What is R&D ?
Research and development is an investment in a company's future - companies that do not spend sufficiently in R&D are often said to be 'eating the seed corn'; that is, when their current product lines become outdated and overtaken by their competitors, they will not have viable successors in the pipeline. So how much is reasonable to spend on research and development? That is highly dependentboth on the technology area and how fast the market is moving. Two percent of company revenue, not profit, might be enough in a fairly sedate market, but to keep up in rapidly changing markets, companies should expect to spend fifteen percent or more in research and development just to keep up with the rest of the pack.
There is considerable debate over which is the 'R' and which is the 'D' in research and development. Traditionally, research was broken into basic research and applied research, with basic research delving into basic scientific principles and applied research looking for ways to use the basic science to better human lives. More recently, there is very little truly basic research being done in the corporate world; it is mainly the province of academia, often with corporate or government funding support.