Whether you’re filling a gap in the market or seeking to better understand new methods of efficiency for production in your own business, every industry can benefit from research and development (R&D).

We know R&D can be a difficult process at times, but it can be beneficial for a range of different purposes. That’s why we’re passionate about educating businesses and their teams on the steps to effective R&D.

In 2019, global businesses spent $2.3 trillion on R&D, with the high-tech, media and telecom sector responsible for the largest expenditure of $182 billion. This was closely followed by pharma and medical products at $178 billion, and industrials at $156 billion.

That’s according to McKinsey & Company, who also identified the four main obstacles that companies face in R&D. They were Accelerating Innovation Cycles; R&D lacking a connection to customers; few accountability metrics; and a decreased risk tolerance negating bold, innovative projects.

Companies from all industries may need to undertake R&D at some point, as they strive to stay relevant among the competition. So it’s important to know how to navigate these obstacles with an effective R&D process.

Different companies will have different R&D objectives depending on their size and budget. Larger companies will have the available capital to invest in lengthy product development, while smaller ones may only afford to undertake minor R&D projects.

In any case, R&D is a vital part of any business’ growth – especially if claiming government incentives to support your project expenditure, – so it’s important to get it right.

If this blog doesn’t answer your questions, make sure to contact the Global Research Institute to learn more about effective R&D and how to claim the associated costs.

Setting A Goal

Before you set out on your R&D journey, it’s important to know what you’re aiming to achieve and the problem you’re trying to fix for your business.

This could be identifying a gap in the market or an issue with your current offering. Alternatively, it could be as simple as understanding what your customers are looking for in the future.

You should also set goals for how this R&D process will boost your business, such as financial gains, appealing to a wider audience, or in some cases, to claim these business activities on your tax return.

Initial Research

The next step to successful R&D is reading widely across the industry to understand what’s already been done and what you can take as inspiration for your own project. It will also help you to identify and define the technical risks associated with your project. It is advised at this stage to fill in a Technical Investigation Template.

From here, you are likely to begin incurring fees that can be claimed on tax, so it’s important to keep your records in order.

“You must keep records that specify and explain all transactions – including any documents that are relevant for the purpose of working out your tax liabilities,” according to the Australian Taxation Office.

In your research, you may pay for access to literature or reports from other research institutes, or pay a visit to indirect industry competitors to learn about their offering. Different jurisdictions may allow these costs to be claimed, so get in contact with us to understand what’s available to you.

Documenting Your Hypotheses

Before you go any further, any good research should begin with a hypothesis. Once the research is complete, you can then return to this and understand what you’ve learned throughout the process.

You should also outline the key questions you would like to answer and the key objectives you would like to accomplish. This will give you an indication of whether the project was a success or failure – based on whether you have proved or disproved your hypothesis – and whether the associated costs were worth spending to enable a commercial outcome.

Designing The Study

There are plenty of ways to conduct industry research and this will vary depending on your budget, company size, and purpose.

A cheap study design could be an observational study where historical reports are searched for buying patterns. Alternatively, a more expensive method would be to survey a target audience, conducting workshops and think tanks before experimenting with various new product designs.

Another factor to consider is the study sample, which could relate to how widely you read, or the pool of people from which you survey. A global survey would naturally cost more as you tailor more questions to their language and culture, while reading more widely would be more expensive to access more resources.

Different jurisdictions allow for various R&D project elements that can be claimed. Market research, in some countries, is permissible to be claimed under the relevant local tax or government incentives, yet is specifically excluded in others, so when designing your study it is worth considering if any exemptions to your activity apply.
Studies are usually undertaken in support of a future phase of research and development, which is when you conduct your experimnetation.

Analysing The Data

How you collate and analyse your research data will depend on the kind of research you undertake. A survey will involve the collation of both qualitative and quantitative data which can be assessed to find patterns and customer personas for you to satisfy in the product development stage.

If your research simply involved reading widely and consulting industry professionals, you’ll likely be left with qualitative themes and patterns of a similar nature to digest and use in development.

The Research Report And Proposal

Once you have understood your findings, you should be able to identify what needs to be developed in order to achieve your R&D goals.

Whether that was a new product, a new manufacturing methodology , or something completely different, you’ll need to write up a research report to present to investors or executives who can approve the experimentation and development stage.

A research report will clearly outline your hypothesis, findings, a development proposal and your reasons for development. If all goes well, your development will be approved and the next stage of an exciting journey can begin for your business.

Conduct the Experiments using a Scientific Method

You should undertake experimentation using a systematic method and progression of work, regularly review and report on your findings and iterate the design. This is the standard process for undertaking true research and development activities.

Claiming R&D On Tax

The final step in any R&D journey should be claiming anything on tax or via other government incentives if it’s eligible. But the loopholes associated can be complicated to understand, and some things can be missed in the tax return process unless you know what to look for.

At the Global Research Institute, we’re working with companies across industries to undertake effective R&D projects and get the most out of it when it comes to tax time.

For more information, sign up with us and enhance your education on all things R&D.