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. It provides numerous benefits like gaining a competitive advantage, responding to customer needs, and driving success. R&D also helps minimize product development errors since all choices are data-driven.
In this article, you will learn what research and development is, the role it plays in product development, and how you can implement it within your product team.
Research and development provides insights into how the market is responding to your product and helps you discover gaps in an industry that could be leveraged to create a competitive advantage. It’s a crucial part of aligning customer needs with your product capabilities.
R&D can also ensure that your company is creating value that aligns with your organization’s goals. Strategic alignment between the company vision and R&D will create innovative products that drive your company forward.
R&D lays the foundation for product innovation and development. R&D activities help create new products, improve existing ones, and drive a company’s competitiveness.
The first step of the product development lifecycle is research and development (R&D). If you don’t have high-quality R&D, it affects the entire lifecycle of a product. Your organization could end up spending resources on an idea that’s not verified by accurate research.
R&D provides the necessary and actionable insights to inform and guide product development. Meanwhile, product development focuses on bringing validated ideas to market. Ultimately, R&D lays the groundwork for creating new or improved products while product management encompasses the entire lifecycle of a product.
Product management and R&D have separate, but interconnected functions within an organization. Product management covers many responsibilities including creating and selling the product. On the other hand, research and development hones in on identifying trends in your industry and target audience and using that information to help you adapt to the changing market.
Despite the connection between product development and R&D, product managers aren’t usually heavily involved in both spheres. You might find that your own bias affects research. Because of this, PMs often use skilled researchers who take charge of the R&D process and provide them with their findings.
Many organizations may look at the bill for research and development and hesitate to approve it. Labor expenses alone cost organizations $372 billion in 2020.
But if you’re not willing to pay for R&D, you risk giving up a competitive advantage. Many industries reinvest as much as 30 percent or more of their earnings before taxes, interest, depreciation, and amortization (EBITDA) into innovation research.
While R&D expenses may seem costly, your organization can’t afford to let competitors become more successful than you.
Every organization will approach R&D differently. In general, though, research and development for product management may include the following steps:
Try to adopt a willingness to be bold with your R&D strategy. Oftentimes, organizations have a growth goal, but only approve “safe” projects. By doing so, you may limit yourself to your current market share, instead of discovering new possibilities for innovation.
Ultimately, an R&D strategy is what ensures innovation is happening at a company. Aligning the R&D strategy with product management goals is crucial to the overall success of an organization’s vision.
Developing a research and development strategy involves a few key considerations:
R&D fuels product innovation and provides organizations with a competitive edge. Many organizations share their R&D strategies and insights with consumers. One example is at Proctor and Gamble (P&G).
Let’s take a closer look at how R&D informed P&G’s creation of Verso Vita. P&G wanted to reduce the use of fossil-sourced plastics and use more recycled content. This goal came out of a problem with recycling polypropylene (PP), since it often kept the color and smell of the previous product.
R&D needed to create a solution for this issue and created the Verso Vita process to restore PP to its original quality. The resulting Verso Vita process uses less energy than it takes to create a new PP.
With this new product, P&G moved closer towards its sustainability goal of having 100 percent recyclable or reusable packaging by 2030.
The ability to make bold decisions with data-driven insights can help ensure your R&D expenses are creating value for your business and customers, but gaining those insights requires strategy.
Ensuring your R&D strategy aligns with your company goals is fundamental to success. Research and development is the first phase of a product life cycle, and it creates the foundation for creating an impactful product.
Featured image source: IconScout
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