October 3rd, 2022 | by CSHARK

What is R&D in Business - Research and Development

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When you’re developing a new product, service, or process – or improving an already existing one – R&D is one of the earliest phases. 

Research and development is probably the most valuable tool for growing and improving your business. It involves market and customer needs research as well as developing or improving products and services to fit those requirements better. 

A well-executed R&D can lead to innovation, increased productivity, and gaining a competitive advantage. Let’s explore this topic further!

What does R&D stand for?

R&D simply means research and development. 

But in a business context, its power is much wider and more complicated. You may now ask, so what is research and development? Let us explain.

Research and development generally is known as a generation of new knowledge. From a business perspective, it’s all the activity a company undertakes to develop new products, processes, or services, or to improve the existing ones.

Even though R&D is sometimes connected to risks as experimenting involves uncertainties (like if the attempt is feasible), it’s essential for many businesses. Continuous improvements and the creation of new offerings is the best way to stay competitive and profitable.

Typical R&D activities include:

  • Designing and developing new products
  • Designing and developing new testing methods
  • Enhancing existing products
  • Developing better technologies for manufacturing and production
  • Developing software for process and product improvements
  • Developing robotics or automated processes for efficiency improvements

In what sectors does R&D appear?

Research and development can be seen in a wide range of industries and businesses of all sizes. We can come across R&D in software and technology, life sciences, food & drink, or pharmaceuticals, just to name a few. Research and development is also a crucial part of the construction industry, engineering, and manufacturing.

Types of research and development

Research and development often starts with theories and ideas, which can help in identifying new opportunities and potential issues. Then it’s time to explore and research those ideas to test their feasibility. We can say that in R&D there are 2 types of research:

  • Basic research – helping to acquire knowledge and build understanding and intelligence that can be used to gain an advantage. The knowledge can then be used as a foundation for further research.
  • Applied research – often more defined and looking to achieve specific objectives. It can include using new technology, cutting costs, reaching a new market, or introducing safety measures. Applied research is what leads to the development phase.

The development phase of R&D is all about turning an idea into a product or process. It’s about translating the research into something tangible. Designs, prototypes, and testing are the main tools in this phase.

What can R&D be used for?

As said above, R&D can generally be used for:

  1. New product research and development – R&D is often a part of new product development since the ever-changing market demands fast adaptation. Good research is the basic component of a successful product.
  2. Improving existing processes and products – evaluation of existing products, processes and services is the best way to avoid stagnation.

What is R&D in business?

Businesses approach R&D in various ways as they all have different organizational structures. Some businesses choose to outsource research and development while others establish entire departments dedicated to it. 

R&D in business is a complex process that often comes with challenges. Many of them fail to reduce development times while planning and road-mapping for the future. Also building a culture of innovation is for many companies hard to achieve.

Why is R&D important for business? Benefits of R&D

Research and development is an important step to take to grow a business and compete in a market. Those who innovate and adopt new technologies while improving the existing processes are more likely to succeed.

In software development, R&D is crucial to stay competitive and be on top of consumer needs and wants. Research & development can ensure the sustainability of the entire organization as it helps to determine the possible direction of the industry and react to new trends. All of those actions can attract new customers and talent, which help your business to grow, fueling progress.

In a much wider view, R&D can positively impact the wider economy as sectors investing in it tend to achieve more. In many countries, R&D and economic growth go hand in hand as research and development processes often is a part of the government’s plan for economic development.

For example, the UK Government made R&D tax credits a cornerstone of policy and in worldwide R&D spendings, the United States and China are the true leaders.

How to develop an R&D strategy?

The strategy for R&D widely depends on the size of the business. In smaller companies, R&D focuses more on product improvements as the budget is often limited. Larger enterprises, on the other hand, are able to give it more time and resources. 

The benefits of R&D are long-term, so it’s crucial to remember that the investment may not bring short-term profits. R&D can help you develop better processes and discover new ways of delivering services. 

However, it’s important to keep in mind that more time and money spent on R&D does not guarantee its success. That’s why it’s advisable to perform extensive market research to identify the needs and desires of customers.

Costs of research and development

R&D can become expensive pretty easily as new technologies or highly specialized staff are often costly. What doesn’t help is the fact that most of those costs are upfront, without any guarantees of success – but not all CEOs get discouraged by that. In some businesses, the R&D spendings are the biggest part of total expenditures. 

The companies that spend the most on R&D are Apple, Samsung, and Amazon with billions of dollars going towards research and development.

Outsourcing R&D

Businesses of all sizes can turn towards outsourcing their research and development as it’s not always possible to carry it out in-house. This means that other organizations help them run the R&D processes and provide them with something that can be applied to the business.


All in all, you can clearly see that R&D is super essential for businesses that wish to stay competitive. It gives them the ability to create products that are hard to replicate by the competition. 

Research and development can also significantly boost productivity, creating an even bigger edge in outrunning the competitors. That being said, innovation allows you to predict customer demands or emerging trends and act accordingly. 

What is more, R&D is a vital part of any organization as it helps to secure its future – the more research you do, the bigger chances there are that your product will be more durable and robust. That is why, if you want to build a unique and successful software product, you should definitely consider adding a research & development phase to your processes.


This article wouldn’t have been written without the engagement of our CSHARKers! It was created thanks to their expert knowledge & extensive experience. As multiple people were involved in the consultancy, creation, and verification process, we figured it’s not fair to list just one of us as an author. Let’s say it was a collective work of many great minds.