What is R&D Technology?

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  • Originally Written By: John Kinsellagh
  • Revised By: C. Mitchell
  • Edited By: C. Wilborn
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  • Last Modified Date: 13 November 2018
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Research and development technology, often known simply as “R&D” technology, is a business model in which new products and systems are tested and tried out before being marketed to the public. More formally speaking, it is the practical application of knowledge, gained through systematic and methodical research, that allows a company to bring to market new and innovative products that they can exploit for commercial advantage. Most companies in the services and goods sector depend on a steady stream of new products and services, but these aren’t as simple to prepare as many people think. The R&D process is often intensive, and the technologies it uses allow corporate leaders to understand everything from how a particular product works to how it’s expected to sell. Some of the technology is hardware-based, like computers and robotic sensors, but a lot is software-based, too; programs will calculate statistics, make projections, and chart potential problems to allow technicians to make improvements. Almost every company that makes or sells something will engage in the R&D process to some degree, though it’s often most overt and central in large, consumer-facing organizations.


Importance of New Product Design

Creating new products that are both marketable and useful is an important part of the success of many different businesses in many different sectors. Not only is the marketplace increasingly competitive in many places, but consumer needs and desires also tend to shift over time. Available technology changes rapidly, too. Even companies with star products one year often find themselves struggling to stay relevant if they don’t make changes in the next.

The R&D process generally is how new product concepts and templates are designed and tested before being produced on a large scale, and the technologies involved are how technicians both design their tests and reach their results. In this sense, using R&D technology is one way companies seek to maintain their competitive edge.

Funding and Finances

The funding for most consumer-oriented companies' R&D technology efforts comes from the company’s retained earnings, which is to say that the process has to be budgeted. Product testing isn’t usually cheap, especially in market sectors where there’s naturally a lot of trial and error. Companies have to be willing to spend a lot of money to test products that ultimately flop, or that don’t actually ever get sold. In the long run, even expensive testing at the outset costs less than going through with the manufacturing of a product that either isn’t built well or won’t sell, but the expenses do usually have to be anticipated.

Companies using extensive technologies in the R&D process often forgo short-term profit in order to maximize long term gain by acquiring a dominant market share for their products that successfully incorporate leading technological advantages. One of the attributes of many high tech companies, for instance, is the amount they spend on technology development. Pharmaceutical companies are a good example. These typically spend about 15% of their revenues for research and development facilities in the hope that continuous research will lead to new patents being issued for some of their drugs in the development stages.

Expanding Markets and Uses

There are many different applications for R&D technologies beyond just designing new products. Some corporations focus their R&D efforts on recombining or experimenting with old ideas in new ways to see how existing technologies in one product market could lead to breakthrough innovations in another separate market. Often, innovative products introduced into the market have resulted from assessing consumer demand and then incorporating existing technology into a new product in a new and novel way.

Historical Roots and Early Examples

The American entrepreneur and early businessman Thomas Edison was one of the first and most notable proponents of this type of research for commercial product development. Many of Edison's inventions that met with commercial success, among the most notable being the light bulb, were ideas that were borrowed from existing patents of other scientists or from inventions that others had created. Edison was able to constantly innovate because he knew how to adapt and improve existing technologies. This put him ahead of his competitors who weren’t able to anticipate these sorts of adaptations.

The process has also given rise to many aspects of technology that are considered “standard” today, including the computer mouse. The concept underlying the computer mouse first appeared in Xerox’s Palo Alto R&D technology research facility in the 1970s. These devices didn't become well known until later, however. It was the founders of Apple computer, ten years later, who successfully incorporated this idea as an integral aspect of the user interface of the first Macintosh computers.


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