R&D, otherwise known as research and development, is typically the conception and implementation of new product ideas. The research portion of R&D refers to the investigation and experimentation stage of creating a new product or improving an existing product. The development portion is the process of designing and testing the effectiveness of the new product or product improvement. Worldwide, millions of dollars each year is spent on R&D by governments, non-governmental organizations, and corporations.
Research is typically an investigation of current knowledge about existing products in order to find a fresh idea for a new product. The theory behind this part of R&D is that without the discovery of innovative ideas, there may be no creation of new products. Basic research seeks to increase knowledge about a subject, while applied research often looks for creative ideas to design new products or ways to improve existing ones.
Development of these ideas into workable, saleable products also often comes under the R&D banner. Discoveries typically need to be tested and refined before they can be implemented in the marketplace. For example, the pharmaceuticals industry usually puts years of testing into new drugs to ensure they are safe for patients.
Unlike scientists conducting experiments, researchers who work in an research and development department usually do not begin their tests with a predetermined hypothesis in mind. There are no guarantees that the research will produce any usable or marketable products, so it is risky to invest a great deal in it. This may be part of the reason that many corporations leave much of the research part of R&D to universities.
Many companies have an R&D department, but not many spend a large portion of revenue on it. Most of these companies spend less than 5% of profits on research and development initiatives, but a few, mostly in the pharmaceuticals or computer industries, can spend over 10%. Generally, the more an industry needs new products to keep up with technology, the greater that industry’s spending on research and development to create them.
Research and development is typically carried out in the R&D departments of many different organizations. For the most part, the research side is taken on by universities, governments, and non-profit organizations, while the development stage is undertaken by manufacturers and for-profit corporations. Some organizations may hire an independent research and development organization or pool their resources with similar companies to make their investments more effective.