager, you probably already have incorporated some of these practices. If not, I highly encourage you to do so.

To find an opportunity you will need to discover and unravel a need. User-centered building helps ensure that products and services are designed with the end-user in mind, leading to better, more effective problem-solving, and solutions to meet the needs of the people who will be using them.

Consider partnering with external organizations, such as universities, research institutes, or other companies, to help drive R&D. This can provide access to additional resources, expertise, and perspectives.

Example: How does R&D influence product development?

Referring back back to our example:

LEGO places a strong emphasis on user-centered design. It conducts user research to understand their needs, preferences, and behaviors and incorporate those findings into product design and development.

LEGO also collaborates with a variety of external partners, including universities, research institutions, and other companies, to drive innovation and R&D. For example, it has worked with the Massachusetts Institute of Technology (MIT) on several projects.

LEGO uses rapid prototyping and testing to iterate and improve its products and encourage employees to be creative and innovative. It does this through the LEGO IDEAS program, which provides a platform for employees to submit and vote on new product ideas.

How to analyze and interpret the results of R&D

It goes without saying that analyzing and interpreting the results of research and development is crucial. How else will you validate or disprove hypotheses, determine the success or failure, and inform future R&D decisions?

Here are some steps that will help you out:

• Define the objectives and hypothesis
• Gather and organize data
• Analyze the data
• Interpret the results
• Validate the results
• Communicate the results
• Use the results to inform future R&D decisions

1. Define the objectives and hypothesis

When you want to analyze results, it’s crucial to have a clear understanding of what you set out to achieve and what you expected to see.

2. Gather and organize data

Collect all relevant data and organize it in a way that allows for easy analysis and interpretation.

3. Analyze the data

Use appropriate statistical methods to analyze the data, such as hypothesis testing, regression analysis, or analysis of variance (ANOVA).

4. Interpret the results

Based on the analysis, interpret the results and draw meaningful conclusions. This may involve identifying patterns, correlations, or relationships between variables.

5. Validate the results

Validate the results by checking for consistency, accuracy, and reliability. It may also be necessary to perform additional tests or experiments to confirm or refute the results.

6. Communicate the results

Communicate the results of the R&D project to stakeholders, including management, investors, customers, and employees. This may involve presenting data, charts, graphs, or other visual representations of the results.

7. Use the results to inform future R&D decisions

Use the results of the R&D project to inform future R&D decisions, including what to research next, what to improve, and what to commercialize.

Proper analysis and interpretation of R&D results are crucial to make informed decisions and drive innovation and growth.

There are various strategies you can implement in your product process. It is key to define your objective and expected results and have a structured process to validate R&D success.

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R&D Strategy Template

What is an R&D Strategy?

An R&D Strategy is the complete process that defines an organization's approach to research and development, from the planning phase to its execution and tracking. It serves as a roadmap to guide the R&D efforts and investments of the company and links them back to the overall objectives and goals of the organization.  

What's included in this R&D Strategy template?

• 3x R&D Focus Areas
• 7x R&D Objectives
• 20x R&D Projects
• 10x R&D KPIs

Who is this R&D Strategy template for?

This R&D Strategy template is aimed at employees working at companies of all sizes and industries who are looking for a template to execute their R&D strategy. It is designed to provide a comprehensive framework for assessing the current state of R&D, setting goals, and designing and executing an R&D strategy that has the potential to drive success.

How is this R&D Strategy template relevant to your organization?

This R&D Strategy template is relevant to your organization because it can be tailored to fit the specific needs of your company. It will enable you to build and execute your strategy based on your focus areas or priorities and shape an R&D strategy that will have the greatest potential to add value to your organization.  

1. Define clear examples of your focus areas

Focus areas are broad categories used to group problems or challenging areas within your organization. Creating focus areas helps guide your organization on what areas are a priority to work towards. If you’re struggling for inspiration, try to think of the categories within your organization that you want to focus on and start creating strategic focus areas from there.  Examples of strategic focus areas that could fall under a R&D Strategy could be: Tech Transformation, Security and Compliance, and Lead the Evolution.

2. Think about the objectives that could fall under that focus area

How could you best encapsulate this focus area? What goals could you set and act upon to achieve a positive result in this focus area? These are the sorts of questions you want to answer when thinking about setting up objectives. A strategic objective usually has to be specific and measurable to cause enough impact and effectively explain what you want to achieve. Examples of some objectives for the focus area of Lead the Evolution could be: Decarbonization of the company; Research and evolve in new segment of our market; and Lead the shift in new trends of the industry and technologies with best-in-class talent.

3. Set measurable targets (KPIs) to tackle the objective

KPIs are important metrics that make sure that you can accomplish your business objectives. KPIs not only take into account numerical measurements to help track your progress but also enable you to review the performance of your goals so you can accordingly make adjustments in your execution to achieve your strategic goals.  An example of a KPI for the objective Lead the shift in new trends of the industry and technologies with best-in-class talent could be: Increase number of deep-tech engineers hired to 50 people.

4. Implement related projects to achieve the KPIs

Projects can help you and your team understand how to adapt, improve, learn from, and better implement processes that can help you achieve your end strategic objectives.  An example of a project to enhance "Lead the Evolution" within your organization could be: Research market and analyze the trend of low, mid, and high segments; and Establish an AI department. 

5. Utilize Cascade Strategy Execution Platform to see faster results from your strategy

Make sure your strategy is front and center with Cascade. You can plan, execute, measure and adapt your strategy in one easy-to-use platform and make sure your strategic plan is connected to on-the-ground execution. Get inspired by this R&D Strategy template and launch your strategy in Cascade; it’s $0 forever.

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Start » strategy, what is research and development .

Research and development provides businesses with the information they need to successfully bring their products or services to market.

In any industry, even the most revolutionary products and services are rarely fully conceptualized on day 1. Most often, success in the market stems from extensive, effective research and development (R&D). This is especially true for small businesses, which contribute a significantly higher percentage of sales to R&D work than larger businesses.

Here’s everything you need to know about R&D and why it’s well worth the investment.

What is research and development?

R&D refers to the various activities businesses conduct to prepare new products or services for the marketplace. Businesses of all sizes and sectors can partake in R&D activities, though the amount of investment can vary. For example, technology and health care companies tend to have higher R&D expenses , as do enterprises with larger budgets.

Typically the first step in the development process, R&D is not expected to yield immediate profits. Rather, it focuses on innovation and setting up a company for long-term profitability. During this process, businesses may secure patents, copyrights, and other intellectual property associated with their products and services.

At larger companies, R&D activities are often handled in-house by a designated R&D department. However, some smaller companies may opt to outsource R&D to a third-party research firm, a specialist, or an educational institution.

[Read more: 7 Ways to Find Small Business Grant Opportunities ]

Types of research and development

R&D activities typically fall into one of three main categories:

• Basic research: Basic research, sometimes called fundamental research, aims to provide theoretical insight into specific problems or phenomena. For example, a company looking to develop a new toy for children might conduct basic research into child play development.
• Applied research: This type of research is practical and conducted with a specific goal in mind, most often discovering new solutions for existing problems. The children’s toy company from the previous example might conduct applied research into developing a toy that facilitates play development in a new or improved way.
• Development research: In development research, researchers focus exclusively on applied research to develop new products and improve existing ones. For example, a team of development researchers may test the hypothetical company’s new toy or implement feedback obtained from customers.

Small businesses have limited resources. They don’t have that endless budget that the Fortune 500 company has, which means the small business will have to get creative to conduct worthwhile research and development.

Becca Hoeft, CEO and Founder of Morris Hoeft Group

Why invest in research and development?

While R&D can require a significant investment, it also yields several advantages. Below are four specific areas where your business can benefit by conducting R&D.

New products

R&D supports businesses in developing new offerings or improving existing ones based on market demand. By conducting research and applying your findings to your final product, companies are more likely to develop something that meets customers’ needs and performs well in the marketplace.

R&D can help businesses understand their place in the market as well as identify inefficiencies in their workflows. Insights from R&D activities can illuminate ways to improve operations as well as where to most effectively allocate resources, increasing overall efficiency.

Cost reductions

While developing a well-researched product or service that performs well is likely to maximize profit, R&D aimed at improving internal processes and technologies can reduce the cost of bringing products and services to market.

Businesses that invest in R&D may be eligible for specific tax incentives. For one, the federal R&D tax credit offers a dollar-for-dollar reduction in tax liability for businesses that partake in various research-based activities. Eligible companies can apply for this credit by submitting Form 6765 with their business taxes.

[Read more: How to Seek Funding for Your Invention ]

Overcoming the challenges of small business R&D

According to Becca Hoeft, CEO and Founder of Morris Hoeft Group , small businesses may face numerous challenges related to R&D that their larger counterparts might not experience.

“Small businesses have limited resources,” said Hoeft. “They don’t have that endless budget that the Fortune 500 company has, which means the small business will have to get creative to conduct worthwhile research and development.”

While R&D funding is available through various government grants, university programs, and research institutions, Hoeft noted that it may take some time and strategic planning to obtain it. She recommended that small business owners start talking publicly about what kind of research they are doing and what they need to conduct it.

“Don’t hide under a rock and expect money to magically appear,” Hoeft told CO—. “Get on a stage at a relevant conference [or] start a blog series about your idea.”

Keep in mind that once you start sharing your ideas and what you want to research, “it’s out there in the universe,” said Hoeft. Therefore, protecting your intellectual property before you begin and during the research process is extremely important.

“Ensure your trademarks, patents, and copyrights are in place to protect you and your small business,” Hoeft added.

[Read more: How to Qualify for and Claim the R&D Tax Credit ]

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Creating an R&D strategy: Overcoming budget challenges

• Alex Hannaway
• September 8, 2023

Introduction

In the ever-changing business landscape, Research and Development (R&D) serves as the driving force behind innovation and progress. It is the key that unlocks the potential for companies to redefine industries, enhance customer experiences, and solidify their market positions.

This sentiment is strongly supported by companies in the UK, as indicated by the latest data from The Office of National Statistics. In 2021, UK businesses invested a staggering £46.9 billion in R&D , demonstrating their commitment to staying at the forefront of technological advancements.

This article will delve into the critical role that R&D plays in business growth strategies, its profound impact on gaining a competitive advantage, and the exciting opportunities it presents in today’s rapidly evolving global market.

The Importance of a good Research and Development (R&D) strategy

R&D is the lifeblood of innovation, fueling advancements in technology, product design, and service delivery. It’s the force that drives businesses to think beyond the status quo, pushing boundaries, and unlocking new possibilities. For small businesses in the UK, Research and Development activities are not a luxury but a necessity for survival and growth.

Innovation through R&D can lead to several key benefits for small UK businesses:

• Competitive Edge: R&D efforts enable businesses to stay ahead of competitors by introducing novel products or services that captivate customers and carve out unique market positions.
• Market Expansion: R&D helps identify opportunities for diversification and market expansion, opening doors to new customer segments and revenue streams.
• Cost Efficiency: Through R&D, businesses can discover more efficient processes, reducing operational costs and improving profitability.
• Adaptation to Regulatory Changes: In a rapidly changing regulatory environment, R&D is essential for businesses to adapt and remain compliant.

The impact of budget constraints on R&D

While the merits of R&D are undeniable, the path to innovation is often fraught with challenges, and one of the most formidable obstacles is budget constraints. Small businesses, in particular, frequently find themselves grappling with limited financial resources, making it increasingly challenging to invest in R&D initiatives that are essential for sustainable growth.

Understanding R&D Strategy

Defining r&d strategy.

At its core, a research and development strategy is a roadmap that defines how a business plans to harness its resources and expertise to innovate, develop new products or services, and remain competitive, whether that’s a technology company or an aerospace business. It outlines the goals, priorities, and methods for achieving technological advancements and market differentiation. For small businesses in the UK, defining a clear R&D strategy is akin to charting the course for success.

The Role of R&D in innovation and competitiveness

Innovation is the cornerstone of competitiveness in the modern business landscape. R&D plays a pivotal role in fostering innovation by facilitating the exploration of uncharted territories, refining existing offerings, and the development of cutting-edge solutions. For small businesses, R&D isn’t just an avenue for keeping up with larger competitors—it’s a means to surpass them.

Aligning R&D with business goals

The efficacy of an R&D strategy hinges on its alignment with the overarching objectives of the business. When R&D efforts harmonise with core business goals, the impact can be transformational. This section will explore the importance of synergy between R&D and business strategy and provide insights into how small UK businesses can ensure that their R&D initiatives are well-integrated and focused on achieving tangible outcomes.

Steps to Creating an Effective R&D Strategy

Assessing current r&d capabilities.

• Analysing existing resources: Before embarking on any strategic initiative, it’s essential to conduct a comprehensive assessment of available resources. This includes financial assets, existing technologies, infrastructure, and intellectual property. Understanding what you have at your disposal allows you to set realistic goals and identify areas needing additional investment.
• Evaluating talent and expertise: The success of R&D largely depends on the talent driving it. Assess the skill sets within your team. Do you have the right mix of researchers, scientists, engineers, support staff and development team? Recognising gaps can help you strategise on training, hiring, or collaboration.

Setting clear objectives and priorities

• Defining short-term and long-term goals: An effective R&D strategy distinguishes between immediate objectives and long-term aspirations. While short-term goals might focus on refining existing products, long-term objectives might eye market disruptions or enter entirely new sectors.
• Prioritising projects: With limited resources, it’s crucial to rank projects based on factors such as market demand, expected ROI, and alignment with business objectives. This ensures that you allocate resources to projects with the highest potential impact.

Aligning R&D strategy with business strategy

• Identifying market trends and customer needs: Employ tools like market research and customer feedback. Understanding where the market is headed and what customers desire can guide your R&D efforts, making them more relevant and impactful.
• Ensuring synergy with overall corporate goals: R&D shouldn’t operate in a silo. The activities companies undertake should support and be supported by the broader objectives of the business, from marketing to operations.

Investing in innovation culture

• Fostering creativity and experimentation: A culture that celebrates creative thinking and isn’t averse to taking calculated risks is more likely to innovate. Encourage brainstorming sessions, allocate time for blue-sky projects, and embrace failures as learning opportunities.
• Encouraging collaboration and knowledge sharing: Collaboration sparks innovation. Foster an environment where teams across departments can collaborate and knowledge flows seamlessly, be it through regular inter-departmental meetings or digital collaboration platforms.

Leveraging external partnerships

• Collaborating with academia and research institutions: Universities and research bodies can be goldmines of innovation. Partnering can grant access to extensive research, state-of-the-art facilities, and emerging talent.
• Exploring joint ventures and strategic alliances: For R&D projects requiring substantial resources or expertise your current capacity, consider partnering with other firms. Shared efforts can lead to shared success.

Thus far, we’ve delved into the building blocks of an effective R&D strategy. Next, we will shift our focus to the critical components of R&D budgeting and resource allocation.

Budget challenges in R&D

• Cost Savings: By automating your invoice management processes, you can significantly reduce costs associated with manual data entry, paper storage, and potential errors. Say goodbye to printing, mailing, and storing paper invoices. Embrace automation and watch your expenses shrink.
• Enhanced Accuracy: Manual data entry is prone to errors, leading to discrepancies in your financial records. Automation eliminates the risk of human error, ensuring accurate invoice processing and reducing the time spent rectifying mistakes. With automation, precision becomes the new normal.
• Time Efficiency: Consider all your accounts payable team’s hours on manual data entry and routing invoices. Automation streamlines these processes, allowing invoices to flow seamlessly from departments to approvers with just a few clicks. Free up your team’s time for more strategic tasks that drive your business forward.
• Improved Archives: Storing and organising paper invoices can be a nightmare. They take up physical space, and retrieval can be time-consuming and tedious. With automated invoice processing, you can enjoy digital archives that are easily searchable and accessible at any time. 

Now that you’ve glimpsed the power of automation in streamlining your invoice management, it’s time to take action. Embrace the modernisation of invoice management and unleash the potential of your accounts payable team. Say goodbye to manual data entry, paperwork, and inefficiency. The future is here, and it’s time to revolutionise invoice management practices.

Stay tuned as we dive deeper into how automation can transform your invoice management and explore success stories from businesses that have already embraced this game-changing technology. Get ready to supercharge your invoice management processes and take your business to new heights.

Common Budget Constraints in R&D

In the pursuit of innovation, small businesses often confront a trio of budgetary challenges that can impede progress and stifle creativity:

• Limited Financial Resources: Small businesses typically have modest budgets, making it difficult to allocate significant funds to R&D activities.
• Uncertain ROI: R&D investments can be inherently risky, with uncertain returns on investment. This uncertainty can deter small businesses from committing resources to innovative endeavours.
• Competition for Funds: Budgets are finite, and small businesses must juggle various competing priorities, including marketing, operations, and employee salaries. This competition for funds can leave R&D initiatives underfunded.

The consequences of inadequate R&D budgets

Insufficient investment in Research and Development (R&D) can send shockwaves throughout a small business, affecting not only its immediate prospects but its long-term viability. Let’s explore the ripple effects of inadequate R&D budgets, shedding light on the missed opportunities and potential stagnation that can result:

• Innovation shortfall: R&D is the heartbeat of innovation. When budgets fall short, innovation takes a backseat. Small businesses that can’t invest in cutting-edge research and product development risk falling behind competitors who continuously introduce new and improved offerings. This innovation shortfall can result in outdated products or services, eroding market relevance.
• Market adaptation challenges: Today’s markets are dynamic, with trends and consumer preferences evolving rapidly. Insufficient R&D investment leaves a business ill-prepared to adapt to these changes. Without the resources to explore new markets or pivot in response to shifts in customer demand, a small business can become locked into outdated business models or product lines.
• Competitive disadvantage: In an increasingly competitive landscape, staying ahead of the curve is critical. Businesses with inadequate R&D budgets often find themselves trailing behind competitors who invest more robustly in innovation. The consequences can include losing market share, reduced pricing power, and diminished brand appeal.
• Reduced efficiency: R&D doesn’t only involve groundbreaking innovations. It also includes finding more efficient processes and cost-effective solutions. Inadequate R&D budgets mean missing opportunities to streamline operations, enhance productivity, and reduce costs. This can lead to reduced profitability and erode a company’s ability to weather economic downturns.
• Risk of technological obsolescence: Technology evolves rapidly. Businesses that don’t keep pace with technological advancements may find themselves using outdated systems and tools. This not only affects their operational efficiency but also leaves them vulnerable to cybersecurity threats and data breaches.
• Talent attraction and retention: A thriving R&D department can be a magnet for top talent. Skilled researchers, developers, scientists, and engineers are drawn to companies with a commitment to innovation. Conversely, businesses with inadequate R&D budgets may struggle to attract and retain the talent necessary for technological breakthroughs.
• Missed opportunities for expansion: Innovation often opens doors to new markets and revenue streams. Small businesses with constrained R&D budgets may miss opportunities to diversify their product or service offerings, enter new geographic markets, or tap into emerging trends.
• Long-term viability: Over time, the consequences of underinvestment in R&D can accumulate, jeopardising a business’s long-term viability. As competitors continue to innovate and adapt, companies with insufficient R&D resources may find it increasingly difficult to catch up or remain relevant.

In essence, the ripple effects of inadequate R&D budgets extend far beyond budgetary constraints. They touch every facet of a business, from its ability to innovate and compete to its capacity to remain agile and resilient in the face of uncertainty. Recognising these consequences underscores the importance of prioritising R&D investments, even for small technology companies in the UK, as such an approach becomes a strategic imperative for sustainable growth and competitiveness.

Overcoming Budget Challenges in your R&D strategy

Efficient resource allocation.

• Portfolio management: By managing your R&D projects as a portfolio, you can balance high-risk, high-reward projects with safer, incremental innovations. This balanced approach optimises the use of resources while ensuring a steady stream of innovation.
• Cost-effective project selection: Emphasise projects that leverage existing resources or those that have a clear, quicker path to monetisation.

Securing additional funding

• Exploring government grants and incentives: The UK government offers a plethora of grants, tax incentives, and other financial aids for businesses, especially in the realm of R&D. These include innovation grants, R&D tax credits and R&D Advance Funding. Tapping into these can significantly alleviate budget pressures.
• Attracting venture capital and external investors: For projects with significant market potential, consider courting venture capitalists or angel investors. These external funding sources can provide not only capital but also invaluable expertise and network connections.

Risk management

• Identifying and mitigating risks: From technological hurdles to regulatory challenges, R&D projects are fraught with risks. Identifying these risks early on and strategising on mitigation can prevent costly failures.
• Contingency planning: Always have a backup plan. Whether it’s a pivot in project direction or additional funding sources, preparedness can make the difference between an R&D hiccup and a catastrophe.

Monitoring and evaluation

• Key performance indicators (KPIs): Determine which metrics best capture the progress and success of your R&D efforts. This could range from the speed of prototype development to basic research to the number of patents filed.
• Regular reviews and adjustments: Research and development (R&D) is a dynamic and ever-evolving field. It is crucial to regularly review your strategy development in light of new data, market shifts, or internal changes in order to ensure that your approach remains relevant and effective. Embracing emerging technologies or industry trends like Artificial Intelligence (AI) and Machine Learning (ML) can significantly accelerate development cycles, making them a smart choice for many companies. Stay adaptable and responsive to the evolving landscape, adjusting your approach as needed to stay ahead of the game.

The pivotal role of R&D in a company’s growth

In the quest for sustainable growth and enduring success, one thing remains abundantly clear: Research and Development (R&D) stands as the cornerstone of innovation, progress, and transformation. R&D fuels the engines of ingenuity, enabling companies, especially small businesses in the UK, to reach new heights and explore uncharted territories.

The significance of a well-crafted R&D strategy

Amid the dynamic and ever-evolving business landscape, the importance of a well-crafted R&D strategy cannot be overstated. Such a strategy serves as the compass guiding businesses through the tumultuous seas of technological change and market shifts. It not only harnesses the power of innovation but also optimises the allocation of resources, ensuring that every investment counts.

Encouragement to take proactive steps in overcoming budget constraints

Budget constraints are formidable adversaries in the journey of R&D, especially for small businesses. Yet, as we’ve explored throughout this article, these constraints need not be insurmountable obstacles. By taking proactive steps, evaluating current capabilities, setting clear objectives, fostering an innovation culture, and leveraging external partnerships, small businesses can navigate the complexities of R&D and emerge stronger, more innovative, and better poised for success.

Future outlook for R&D in a competitive business landscape

The future of R&D in the competitive UK business landscape holds promise and potential. As technology continues to advance at a breakneck pace and consumer expectations evolve, the demand for innovation will only intensify. Businesses that embrace R&D and develop strategies tailored to their unique strengths and challenges will find themselves at the forefront of this transformative wave. Such a strategy positions them not merely as spectators but as active participants in shaping the future of their industries, ensuring that they not only survive but thrive in the ever-competitive marketplace.

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Improving Surface Transportation Security: A Research and Development Strategy (1999)

Chapter: 3 establishing a research and development strategy, 3 establishing a research and development strategy.

At this early stage in the establishment of an R&D program for surface transportation security, building a solid strategic basis for the program, including a clearly thought out process for conducting it, is more important than identifying a detailed agenda of R&D topics. It may be tempting, given the importance of the problem, to rush into efforts to find near-term solutions. Nevertheless, because the security of the surface transportation infrastructure is a continuing, long-term concern, and the appropriate R&D responses to it are not yet well defined, a general strategy should be established and clarified first.

The surface transportation system and its security needs are so wide ranging and diverse that creating and maintaining a balanced, systematic R&D strategy will be a continuing challenge. The approach taken should be dynamic and able to evolve over time as the situation changes. Its perspective should encompass the surface transportation system as a whole, not transportation modes individually. The strategy should include both near-term and long-term efforts and should address both point vulnerabilities and system-wide strategic vulnerabilities.

This chapter presents the study's recommendations for such a strategy. Rather than choosing among the many promising R&D topics, it describes a process for making those choices—how to define DOT's role, how to maintain a balanced and systematic program, how to set priorities, how to make sure that the technologies and processes developed are appropriate for the intended users.

The recommended approach, a standard methodology used in systems engineering, 1 consists of five fundamental steps:

DOT itself is best placed to decide how to organize these steps internally, assign responsibilities for managing the various elements, and ensure their coordination with other agencies and with owners and operators throughout the transportation sector. As noted elsewhere in this report, no matter what approach is adopted, the crosscutting problem of improving security should not be divided up according to transportation modes. Rather, part of DOT's strategy should be to assign lead responsibility for security R&D to a single person or office. Other changes in organization or approach may also be necessary to implement certain elements of the strategy, such as the involvement of owners and operators. Beyond these recommendations, however, it would be outside this study's charge to take a position on organizational or procedural matters that are internal to DOT.

Defining the Problem and Objectives

The first step, defining the problem and objectives, is critical for everything that follows because it determines the criteria for evaluating potential R&D projects and making decisions. Because this is also the most difficult step, it should be given high priority and undertaken with great care. A common error is to pay insufficient attention to this step, or even ignore it completely, and jump directly to the identification of possible solutions. Perhaps thinking up potential solutions gives one a sense that rapid progress is being made and appears to provide more scope for creativity, but making that error can have serious consequences. That is why the main focus of this study is on developing a strategy for R&D rather than providing a specific agenda of R&D projects.

Defining the problem begins with identifying the needs that generated it, such as the need to prevent attacks or mitigate their impact, and describing the circumstances in which the problem exists. (The categorization of security needs will be used later to categorize R&D responses. See Box 3-1 .) In general terms,

Type of Attack Response Area Biological Chemical Cyber/C Explosive General Prevention . . . . . Mitigation . . . . . Monitoring . . . . . Recovery . . . . . Investigation . . . . . Systems Responses . . . . . This matrix is a framework for identifying and evaluating possible R&D topics. The columns represent the major types of attack and the rows the major categories of R&D response to improve security against those attacks. Note that transportation modes are intentionally not separated from each other. The following definitions of the response categories are explained further, with examples, in :   preventing an attacker from carrying out an attack.   reducing the harmful impact of an attack as it occurs and in its immediate aftermath.   recognizing that an attack is taking place, identifying its type and magnitude, and predicting and monitoring its development.   returning to normal operation after an attack is over.   identifying what happened in an attack, how it happened, and who was responsible.   ensuring that elements of the system function together properly and learning more about the problem to improve overall system effectiveness. Crosscutting needs, such as education, training, and technology transfer, do not appear in the matrix as separate categories. They should be integral components of all responses in all categories. the problem under consideration here is to construct a program of R&D that will improve the security of the surface transportation system. Describing this problem will require identifying technological and procedural security needs that are not currently being met. It will also require identifying a variety of other factors: the available funding, the nature of the threat, the relevant R&D already being conducted elsewhere, competing transportation goals such as openness and accessibility and efficiency, societal and legal constraints on approaches to security, and so on. Clear and accurate descriptions of these factors will provide useful limits on both the problem and its solution. The nature of the threat is an important aspect of the problem. Planning and carrying out an attack are costly to an attacker, both financially and in the risk of discovery. The size, complexity, and expense of each potential attack correspond to the attacker's risk and the resources required. One cannot necessarily predict an attacker's sensitivity to cost and risk or his level of motivation and resolve, but nevertheless, potential security countermeasures should be characterized according the level of attack they address and the level of risk that would remain after they have been deployed. The analysis should then proceed to establish objectives that will later serve as criteria for evaluating potential solutions. It may be helpful to picture these objectives as a hierarchical tree, with an overall system goal at the root of the tree, midlevel objectives branching out from it, and quantifiable measures of performance as the leaves. A key element should be a clear definition of what DOT seeks to accomplish by its R&D activities in surface transportation security. DOT's answer to this question should include the following system-level goals: a comprehensive understanding of the surface transportation system's point and systemic vulnerabilities to hostile attack a comprehensive understanding of existing security technologies and processes and how to apply them effectively to surface transportation the development of new security technologies and processes in response to specific, clearly identified vulnerabilities that are unique to surface transportation the implementation of effective security technologies and processes by surface transportation owners and operators in such a way that vulnerabilities to attack are reduced without significantly compromising other transportation goals Note that these objectives are likely to lead to a diverse program that includes many types of R&D: hardware, software, and system development; technology evaluation and testing; pilot programs; paper studies; and technology transfer. Implementing the R&D results will present many challenges, including cost, potential delays to passengers or cargo, privacy concerns, the balance of perceived benefits and perceived risks, and the balance between protecting against attacks and disrupting ongoing activities. Some of these factors, particularly cost and effectiveness, may be difficult to determine in advance—that is the nature of R&D—but objectives for them should nevertheless be considered as carefully as possible. For example, most people will never experience an actual incident, so it is highly desirable to build security measures into everyday operations as ''just a good way of doing business." Moreover, some security measures can have positive side effects on everyday operations, such as reducing thefts of cargo or losses of passenger baggage. The value of such dual-use benefits—which serve a business purpose, as well as promoting security, and thus turn security from a cost to an asset—should be recognized explicitly in setting objectives. Defining the Department of Transportation's Role An important factor in defining the objectives is a clear understanding of DOT's proper role. The federal government already conducts extensive R&D on counterterrorism and related aspects of infrastructure protection. This work is spread among a variety of agencies. The R&D resources of some of these agencies, such as the Departments of Defense and Energy, are much greater than those that DOT is likely to devote to security R&D for surface transportation. Nevertheless, DOT has an important role to play. Clearly identifying that role, a niche that capitalizes on other agencies' efforts without reinventing the wheel, will be critical to the effectiveness of DOT's program of R&D for surface transportation security. For each potential R&D project the question must be, Is DOT the right agency to address this particular aspect of the problem? Even in some important areas, where surface transportation is clearly vulnerable, the answer to this question will be No. For example, many elements of the surface transportation system are becoming increasingly automated and reliant on computers and communications for their continuing operation. As this trend continues and even accelerates, the transportation infrastructure will become increasingly vulnerable to a cyber attack on the telecommunications system. For example, many traffic operations centers in urban areas transmit control information and traffic data over ordinary telephone lines, so the security of the telephone network is certainly an important concern for surface transportation. But its importance is by no means unique to surface transportation, and so it would make little sense for DOT to take on this challenge. Similarly, hardening the structure of railway or bus stations against bomb blasts is probably not very different from hardening the structure of other public buildings, so general R&D on structural hardening may be best left to others. The objectives that DOT establishes, against which potential R&D projects in surface transportation security will be evaluated, must be able to identify such situations, which will not always be as clear cut as these examples. DOT does have a vital role to play. Within DOT, since the early 1970s the Federal Aviation Administration has conducted a significant and valuable program on weapon and explosives detection and other techniques to protect air transportation. Moreover, DOT has a long history of responding effectively to natural disasters, which are in many ways a similar problem to intentional attacks, though the emphasis of the response may be different. (For example, mitigation and rapid recovery are important in both cases, but security measures may also include prevention and forensic investigation.) DOT has a similarly valuable R&D role in protecting surface transportation against hostile attacks. One likely niche for DOT is evaluating transportation applications of technology developed elsewhere and helping to transfer promising technology to the transportation sector. For example, the Department of Defense, the Department of Energy, and others have already developed a number of systems for detecting chemical agents, but many challenging problems arise when these systems are used in enclosed spaces, such as subways. The rate of false alarms must be much lower in a subway than in many other places, even other large civilian facilities such as office buildings, because in those facilities alarms and evacuations cause only localized disruption. In contrast, even if only one subway station is affected directly, operations are likely to be disrupted system-wide. At the same time, the confined air in an urban subway is likely to be a very difficult background against which to identify hazardous chemicals. Thus perhaps DOT has an important role to play in evaluating the available products for subway use—are their false-alarm rates acceptably low despite the heavy chemical and biological background contained in ordinary subway air? This is just one example of the useful role DOT could play in collecting and disseminating guidelines on security best practices for surface transportation operators. DOT's role will also be influenced by the fact that some special characteristics of surface transportation systems may not be adequately addressed elsewhere. In the case of subways, for example, the piston action of trains as they pass through tunnels could provide attackers with a uniquely effective means of dispersing a chemical or biological agent throughout a city. DOT might therefore consider a variety of subway-specific R&D responses, such as developing airflow barriers, modeling aerosol dispersion in tunnels and ventilation systems (which is already being done at DOT and elsewhere), or measuring the baseline levels of chemical species and microbes already present in ordinary subway air. In the case of railway and bus stations, even though they may present no transportation-unique security issues in structural design, the potential for a bombing to disrupt the rest of the transportation system may suggest some important R&D topics for systems modeling. Or if there are aspects of R&D on bomb protecting structures that focus specifically on bridges and tunnels, two elements that are essentially unique to transportation, it might make sense for DOT to focus R&D in those areas. Setting Priorities A final vital aspect of setting objectives is the establishment of criteria for prioritizing R&D outcomes. A huge variety of security R&D projects can be imagined that would all be desirable and appropriate for DOT if infinite resources were available. How should DOT select from such a list? There are many possible criteria. One obvious approach is to give the most likely threats the highest priority. This would require an assessment of risk, beyond the assessment of vulnerability discussed in Chapter 2 . For example, domestic "patriot" or "militia" groups have specifically advocated attacks against the rail infrastructure. If that threat is considered credible and serious, perhaps an emphasis on protecting rail transport might be appropriate. But this approach is not enough. In many cases, if not most cases, reliable threat information is simply not available. Even the best intelligence efforts have trouble identifying threats from lone individuals, and in any case, the greatest threat is likely to be unanticipated. Moreover, a security R&D program must look toward future needs. Threats change much more quickly than vulnerabilities. Because R&D results take time to produce and implement, DOT's program must provide for the likelihood that today's threat will not be the same as tomorrow's. This suggests a bias toward solutions with broad applicability. Yes, it is essential to continue the ongoing efforts by various agencies to develop better threat information, and any threat information that is available would certainly be an important input to the process of R&D prioritization, but other approaches are also needed. The objectives of an R&D strategy should include factors based on the answers to such questions as these: If a threat does materialize, how serious is its potential impact on people, property, and society? Would the consequences be so disastrous that we must not ignore the threat even if it appears highly unlikely? Where can additional R&D resources result in the most improvement per dollar? Is the rate of progress in this area limited by the state of technology or the availability of funding? Is this an area where a modest R&D investment could make a significant advance toward solving a problem completely? Would R&D in this area have other benefits (such as improving security against theft or robbery, or preventing accidents) even if the threat of a hostile attack never materialized? Dual-use results might have a significantly greater chance of being accepted and implemented by transportation owners and operators. Would R&D in this area respond to just one type of vulnerability, or many? What related R&D topics are other agencies investigating that DOT could use to increase the return on its own (probably modest) R&D resources? What R&D topics are other agencies not investigating, and do they include transportation-specific needs that will be ignored if DOT does nothing? Are there useful technologies, already developed by other agencies, that require integration before being transfered to the transportation sector? Based on the answers to the first question, DOT might choose to prioritize R&D opportunities by the magnitude of the vulnerability they would address. Or based on answers to the second and third questions, DOT might choose to prioritize R&D projects according to inherent "ripeness for progress," perhaps as determined by peer review in the R&D community. Choices such as these are part of the process of defining the problem and setting objectives. Identifying Potential Alternatives The second step of the recommended strategy is to examine as wide a range of potential solutions as possible. This study has intentionally avoided dividing its subject matter up according to the various modes of transportation. The process DOT chooses for identifying potential R&D projects should do the same. Although most transportation-related R&D is organized and funded according to transportation mode, there is so much synergy and overlap among the security concerns of the different modes that such a division in this case would be artificial and deleterious. Instead, DOT should categorize potential R&D topics according to a matrix like the one shown in Box 3-1 , with each element of the matrix representing a combination of a particular type of attack (without regard to the type of target) and a particular type of response. This approach has several attractions, both for considering processes and strategies and for considering individual R&D projects. First, it ensures completeness; because each column describes a threat and each row a response, one can quickly evaluate the coverage of threats with research in each response area. Second, it provides a flexible way to define both programs (strategic plans) and projects (tactical plans). Third, it can be used to assess quickly the technological status of existing responses to various threats. Fourth, it provides a convenient communications vehicle because of its simple two-dimensional structure. Finally, it is both stable and robust; the row and column categories will remain relevant for defining research strategies and tactics for the foreseeable future, and when changes do occur they can be easily accommodated by adding rows or columns, with no need to reorganize what was there before. Each proposed alternative must be described in sufficient detail that it can be evaluated against the objectives. Essentially this means that, for each potential R&D project, all relevant consequences should be described concretely—not only security consequences, but also more general consequences, such as the cost and practicality of implementation, the effect on travel time and convenience, potential legal or privacy concerns, and so on. At a minimum, potential projects should be described in sufficient detail that they can be understood clearly by whoever would ultimately have to implement them. (Too much detail, of course, could delay the whole exercise and increase its cost and complexity. Striking an appropriate balance, however, should not be too difficult.) Evaluating Alternatives In the evaluation step of the strategy, each alternative should be formally measured against the objectives defined at the beginning of the process. That is, once DOT has systematically identified a wide variety of potential R&D projects, it must assess the impact each would have if it were successful and its results were implemented. Here again, impact means not only the impact on security, but also the broader impact on the transportation system and society as a whole. For example, the evaluation in this step should include trade-offs such as the balance of security against cost and inconvenience. A sensitivity analysis should be included to identify how changes in assumptions would change the evaluation. Establishing the capability to conduct such an evaluation is not a simple task. For example, one of the criteria developed during the problem definition phase is sure to be the specificity of the project to DOT's unique role and responsibilities. Evaluating projects against this criterion will clearly require effective coordination and information sharing between DOT and other federal and state agencies. Because of the wide range of work being done and the variety of agencies involved, this will be a significant challenge. The Critical Infrastructure Coordinating Group's interagency working group on R&D is one important mechanism for coordination, and DOT should continue to place a high priority on its participation in that group. In addition, the coordinating role of the Technical Support Working Group should be very useful, although that organization is not involved in all projects. The committee understands that the Federal Aviation Administration and the DOT Office of Intelligence and Security participate regularly in Technical Support Working Group subgroups. That participation should continue, and if possible, other DOT agencies involved in security R&D for surface transportation should also participate. There are a variety of ways DOT can improve its capability to evaluate the priority-setting criteria discussed above. For example, it might choose to intensify its efforts to develop threat intelligence. Or (as suggested in Chapter 2 ) it might conduct more analysis of past incidents of various types to assess the effectiveness of various alternatives. Or it might convene workshops to elicit expert technical input on the probable success or effectiveness of various R&D approaches. (These workshops could also be a good way to involve owners and operators.) Some form of modeling or simulation is often used in evaluating complex situations. Evaluation has received more attention in the systems engineering literature than any other step of the recommended strategy, and that attention has generated considerable controversy because sophisticated techniques have often been applied to problems with poorly specified or inconsistent objectives. Sophisticated evaluation techniques do not guarantee good results unless the basic description of the problem is clear, consistent, and complete. Deciding on a Course of Action The fourth step, deciding on a course of action, means more than just selecting a portfolio of R&D projects. For example, a potential project might be evaluated as important and likely to succeed but not appropriate for DOT. In that case, the right course of action would involve coordinating with other agencies to make sure they are addressing the problem and are aware of its transportation-specific aspects. DOT must be able to tell other agencies that "this needs to be done, but we aren't the ones to do it." DOT's overall R&D strategy for surface transportation security should include planning for this situation as well as planning for DOT itself to conduct R&D. Decision making has received considerable attention in the systems-engineering literature. Although the evaluation process involves rating each alternative against each objective, these ratings usually do not produce a unique solution. Usually multiple objectives compete with each other, and no single alternative is dominant on every scale. A decision model is therefore necessary to rank the alternatives. Theoretically, the soundest approach is based on utility functions (Keeney and Raiffa, 1976), but this approach is too expensive and time-consuming for most organizations. The simplest alternative is to provide managers with graphical displays of the ratings of each alternative against each objective and allow them to make the final selection. Other approaches assign a simple weight to each objective and provide a single overall score for each alternative. Clearly DOT's choice of a decision model should depend on the resources available and the importance attached to each decision. Implementing the Plan The final step is implementation, which may involve communicating decisions at various levels inside and outside the government, developing budgets and schedules, obtaining resources, and assigning responsibilities. Note that for surface transportation security, implementation means much more than instituting the R&D program. The real goal, of course, is to ensure that security solutions are implemented in the surface transportation system, not just to develop technologies and processes for their own sake. Thus implementing the R&D plan will have to include ensuring the implementation of R&D results. Accomplishing that goal will require commitment by high-level management, incorporation of R&D results into ongoing agency programs, and user acceptance of the technologies and processes developed. It will also depend on raising the transportation community's awareness of how new approaches and techniques can improve security. Buy-in within DOT, both by top-level officials and by program managers throughout the department, will be essential for R&D investments to be made wisely and their results widely disseminated. Buy-in by state and local transportation agencies will be equally important. Finally, and perhaps most important, success will depend on ensuring that transportation system owners and operators endorse and help shape DOT's R&D program. Involving Owners and Operators Involving owners and operators in the R&D process is essential to achieving their acceptance of its results and is therefore critical to the success of the strategy's implementation step. DOT should place considerable emphasis on this involvement. Owners and operators can provide a critical, real-world perspective on the balance of costs and benefits, on issues involving human factors, on the dynamics of the industry, on how these factors may influence a technology's acceptance, and on how new technologies can be managed successfully in the context of the existing infrastructure. All these considerations are important elements in defining R&D priorities and determining a concept's potential for successful implementation. One mechanism for involving owners and operators is to hold regular workshops, review panels, and other meetings. A model for this approach could be the workshop on chemical and biological threats to transportation held in September 1998 at the DOT Volpe Center in Cambridge, Massachusetts, and the planned follow-on symposium with broader participation. Similar activities could be undertaken in other technical areas, such as cyber security or protection against bomb blasts. Another model could be the Gordon Research Conference on Illicit Substance Detection, held in August 1998, which also focused on chemical and biological attacks. A valuable feature of that meeting was the opportunity it provided for leading researchers to come together with those whose main concerns are policy making and implementation. Interactions like these build a strong foundation for future information sharing and improve researchers' understanding of government and industry needs. Strong industrial participation is particularly important for outcomes to be in owners' and operators' best interests, as well as the national interest. Strong participation by state departments of transportation would help convince owners and operators of the seriousness of the issues and thus encourage implementation. Technology transfer should be a consideration from the very beginning of each project. Potential technology users should be involved in all phases of the program, from the planning and development of fundamental strategy to the selection and continuing oversight of individual projects. This bottom-up approach will help ensure that the projects selected reflect a realistic view of the operational situation in the real world of surface transportation. For example, in a major ferry operation the turnaround time is often very rapid, with hundreds of vehicles and people being unloaded and loaded in a period of perhaps 15 minutes. A vehicle or baggage scanning system designed to detect explosives would be impractical for such an application if it introduced even a small delay in the time required to board each vehicle or passenger. Involving someone with direct experience of ferry operations would help to identify such problems early in the process. Similarly, transit systems and parking facilities have ticket turnstiles and control gates that single out individual travelers or vehicles. Perhaps chemical sensing systems could be incorporated into this equipment to alert security personnel, but unless operators were involved in the development process, it would be easy to develop a product that no one would use. (Would maintenance be practical? Would the system cause delays for travelers? What should the response be in the event of an alarm, and would the false-alarm rate be acceptably low ?) Examples can easily be imagined for each mode of transportation and each type of potential R&D response. DOT should undertake an aggressive, ongoing campaign to educate transportation owners and operators about threats, vulnerabilities, and R&D results. The outreach effort could be generic, or separate teams could be assembled to specialize in the concerns of urban transit, say, or pipelines or railroads. Incidents particularly relevant to the target audience (such as the sarin attack in the Tokyo subway, for a transit audience) could be used to motivate operators to participate. Feedback from the campaign would help DOT identify technological and procedural security needs and useful areas for further R&D, as well as how operator perceptions and attitudes are likely to affect implementation. This would help DOT keep its R&D strategy dynamic and responsive in the long term. Moreover, the resulting heightened awareness of security issues could encourage operators to increase their security efforts using existing techniques, even before any R&D came to fruition. Active outreach would have several side benefits. First, by creating a group of interested stakeholders out in the field, it would establish a pool of likely early adopters or beta-testers of new systems resulting from R&D. Second, by building relationships with owners and operators, it would facilitate the provision of other security-related support, such as new equipment or training. Last but not least, by building wider awareness and support, it could strengthen DOT's argument for increasing the resources allocated to security R&D. DOT should also consider outreach and education directed toward users of transportation services. Ultimately, travelers and shippers will be the ones who decide whether to pay higher prices so that owners and operators can recover the cost of added security measures. Outreach to users would have to be designed carefully to avoid either undermining public confidence in the safety and security of the current surface transportation system or desensitizing users to security concerns by "crying wolf" when actual incidents are admittedly infrequent. Involving owners and operators in the R&D process may also build acceptance of the reality of the threat that the R&D results are designed to protect against. Many surface transportation operators believe that hostile attacks against their facilities are unlikely, and at least for most of them, this perception is probably correct. Persuading them that security should be a real concern and that security measures will be cost-effective for their facilities will be a challenge (see Box 3-2 ). Increased dissemination of intelligence information to major players in the surface transportation industry could increase their acceptance of the need for new technologies and processes, but direct involvement is key. All these efforts to involve owners and operators must be taken seriously as a fundamental part of the R&D strategy. Stakeholders should be considered more than just a source of input and ideas. They should have a real say in which R&D projects are undertaken and how they are conducted. Only genuine, two-way communication will ensure that security concerns become an integral part of system design and day-to-day operations. Protecting Sensitive Information As DOT builds up its R&D in surface transportation security, it will encounter a growing need to protect information that is sensitive, but not classified. For example, increased dissemination of intelligence to transportation operators, as recommended above, may be problematic unless access to that intelligence can be controlled. This concern is not reflected directly in the recommended five stage strategic process, but resolving it is vital so that the process can have full access to relevant information sources and result in effective implementation. Indeed, this issue arose several times just during the course of this study. Existing guidelines for the release of information provide no mechanism for solving this problem. For example, DOT might wish to provide sensitive information to a variety of people with legitimate and constructive reasons to use it, such as individuals responsible for security in major transportation companies—or for that matter, the committee that prepared this report. Currently, however, unless the information is actually classified, there is no legal means to do this without also making it available to the public at large under the requirements of laws such as the Freedom of Information Act. Some agencies have already resolved this dilemma. For example, the Federal Aviation Administration, which has been struggling with security issues for much longer than have DOT's surface transportation components, has recourse to a regulation known as 14 CFR 191, which protects information resulting from R&D on aviation security. Agency officials can disseminate "191" information to appropriate individuals within airlines, airports, security equipment manufacturers, local law enforcement and emergency services organizations, security policy analysts, and so on without rendering it subject to general public disclosure. As DOT expands its R&D activities in surface transportation security, information protection is likely to become increasingly worrisome. DOT should consider urging the Congress to provide legal authority for a regulation similar to 14 CFR 191. The committee visited several surface transportation facilities during the course of this study. A common characteristic of these sites was their low level of security against hostile attacks. This is generally the situation except at ports of entry, where the Immigration and Naturalization Service and the Customs Service have placed terrorism higher on their agenda. The infrastructure operators with whom the committee spoke during the site visits perceived a low level of threat. They were primarily concerned about theft or robbery of cash, personal property, and cargo. Where the committee did encounter airport-style security equipment—at the passenger embarkation point for a cruise ship—it was applied inconsistently. Passengers were made to walk through metal detectors and their hand luggage was x-rayed, but their checked luggage was not examined at all, even though it would be freely available to them once they were on board. The gap between today's level of security and even a modest level of protection against hostile attack appears to be wide indeed. Based on this experience, it appears that operators' perceptions of threat are likely to have a major impact on the deployment of any products of the R&D described in this report. Governments may mandate security measures, but these requirements have historically followed incidents rather than anticipated them. In the absence of legislation, operators will deploy only the security measures they believe to be cost effective. The importance of cost effectiveness for owners and operators cannot be overstated. This is not an abstract or hypothetical concern. For example, throughout the 1980s, sponsors of research on computer and network security funded and encouraged the development of technologies that were intended to be highly effective against hostile attacks on computers and networks. However, the funding agencies were unable to convince private-sector suppliers and users of computers and networks that the threat justified integration of these technologies into high-volume products or their application to commercial or government systems. As a result, the research funds expended had little direct impact on the security of real systems (NRC, 1998). DOT should not follow the same path by funding security solutions that are not supported by owners and operators and thus are never deployed. One way to help ensure that R&D expenditures ultimately yield real security improvements is to support dual-use technologies that can address both hostile threats against infrastructure and other disruptions, such as robberies, accidents, or natural disasters. An example of this effect is the experience of commercial airlines, for which the expense and complication of security-driven requirements for baggage tracking and passenger identification have resulted in less luggage lost and fewer illegal transfers of nontransferable tickets. Building a solid strategic basis is the most important task at this early stage in DOT's establishment of an R&D program for surface transportation security. That strategy should be a systematic process consisting of five fundamental steps: The implementation of this strategy should incorporate the following key features: Because improving security is a crosscutting problem, DOT should not break up its efforts in this area according to transportation modes. DOT should clearly identify and understand its role in security R&D and how that role meshes with work being done by other agencies. As a framework for identifying and evaluating potential R&D topics, DOT should categorize topics according to the type of attack to which they respond and the type of response to which they are directed: prevention, mitigation, monitoring, recovery, investigation, or systems. DOT should make strenuous efforts to increase the involvement of transportation owners and operators. Their serious involvement in all stages of the program will be critical to successful implementation. To meet the growing need to protect information that is sensitive, but not classified, DOT should consider urging the Congress to provide legal authority similar to the regulation 14 CFR 191, which protects information on aviation security. The surface transportation system is vital to our nation's economy, defense, and quality of life. Because threats against the system have hitherto been perceived as minor, little attention has been paid to its security. But the world is changing, as highlighted by dramatic incidents such as the terrorist chemical attack on the Tokyo subway in 1995. As a consequence, security concerns are now attracting more attention—appropriately so, for the threat is real, and responding to it is hard. Although the surface transportation system is remarkably resilient, it is also open and decentralized, making a security response challenging. Research and development can contribute to that response in important ways. Some important themes emerge from analysis of this strategy. First, a dual-use approach, in which security objectives are furthered at the same time as other transportation goals, can encourage the implementation of security technologies and processes. Second, modeling could be used more to develop a better understanding of the scope of the security problem. Third, DOT can play an important role in developing and disseminating information about best practices that use existing technologies and processes, including low-technology alternatives. Finally, security should be considered as part of a broader picture, not a wholly new and different problem but one that is similar and closely connected to the transportation community's previous experience in responding to accidents, natural disasters, and hazardous materials. READ FREE ONLINE Welcome to OpenBook! You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website. Do you want to take a quick tour of the OpenBook's features? Show this book's table of contents , where you can jump to any chapter by name. ...or use these buttons to go back to the previous chapter or skip to the next one. 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The essential components of a successful L&D strategy Over the past decade, the global workforce has been continually evolving because of a number of factors. An increasingly competitive business landscape, rising complexity, and the digital revolution are reshaping the mix of employees. Meanwhile, persistent uncertainty, a multigenerational workforce, and a shorter shelf life for knowledge have placed a premium on reskilling and upskilling. The shift to a digital, knowledge-based economy means that a vibrant workforce is more important than ever: research suggests that a very significant percentage of market capitalization in public companies is based on intangible assets—skilled employees, exceptional leaders, and knowledge. 1 Intangible Asset Market Value Study, Ocean Tomo. Learning and development—From evolution to revolution We began in 2014 by surveying 1,500 executives about capability building. In 2016, we added 120 L&D leaders at 91 organizations to our database, gathering information on their traditional training strategies and aspirations for future programs. We also interviewed 15 chief learning officers or L&D heads at major companies. Historically, the L&D function has been relatively successful in helping employees build skills and perform well in their existing roles. The main focus of L&D has been on upskilling. However, the pace of change continues to accelerate; McKinsey research estimates that as many as 800 million jobs could be displaced by automation by 2030. Employee roles are expected to continue evolving, and a large number of people will need to learn new skills to remain employable. Unsurprisingly, our research confirmed our initial hypothesis: corporate learning must undergo revolutionary changes over the next few years to keep pace with constant technological advances. In addition to updating training content, companies must increase their focus on blended-learning solutions, which combine digital learning, fieldwork, and highly immersive classroom sessions. With the growth of user-friendly digital-learning platforms, employees will take more ownership of their professional development, logging in to take courses when the need arises rather than waiting for a scheduled classroom session. Such innovations will require companies to devote more resources to training: our survey revealed that 60 percent of respondents plan to increase L&D spending over the next few years, and 66 percent want to boost the number of employee-training hours. As they commit more time and money, companies must ensure that the transformation of the L&D function proceeds smoothly. All of these trends have elevated the importance of the learning-and-development (L&D) function. We undertook several phases of research to understand trends and current priorities in L&D (see sidebar, “Learning and development—From evolution to revolution”). Our efforts highlighted how the L&D function is adapting to meet the changing needs of organizations, as well as the growing levels of investment in professional development. To get the most out of investments in training programs and curriculum development, L&D leaders must embrace a broader role within the organization and formulate an ambitious vision for the function. An essential component of this effort is a comprehensive, coordinated strategy that engages the organization and encourages collaboration. The ACADEMIES© framework, which consists of nine dimensions of L&D, can help to strengthen the function and position it to serve the organization more effectively. The strategic role of L&D One of L&D’s primary responsibilities is to manage the development of people—and to do so in a way that supports other key business priorities. L&D’s strategic role spans five areas (Exhibit 1). 2 Nick van Dam, 25 Best Practices in Learning & Talent Development , second edition, Raleigh, NC: Lulu Publishing, 2008. Attract and retain talent. Traditionally, learning focused solely on improving productivity. Today, learning also contributes to employability. Over the past several decades, employment has shifted from staying with the same company for a lifetime to a model where workers are being retained only as long as they can add value to an enterprise. Workers are now in charge of their personal and professional growth and development—one reason that people list “opportunities for learning and development” among the top criteria for joining an organization. Conversely, a lack of L&D is one of the key reasons people cite for leaving a company. Develop people capabilities. Human capital requires ongoing investments in L&D to retain its value. When knowledge becomes outdated or forgotten—a more rapid occurrence today—the value of human capital declines and needs to be supplemented by new learning and relevant work experiences. 3 Gary S. Becker, “Investment in human capital: A theoretical analysis,” Journal of Political Economy , 1962, Volume 70, Number 5, Part 2, pp. 9–49, jstor.org. Companies that make investments in the next generation of leaders are seeing an impressive return. Research indicates that companies in the top quartile of leadership outperform other organizations by nearly two times on earnings before interest, taxes, depreciation, and amortization (EBITDA). Moreover, companies that invest in developing leaders during significant transformations are 2.4 times more likely to hit their performance targets . 4 “ Economic Conditions Snapshot, June 2009: McKinsey Global Survey results ,” June 2009. Create a values-based culture. As the workforce in many companies becomes increasingly virtual and globally dispersed, L&D can help to build a values-based culture and a sense of community. In particular, millennials are particularly interested in working for values-based, sustainable enterprises that contribute to the welfare of society. Build an employer brand. An organization’s brand is one of its most important assets and conveys a great deal about the company’s success in the market, financial strengths, position in the industry, and products and services. Investments in L&D can help to enhance company’s brand and boost its reputation as an “employer of choice.” As large segments of the workforce prepare to retire, employers must work harder to compete for a shrinking talent pool. To do so, they must communicate their brand strength explicitly through an employer value proposition. Motivate and engage employees. The most important way to engage employees is to provide them with opportunities to learn and develop new competencies. Research suggests that lifelong learning contributes to happiness. 5 John Coleman, “Lifelong learning is good for your health, your wallet, and your social life,” Harvard Business Review , February 7, 2017, hbr.org. When highly engaged employees are challenged and given the skills to grow and develop within their chosen career path, they are more likely to be energized by new opportunities at work and satisfied with their current organization. The L&D function in transition Over the years, we have identified and field-tested nine dimensions that contribute to a strong L&D function. We combined these dimensions to create the ACADEMIES framework, which covers all aspects of L&D functions, from setting aspirations to measuring impact (Exhibit 2). Although many companies regularly execute on several dimensions of this framework, our recent research found that only a few companies are fully mature in all dimensions. 1. Alignment with business strategy One of an L&D executive’s primary tasks is to develop and shape a learning strategy based on the company’s business and talent strategies. The learning strategy seeks to support professional development and build capabilities across the company, on time, and in a cost-effective manner. In addition, the learning strategy can enhance the company culture and encourage employees to live the company’s values. For many organizations, the L&D function supports the implementation of the business strategy. For example, if one of the business strategies is a digital transformation, L&D will focus on building the necessary people capabilities to make that possible. Every business leader would agree that L&D must align with a company’s overall priorities. Yet research has found that many L&D functions fall short on this dimension. Only 40 percent of companies say that their learning strategy is aligned with business goals. 6 Human Capital Management Excellence Conference 2018, Brandon Hall Group. For 60 percent, then, learning has no explicit connection to the company’s strategic objectives. L&D functions may be out of sync with the business because of outdated approaches or because budgets have been based on priorities from previous years rather than today’s imperatives, such as a digital transformation. Would you like to learn more about the McKinsey Academy ? To be effective, L&D must take a hard look at employee capabilities and determine which are most essential to support the execution of the company’s business strategy. L&D leaders should reevaluate this alignment on a yearly basis to ensure they are creating a people-capability agenda that truly reflects business priorities and strategic objectives. 2. Co-ownership between business units and HR With new tools and technologies constantly emerging, companies must become more agile, ready to adapt their business processes and practices. L&D functions must likewise be prepared to rapidly launch capability-building programs—for example, if new business needs suddenly arise or staff members require immediate training on new technologies such as cloud-based collaboration tools. L&D functions can enhance their partnership with business leaders by establishing a governance structure in which leadership from both groups share responsibility for defining, prioritizing, designing, and securing funds for capability-building programs. Under this governance model, a company’s chief experience officer (CXO), senior executives, and business-unit heads will develop the people-capability agenda for segments of the enterprise and ensure that it aligns with the company’s overall strategic goals. Top business executives will also help firmly embed the learning function and all L&D initiatives in the organizational culture. The involvement of senior leadership enables full commitment to the L&D function’s longer-term vision. 3. Assessment of capability gaps and estimated value After companies identify their business priorities, they must verify that their employees can deliver on them—a task that may be more difficult than it sounds. Some companies make no effort to assess employee capabilities, while others do so only at a high level. Conversations with L&D, HR, and senior executives suggest that many companies are ineffective or indifferent at assessing capability gaps, especially when it comes to senior leaders and midlevel managers. The most effective companies take a deliberate, systematic approach to capability assessment. At the heart of this process is a comprehensive competency or capability model based on the organization’s strategic direction. For example, a key competency for a segment of an e-commerce company’s workforce could be “deep expertise in big data and predictive analytics.” After identifying the most essential capabilities for various functions or job descriptions, companies should then assess how employees rate in each of these areas. L&D interventions should seek to close these capability gaps. 4. Design of learning journeys Most corporate learning is delivered through a combination of digital-learning formats and in-person sessions. While our research indicates that immersive L&D experiences in the classroom still have immense value, leaders have told us that they are incredibly busy “from eight to late,” which does not give them a lot of time to sit in a classroom. Furthermore, many said that they prefer to develop and practice new skills and behaviors in a “safe environment,” where they don’t have to worry about public failures that might affect their career paths. Traditional L&D programs consisted of several days of classroom learning with no follow-up sessions, even though people tend to forget what they have learned without regular reinforcement. As a result, many L&D functions are moving away from stand-alone programs by designing learning journeys—continuous learning opportunities that take place over a period of time and include L&D interventions such as fieldwork, pre- and post-classroom digital learning, social learning, on-the-job coaching and mentoring, and short workshops. The main objectives of a learning journey are to help people develop the required new competencies in the most effective and efficient way and to support the transfer of learning to the job. 5. Execution and scale-up An established L&D agenda consists of a number of strategic initiatives that support capability building and are aligned with business goals, such as helping leaders develop high-performing teams or roll out safety training. The successful execution of L&D initiatives on time and on budget is critical to build and sustain support from business leaders. L&D functions often face an overload of initiatives and insufficient funding. L&D leadership needs to maintain an ongoing discussion with business leaders about initiatives and priorities to ensure the requisite resources and support. Many new L&D initiatives are initially targeted to a limited audience. A successful execution of a small pilot, such as an online orientation program for a specific audience, can lead to an even bigger impact once the program is rolled out to the entire enterprise. The program’s cost per person declines as companies benefit from economies of scale. 6. Measurement of impact on business performance A learning strategy’s execution and impact should be measured using key performance indicators (KPIs). The first indicator looks at business excellence: how closely aligned all L&D initiatives and investments are with business priorities. The second KPI looks at learning excellence: whether learning interventions change people’s behavior and performance. Last, an operational-excellence KPI measures how well investments and resources in the corporate academy are used. Accurate measurement is not simple, and many organizations still rely on traditional impact metrics such as learning-program satisfaction and completion scores. But high-performing organizations focus on outcomes-based metrics such as impact on individual performance, employee engagement, team effectiveness, and business-process improvement. We have identified several lenses for articulating and measuring learning impact: Strategic alignment: How effectively does the learning strategy support the organization’s priorities? Capabilities: How well does the L&D function help colleagues build the mind-sets, skills, and expertise they need most? This impact can be measured by assessing people’s capability gaps against a comprehensive competency framework. Organizational health: To what extent does learning strengthen the overall health and DNA of the organization? Relevant dimensions of the McKinsey Organizational Health Index can provide a baseline. Individual peak performance: Beyond raw capabilities, how well does the L&D function help colleagues achieve maximum impact in their role while maintaining a healthy work-life balance? Access to big data provides L&D functions with more opportunities to assess and predict the business impact of their interventions. 7. Integration of L&D interventions into HR processes Just as L&D corporate-learning activities need to be aligned with the business, they should also be an integral part of the HR agenda. L&D has an important role to play in recruitment, onboarding, performance management, promotion, workforce, and succession planning. Our research shows that at best, many L&D functions have only loose connections to annual performance reviews and lack a structured approach and follow-up to performance-management practices. L&D leadership must understand major HR management practices and processes and collaborate closely with HR leaders. The best L&D functions use consolidated development feedback from performance reviews as input for their capability-building agenda. A growing number of companies are replacing annual performance appraisals with frequent, in-the-moment feedback. 7 HCM outlook 2018 , Brandon Hall Group. This is another area in which the L&D function can help managers build skills to provide development feedback effectively. Elevating Learning & Development: Insights and Practical Guidance from the Field Another example is onboarding. Companies that have developed high-impact onboarding processes score better on employee engagement and satisfaction and lose fewer new hires. 8 HCM outlook 2018 , Brandon Hall Group. The L&D function can play a critical role in onboarding—for example, by helping people build the skills to be successful in their role, providing new hires with access to digital-learning technologies, and connecting them with other new hires and mentors. 8. Enabling of the 70:20:10 learning framework Many L&D functions embrace a framework known as “70:20:10,” in which 70 percent of learning takes place on the job, 20 percent through interaction and collaboration, and 10 percent through formal-learning interventions such as classroom training and digital curricula. These percentages are general guidelines and vary by industry and organization. L&D functions have traditionally focused on the formal-learning component. Today, L&D leaders must design and implement interventions that support informal learning, including coaching and mentoring, on-the-job instruction, apprenticeships, leadership shadowing, action-based learning, on-demand access to digital learning, and lunch-and-learn sessions. Social technologies play a growing role in connecting experts and creating and sharing knowledge. 9. Systems and learning technology applications The most significant enablers for just-in-time learning are technology platforms and applications. Examples include next-generation learning-management systems, virtual classrooms, mobile-learning apps, embedded performance-support systems, polling software, learning-video platforms, learning-assessment and -measurement platforms, massive open online courses (MOOCs), and small private online courses (SPOCs), to name just a few. The learning-technology industry has moved entirely to cloud-based platforms, which provide L&D functions with unlimited opportunities to plug and unplug systems and access the latest functionality without having to go through lengthy and expensive implementations of an on-premises system. L&D leaders must make sure that learning technologies fit into an overall system architecture that includes functionality to support the entire talent cycle, including recruitment, onboarding, performance management, L&D, real-time feedback tools, career management, succession planning, and rewards and recognition. L&D leaders are increasingly aware of the challenges created by the fourth industrial revolution (technologies that are connecting the physical and digital worlds), but few have implemented large-scale transformation programs. Instead, most are slowly adapting their strategy and curricula as needed. However, with technology advancing at an ever-accelerating pace, L&D leaders can delay no longer: human capital is more important than ever and will be the primary factor in sustaining competitive advantage over the next few years. The leaders of L&D functions need to revolutionize their approach by creating a learning strategy that aligns with business strategy and by identifying and enabling the capabilities needed to achieve success. This approach will result in robust curricula that employ every relevant and available learning method and technology. The most effective companies will invest in innovative L&D programs, remain flexible and agile, and build the human talent needed to master the digital age. These changes entail some risk, and perhaps some trial and error, but the rewards are great. A version of this chapter was published in TvOO Magazine in September 2016. It is also included in Elevating Learning & Development: Insights and Practical Guidance from the Field , August 2018. Stay current on your favorite topics Jacqueline Brassey is director of Enduring Priorities Learning in McKinsey’s Amsterdam office, where Nick van Dam is an alumnus and senior adviser to the firm as well as professor and chief of the IE University (Madrid) Center for Learning Innovation; Lisa Christensen is a senior learning expert in the San Francisco office. Explore a career with us Related articles. Seven essential elements of a lifelong-learning mind-set Putting lifelong learning on the CEO agenda Implement OKRs CEO/CXO Business Coaching with OKRs Agile Performance Management OKR Advisory OKRs for VCs OKR Certification OKR Foundation Course OKRs Library OKR Examples Across 30+ Industries OKR Examples of 45+ Functions OKR Glossary OKR Software Marketplace Become a Partner 10 Remarkable OKR Examples in Research & Development 08 Jun, 2023 Research and Development (R&D) is a crucial function for organizations aiming to innovate and stay ahead in competitive markets. Objectives and Key Results (OKRs) can provide a structured framework to drive performance and success in R&D initiatives. Here are ten remarkable OKR examples in Research & Development: 1. Accelerating Product Innovation Objective : Drive the development of new and innovative products. Key Results: Launch 5 new products or product features within the next year. Increase the percentage of revenue generated from new products by 10%. Obtain 3 patents or intellectual property registrations. 2. Improving Research Efficiency Objective : Enhance the efficiency and effectiveness of the research process. Reduce the average time required to bring a new concept from ideation to prototype by 20%. Increase the success rate of research projects, measured by 70% of projects meeting predefined milestones. Implement a research collaboration platform and achieve 40% adoption rate. 3. Strengthening Intellectual Property Strategy Objective : Protect and leverage intellectual property assets effectively. Conduct 1 comprehensive intellectual property audit and identify 5 opportunities for IP portfolio optimization. Increase the number of licensing or partnership agreements based on intellectual property assets by 30%. Achieve a 20% reduction in intellectual property infringement incidents. 4. Enhancing Cross-Functional Collaboration Objective : Foster collaboration between R&D and other departments or teams. Implement cross-functional projects or initiatives involving R&D and at least 3 other departments. Conduct regular knowledge-sharing sessions between R&D and other teams, resulting in 60% increase in cross-functional understanding. Achieve a 70% improvement in the integration of customer feedback into the R&D process. 5. Increasing Research Funding Objective : Secure additional funding for research and development activities. Obtain $1000 of funding from external sources, such as grants, partnerships, or investments. Increase the success rate of research funding applications by 80%. Develop a strategy for diversifying funding sources and implement 10 initiatives within the next year. 6. Enhancing Product Testing and Validation Objective : Improve the rigor and effectiveness of product testing and validation processes. Implement standardized testing protocols for 100% of new products or major product revisions. Achieve a customer satisfaction rating of 9 based on product quality and performance. Reduce the number of product recalls or quality incidents by 60%. 7. Enhancing Research Collaboration with External Partners Objective : Strengthen collaborative partnerships with external research organizations or institutions. Establish 7 strategic partnerships or collaborations with external research entities. Increase the number of joint research publications or patents by 50%. Implement 1 process for evaluating and selecting 7 external research partners based on predefined criteria. 8. Driving Technology Transfer and Commercialization Objective : Facilitate the transfer of R&D outputs into commercial products or processes. Develop 3 technology transfer projects resulting in successful commercialization. Increase the percentage of revenue generated from technology transfer projects by 15%. Implement 1 process for assessing the commercial viability of R&D projects at predefined milestones. 9. Enhancing R&D Talent Development Objective : Foster the growth and development of R&D professionals. Implement 1 mentorship program for R&D team members by the next quarter. Provide training on emerging research methodologies or technologies to 90% of the team within the next year. Achieve a 85% employee satisfaction rate with career development initiatives within the next six months. 10. Improving R&D Project Management Objective : Enhance project management practices to ensure timely and successful project completion. Implement a standardized project management framework for 100% of R&D projects. Improve project delivery time by 20% compared to the previous year. Achieve a 30% reduction in project overruns or delays. By adopting these OKR examples in Research & Development, organizations can drive innovation, improve research efficiency, protect intellectual property, foster collaboration, secure funding, and develop R&D talent. These strategic objectives and key results provide a roadmap for organizations seeking to excel in their R&D function and drive long-term success. When looking to set OKRs, it’s natural to want examples to ignite the thought process or simply compare yours to OKR Examples. Check out our compendium of OKR Examples here . Explore Our Range of Services Bring OKRs (Objectives and Key Results) to your organisation with our tried & tested OKR Framework. OKR International’s highly acclaimed Certified OKR Practitioner Program is the first and only OKR accreditation endorsed by ICF & HRCI for continuing education units. OKR International helps leaders create the alignment, engagement and result orientation needed for growth by offering OKR Advisory services. Latest Posts Micros OKRs – Examples OKR Coach Certification on 25-26 Oct. 2024 How to Select the Right OKR Software? How To Get Buy-In for OKRs? Self-Paced Online Learning Gain essential knowledge and set yourself on the path to becoming an OKR expert with one year of access to course content. e-Learning Platform Learn at your own pace Access for a year Digital Badge Immersive Videos, Handouts & Quizzes Search Search Please fill out this field. Investing in R&D What R&D Offers The R&D Tax Credit Buyouts and Mergers R&D Benefits The Bottom Line Business Essentials Why You Should Invest in Research and Development (R&D) Research and development (R&D) is the part of a company's operations that seeks knowledge to develop, design, and enhance its products, services, technologies, or processes. Along with creating new products and adding features to old ones, investing in research and development connects various parts of a company's strategy and business plan. According to the latest Business Enterprise Research and Development survey by the National Center for Science and Engineering and the U.S. Census Bureau, businesses spent $32.5 billion to support their R&D activities in 2020. Here are some reasons your business should invest in research and development. Key Takeaways Research and development (R&D) is an essential driver of economic growth as it spurs innovation, invention, and progress. R&D spending can lead to breakthroughs that can drive profits and well-being for consumers. Today, R&D is present in nearly every business sector as companies jockey for position in their respective markets. Smaller firms engaged in R&D can offset some of these costs and attract investors thanks to a federal tax break. Investing in Research and Development (R&D) The Internal Revenue Service's definition of research and development is investigative activities that a person or business chooses to do with the desired result of a discovery that will create an entirely new product, product line, or service. However, the activities don't only need to be for disovering new products or services—this is only for tax purposes. R&D isn’t just about creating new products; it can be used to strengthen an existing product or service with additional features. Research refers to any new science or thinking that will result in a new product or new features for an existing product. Research can be broken down into either basic research or applied research. Basic research seeks to delve into scientific principles from an academic standpoint, while applied research aims to use that basic research in a real-world setting. The development portion refers to the actual application of the new science or thinking so that a new or increasingly better product or service can begin to take shape. Research and development is essentially the first step in developing a new product, but product development is not exclusively research and development. An offshoot of R&D, product development can refer to the entire product life cycle , from conception to sale to renovation to retirement. R&D Offers Productivity, Product Differentiation Firms gain a competitive advantage by performing in some way that their rivals cannot easily replicate. If R&D efforts lead to an improved type of business process—cutting marginal costs or increasing marginal productivity—it is easier to outpace competitors. R&D often leads to a new type of product or service—for example, without research and development, cell phones or other mobile devices would never have been created. The internet, and even how people live today, would be completely different if businesses had not conducted R&D in the past. Research results give businesses a means to find issues people have and ways to address them, and development allows companies to find unique and different ways to fix the problems. This leads to many different product and service variations, which gives consumers choices and keeps the markets competitive. Some examples of companies that carry out R&D activities are auto manufacturers, software creators, cutting-edge tech companies, and pharmaceutical firms. The R&D Tax Credit In 1981, the IRS started offering tax breaks for companies to spend money and hire employees for research and development. Qualifying companies include startups and other small ventures with qualified research expenses. Such expenses can be used to offset tax liabilities , along with an impressive 20-year carry-forward provision for the credit. Many entrepreneurs and small businesses have made a large sum of money in a short time by selling good ideas to established firms with many resources. Buyouts are particularly common with online companies, but they can be seen wherever there is a lot of incentive to innovate. Research and development can help your ideas or business become more attractive to investors and other companies looking to expand. Advertising and Marketing R&D Benefits Advertising is full of claims about revolutionary new techniques or never-before-seen products and technologies. Consumers demand new and improved products, sometimes simply because they are new. R&D departments can act as advertising wings in the right market. R&D strategies let companies create highly effective marketing strategies around releasing a new or existing product with new features. A company can create marketing campaigns to match innovative products and market participation. What Are the Reasons for R&D? Research and development keep your business competitive. Without R&D, you risk losing your competitive advantage and falling behind other companies researching and developing new products in your industry. Why Is R&D Important for Startups? R&D is essential because it helps you keep your business momentum going. New products and services help you attract more customers, make sales, and give you something to talk about with your investors. What Factors are Essential in Successful R&D? Successful research and development depend on many factors, but the most important is a strong interest from your customer base and investors. If you spend money and time researching and developing something no one wants, it's being wasted. Increased market participation, cost management benefits, advancements in marketing abilities, and trend-matching are all reasons companies invest in R&D. R&D can help a company follow or stay ahead of market trends and keep the company relevant. Although resources must be allocated to R&D, the innovations gained through this research can actually work to reduce costs through more efficient production processes or more efficient products. R&D efforts can also reduce corporate income tax, thanks to the deductions and credits they generate. National Center for Science and Engineering. " Businesses Invested $32.5 Billion in Assets to Support Their R&D Activities in the United States in 2020 ." Tax Foundation. " Reviewing the Federal Tax Treatment of Research & Development Expenses ." Internal Revenue Service. " About Form 6765, Credit for Increasing Research Activities ." Internal Revenue Service. " Instructions for Form 3800 (2022) ," Page 2. Terms of Service Editorial Policy Privacy Policy 315 COMMENTS Building an R&D strategy for modern times The choices of operating model and organizational design will ultimately determine how well the R&D strategy is executed. During the strategy's development, however, the focus should be on enablers that represent cross-cutting skills and ways of working. A strategy for attracting, developing, and retaining talent is one common example. PDF Creating an R&D Strategy There are three essential purposes (and requirements) of a good strategy. A good strategy provides consistency, coherence, and alignment. 1. Consistency: Advantage is not the result of a single decision, but rather the cumulative outcome of a series of decisions, actions, and behaviors over time. 5 Steps of Creating Successful R&D Strategy for Business Define business objectives. 01. The first and foremost is the correct goal setting, the creation of a business plan, the development of a brand strategy, and the definition of the role of R&D solutions. This will help you make the best investment and resource decisions. R&D in Business: How to Build an R&D Strategy How to develop an efficient R&D strategy step-by-step. The development of an R&D strategy involves four main steps: defining the research problem, creating an R&D plan, collecting and analyzing data, and establishing milestones and testing the strategy. Let's explore each step in detail. 1. Define the research problem. Research and development Research and development, in industry, two intimately related processes by which new products and new forms of old products are brought into being through technological innovation. Research and development, a phrase unheard of in the early part of the 20th century, has since become a universal. PDF A GUIDE TO RESEARCH DEVELOPMENT developing the initial research proposal. In 2018, the United States government spent $142.9 billion funding research and. development activities.1 This funding makes up only a portion of the overall research. enterprise in the U.S., as funded research dollars also come from private and non-profit. Creating an R&D Strategy Key concepts include: A good strategy provides consistency, coherence, and alignment. The "game plan" for an R&D organization can be broken down into 4 strategic levers: architecture, processes, people, and portfolio. Together, decisions made in each of these categories constitute the R&D strategy. R&D performance results from the interaction ... Strategic Planning Guide for Research and Development Leaders About the Gartner Research And Development Strategic Plan Template. Gartner R&D Strategy Template helps R&D leaders define the roadmap for executing the key actions required to meet R&D strategic goals in alignment with the enterprise business model and goals. R&D Leaders can leverage this template to create and communicate a clear action plan ... Utilizing research and development (R&D) to drive innovation In 2019 alone, organizations around the world spent $2.3 trillion on research and development (R&D). Companies know that research and development is essential for growing as a business. Choosing to avoid R&D practices can easily become the choice between a successful or unsuccessful product. R&D is not an optional phase for organizations. Three Steps To Implementing A Successful R&D Strategy In Your ... 3. Have a proper test environment. The final step in determining the effectiveness of your R&D program is making sure you have the right test environment. For example, if you have a restaurant and ... The present-focused, future-ready R&D organization A set of winning design principles. In the ideal R&D organization, responsibilities are clearly established, and interfaces between and among teams (internal and external) are seamless and transparent. These requirements, although not new, have become even more important of late, particularly when more teams are working remotely. Research and development (R&D) and the product lifecycle Research provides you with the necessary information and insights to inform and guide your product design. Development helps you bring ideas to life, validate them and then build and commercialize them. The product development lifecycle is as follows: Research. Ideation and concept development. Design and prototyping. R&D Strategy Template An R&D Strategy is the complete process that defines an organization's approach to research and development, from the planning phase to its execution and tracking. ... Examples of strategic focus areas that could fall under a R&D Strategy could be: Tech Transformation, Security and Compliance, and Lead the Evolution. 2. Think about the ... A Small Business Guide to Research and Development (R&D) Types of research and development. R&D activities typically fall into one of three main categories: Basic research: Basic research, sometimes called fundamental research, aims to provide theoretical insight into specific problems or phenomena. For example, a company looking to develop a new toy for children might conduct basic research into ... What Is Research and Development (R&D)? Research and development represents the activities companies undertake to innovate and introduce new products and services or to improve their existing offerings. R&D allows a company to stay ... Creating an R&D strategy: Overcoming budget challenges Defining R&D strategy. At its core, a research and development strategy is a roadmap that defines how a business plans to harness its resources and expertise to innovate, develop new products or services, and remain competitive, whether that's a technology company or an aerospace business. It outlines the goals, priorities, and methods for ... Establishing a Research and Development Strategy For example, throughout the 1980s, sponsors of research on computer and network security funded and encouraged the development of technologies that were intended to be highly effective against hostile attacks on computers and networks. Essential components of a learning and development strategy The strategic role of L&D. One of L&D's primary responsibilities is to manage the development of people—and to do so in a way that supports other key business priorities. L&D's strategic role spans five areas (Exhibit 1). 2. Attract and retain talent. Traditionally, learning focused solely on improving productivity. What Is Research And Development Strategy? Research and Development (R&D) is an integral part of any company's growth strategy. It involves the analysis and exploration of ideas to create products or services that meet the needs of current or potential customers. R&D investments are essential for product innovation, strategic planning, market expansion, process improvement, and product ... 10 Remarkable OKR Examples in Research & Development Here are ten remarkable OKR examples in Research & Development: 1. Accelerating Product Innovation. Objective: Drive the development of new and innovative products. Key Results: Launch 5 new products or product features within the next year. Increase the percentage of revenue generated from new products by 10%. Research & Development R&D refers to a variety of processes and activities aimed at gathering new knowledge. A variety of organizations such as business, governmental, and academic institutions use R&D to develop and ... Research and Development (R&D) Expenses: Definition and Example Key Takeaways. Research and development (R&D) expenses are direct expenditures relating to a company's efforts to develop, design, and enhance its products, services, technologies, or processes ... Why You Should Invest in Research and Development (R&D) Key Takeaways. Research and development (R&D) is an essential driver of economic growth as it spurs innovation, invention, and progress. R&D spending can lead to breakthroughs that can drive ... Mitigating AI-Related Security Risks: Insights and Strategies ... @media (min-width: 45em) { #node-209436 h1 { font-size: 2.9em; } } Join us as we dive into the latest research on AI-related security risks and how Tenable AI Aware can help you stay ahead of these emerging threats.Widespread and potentially unauthorized use of AI is creating new security challenges. You'll gain insight into real-world examples of unauthorized AI use and ways unexpected AI ... assignment essay homework paper phd report resume review speech thesis