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What is R&D and innovation?

R&D and Innovation is the process of developing and commercialising new ideas, implementing new processes or changing the way the business makes money. It can also be viewed as the activities required in order to keep the business competitive and sustainable for the long term. This includes research, new product/service development, new process development and continuous improvement and new business models.

R&D models

The activities that are classified as R&D differ from company to company, but there are two basic models. In the first model, the primary function of an R&D group is to develop new products; in the second model, the primary function of an R&D group is to discover and create new knowledge about scientific and technological topics for the purpose of uncovering and enabling development of valuable new products, processes, and services. Under both models, R&D differs from the vast majority of a company’s activities, which are generally intended to yield nearly immediate profit or immediate improvements in operations and involve little uncertainty as to the return on investment (“ROI”).

How does R&D apply to me?

Creating a structured R&D process can add significant value to your company, bolstering its valuation and creating a greater value proposition, particularly in advance of exit. By documenting the R&D process, your company is effectively improving its ability to capture innovations early on and, where appropriate, secure legal protection. Ensuring that appropriate safeguards are in place – in the form of a trade secrets policy, invention disclosures and/or NDAs, for example – will serve to protect new product development in your company and generating documents detailing the R&D process will create additional transferable IP assets in the form of organisational knowledge,