Research and development are two words attached to each other, and we often use them together. Nonetheless, the two are different.
Research is about investigating something to come up with a business idea. Meanwhile, development is about transforming these ideas into something valuable or commercialized.
Research and development can be about new products, methods, or components. So, it is not limited to designing products. But it’s also about how the product is made.
Benefits and limitations of research and development
Research and development contribute to companies to:
- Survival to remain competitive through product and process innovation
- Continually advancing the product, for example, by adapting and adjusting customer preferences and tastes
- Generate first mover advantage by being the first company to release a product
- Help extend the product life cycle, for example, by adding new features to entice customers to continue using
- Higher sales by satisfying customers better than competitors
- Higher profits by increasing satisfaction (sales) and efficient operations (process innovation)
- Increase market share by attracting potential or competitor customers to switch
- Be a way to more easily break into new markets, for example, by highlighting innovations to consumers in new markets to entice them to buy
- Improved quality through better product design and production methods, enabling quality products to be produced on a large scale
Research and development become strategic when a company operates in a market where competition is intense. Or customers in a market have changing needs and tastes.
Through research and development, companies can better adapt to such environments. In addition, it brings new growth opportunities for the company. Other benefits are increased productivity, customer loyalty, and improved quality.
But, admittedly, research and development can be expensive. It can also take time. Other limitations are:
- Requires a skilled workforce and open to innovation
- Has a relatively high failure rate
- Many ideas are available, but few are commercially viable
- Involves a significant opportunity cost in the short term
- Vulnerable to budget cuts during difficult periods
- Capacity for research and development varies, depending on the company’s business size
Innovation and creativity
There are various ways to innovate. Some companies may focus on both products and processes. While others focus on changing the consumer paradigm in using the product. What are the types? Let’s go deeper.
Innovation refers to creating something new. Innovation creates new intellectual assets. It can be related to product, process, positioning, and paradigm.
Innovation is divided into four types:
- Product innovation
- Process innovation
- Positioning innovation
- Paradigm innovation
Product innovation involves developing new products or improving existing products by adding superior attributes. It may be radical innovation – by creating a new product – or incremental – by enhancing a current product.
Product innovation is essential to increase the company’s opportunities to adapt to changes in the business environment, especially consumer tastes, and needs. It also creates new growth opportunities by introducing new products to satisfy customer needs.
Process innovation is about new ways of doing things better, faster, or cheaper. Processes may be related to producing products (manufacturing). Or, it may be related to shipping to customers.
For example, innovation might involve using a new technology or production method. This innovation makes the production process more efficient and ensures better quality.
Positioning innovation means changing our perception of a product or process. For example, in the past, our watches were used to keep track of time. Still, now they have become our fashion accessories and lifestyle.
Paradigm innovation is about the way we think. Switching to reading digital books from print books is a good example. Our paradigm is changing because reading doesn’t necessarily require us to carry a printed book everywhere. Instead, we just carry a smartphone. It is more practical and mobile.
Innovation requires creative thinking. It can:
- Adaptive creativity
- Innovative creativity
What’s the difference between the two?
Adaptive creativity involves coming up with something new by developing different scenarios or conditions for existing techniques or products. Adaptive creative thinkers seek to solve problems and refine current practices. For example, developing a new car edition with better features requires adaptive creativity.
Innovative creativity involves creating something new. If adaptive thinkers think about how to do something better, innovative thinkers try to do things differently. For example, if adding better features to a car requires adaptive creativity, launching a self-driving car requires innovative creativity.
Research and development with product cycles
The product life cycle has implications for the need for research and development. Short cycles require companies to develop new products quickly.
Companies must be able to commercialize ideas and generate cash quickly as the market is rapidly entering a decline phase, which requires new products to satisfy customer needs.
In addition, research and development are needed to extend the product life cycle. For example, a company uses a new feature to encourage customers to stick with the product.
Research and development for a product have cycles. Or, we say, it is the processes, including:
- Identify the need for a new product
- Designing concepts by considering consumer needs
- Generate one or more prototypes
- Testing prototypes to market for evaluation
- Selecting a suitable prototype, including from an investment appraisal standpoint
- Producing selected prototypes and selling them
Often, the cycle continues even before the final stage is complete. This is especially in an industry where competition is intense. Or customer tastes and the business environment are changing rapidly. Both environments require companies to adapt quickly.
Because it requires intensive research and development, companies must distribute and allocate budgets adequately. In addition, the research and development team must be accustomed to working on multiple projects.
Companies must protect their inventions or innovations from copying. In addition, there are laws designed to protect intellectual property.
Intellectual property is a company’s valuable asset. Therefore, companies must know how they work so they know how to protect them from copying and other infringing.
Intellectual property protection covers four categories:
- Trade secret
Patents allow companies to build, sell, and use their inventions. In addition, it also stops others from copying, creating, and selling inventions without their permission. The company has the right to monopolize its inventions.
The right to monopolize their inventions allows companies to continue to benefit from them by commercializing them without fear of being copied by others.
Patents are usually valid for 20 years. But, some are only valid for 14 years. Once it expires, anyone can copy the invention.
Copyright is an automatic right attached to the work of authorship. So if you, for example, compose song lyrics, you own the copyright in what you produce.
Copyright applies to works such as:
- Dramatic works such as plays and films
- Literary works such as novels, song lyrics, and newspaper articles
- Musical works such as recordings, concerts, and broadcasts
Creators can register a copyright for their work to protect it from being reproduced without permission. Copyright lasts their lifetime plus seventy years after they die.
Trade secrets include formulas, patterns, manufacturing processes, designs, compilations, programs, devices, methods, techniques, or processes by which economic value is obtained. Commercial information, such as distribution methods and advertising strategies, also falls into this category.
Trade secrets are intellectual property not publicly known, so their disclosure or use allows others to derive economic value. In addition, the owner has also made efforts to protect the trade secret.
The formula for making Coca‑Cola or Pepsi is a trade secret. The formula allows the Coca-Cola Company and PepsiCo to produce signature flavors and protect them over time.
Technology in operation
Research and development have spawned various innovations and technologies. Examples are computer-aided design (CAD) and computer-aided manufacture (CAM). Both allow the company’s operations to be more efficient.
Other examples include robotics, electronic point of sale (EPOS), bar codes, QR codes, and big data.
Computer-aided design (CAD)
CAD applies computer systems to create or modify designs such as cars, consumer products, construction, clothing, and textiles. It is widely used by architects, engineers, or construction managers to replace their manual drafting.
CAR helps to simulate in 2D or 3D to visualize designs. So, we can see what the final product will look like. It reduces waste with a more accurate design process. Additionally, changes can be made to a design without rebuilding the prototype, saving developers time.
Computer-aided manufacturing (CAM)
Computer-aided manufacturing (CAM) utilizes computers to control machines and equipment in the manufacturing process. While CAD allows us to design a product or its part, CAM focuses on how to make it.
The process begins through engineering via CAD to create 2D or 3D drawings to visualize products and their parts, for example, cranks for cars. When the design is complete, the engineer will load it into the CAM, usually by exporting the CAD file and importing it into the CAM software. And the production process begins.
Relying on computers and software to power machines and equipment allows us to reduce the risk of human error. Additionally, it provides for consistency across all the resulting products.
Another advantage is the labor cost-saving process. The production process can also operate 24/7 without a break.
However, CAM can be expensive because production relies on high technology. Likewise, damage can be costly to repair.
Robotics relies on machines to work automatically to perform tasks traditionally performed by humans.
These intelligent machines assist operations in several ways. For example, it performs simple repetitive tasks such as in car manufacturing. Alternatively, it is handling hazardous materials, such as jobs in nuclear plants, if done by humans.
Robotics allows the production process to run automatically. Thus, it reduces labor costs.
Besides it is also applied to do repetitive work. Relying on automated machines will be more productive than relying on humans, whose productivity can decrease due to doing the same task over and over again.
Then, unlike human-assisted machines, robotics reduces the need for supervision. Machines work automatically according to what we order or program without fear of deviant acts as would occur if done by humans.
Electronic point of sale (EPOS)
EPOS relies on computer systems (software and hardware) to process transactions. Therefore, it is often used in various businesses, such as retail stores, hotels, and restaurants.
Take a retail store as an example. EPOS acts as a cashier interface. That allows cashiers to speed customers through payments and processing transactions.
EPOS also manages inventory all on one device. This system helps electronic inventory control to reorder stock automatically. It can also be designed to generate up-to-date reports to show which items are the most popular, which items are not selling, and which items are low on stock.
Retailers can link the EPOS system with other departments, such as logistics. Thus, they can ensure that each item is sufficiently available when needed, enabling them to optimize sales.
EPOS enables better inventory management. It can also speed up the payment process. Another advantage is better customer and order management.
Barcodes and QR codes
Barcode consists of bars and spaces that can be read by the machine. A variation is the QR code, invented by Denso Wave in 1994. But unlike a barcode, a QR code has more data storage.
Barcodes encode product information. So, you will often see it on the packaging. Meanwhile, QR codes have broader applications; for example, they scan users when they login to mobile apps or websites.
In retail stores, barcodes allow for faster processing of goods. For example, the cashier only needs to scan it to show how much a product costs. The information in the barcode is also used to track inventory in the warehouse. Finally, the app helps retailers control inventory and costs more accurately.
Big data is more than just databases. It’s about more than just gathering information from multiple sources and bringing it together in a database. But it’s also about organizing and processing data using machine learning, predictive modeling, and analytic applications to generate useful information.
Big data may consist of structured data where processing can be faster. For example, it can be processed immediately and loaded into the dashboard for reporting.
Meanwhile, other big data may include unstructured or semi-structured data, which require further processing and organization before being used for reporting.
Big data is getting increasingly important because it enables more informed and faster decision-making. It collects data and information from various sources for various purposes. For example, the marketing team collects data from websites, mobile apps, and social media to understand customers. So, they can develop a more accurate marketing mix.
Technological advances also facilitate big data to develop. For example, computer systems’ high processing capability and speed allow data to be collected and processed quickly. It is also combined with advances in software to support data organization, management, and processing. In addition, progress in increasing computer storage capacity has also contributed.