Why do we need R&D?

Why do we need R&D?

Research and Development, often times referred to as “R&D”, is essential in the world of business today. R&D refers to the efforts into developing, improving, or modifying products or services to further the growth of a company. Research and Development require constant innovation in order to stay on top of current trends. Although R&D can get pretty expensive, it is crucial in surviving the harsh world today. The Harvard Business Review thinks that companies are fast to get rid of R&D departments when the going gets tough and budgets get tight, since “R&D is expensed rather than capitalized, cuts yield immediate increases in profit, while the detrimental impact of those cuts aren’t felt for a few years” (Knott, 2012). Cutting R&D from the budget may only help in the short-term.

America is one of the most innovative countries in the R&D category, with Apple, Amazon, Microsoft, and Facebook all making the top 10 Most Innovative Companies.

In 2016 alone, Apple spent $8.1 billion on Research and Development. Obviously Apple has the most to lose and gain from R&D, considering they aim to come out with new phones or products at least once a year. Apple has to beat out top competitors like Samsung in order to keep their customers, so their products need to constantly be improving and staying on top of the current trends of society. Samsung spent $12.7 billion on their R&D in 2016, which is a little more than what Apple spent. Samsung did have a pretty bad year though with phones exploding on planes and catching fire. I’d say after all of that, I’m sure they spent more than they wanted on R&D to fix those problems (Sorry, Samsung).

To sum it up, Research and Development is what keeps companies afloat in the ever changing market. Trends change faster than the flip of a dime so staying on top of current trends and predicting the future trends can be very beneficial to a company. Companies that devote money to their R&D departments always end up benefiting from it.


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