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What Is Research and Development?

  • Understanding R&D
  • Types of R&D
  • Pros and Cons
  • Considerations
  • R&D vs. Applied Research
  • R&D Tax Credits

The Bottom Line

  • Business Essentials

What Is Research and Development (R&D)?

what is research and development and why is it important

Investopedia / Ellen Lindner

Research and development (R&D) is the series of activities that companies undertake to innovate. R&D is often the first stage in the development process that results in market research product development, and product testing.

Key Takeaways

  • Research and development represents the activities companies undertake to innovate and introduce new products and services or to improve their existing offerings.
  • R&D allows a company to stay ahead of its competition by catering to new wants or needs in the market.
  • Companies in different sectors and industries conduct R&D—pharmaceuticals, semiconductors, and technology companies generally spend the most.
  • R&D is often a broad approach to exploratory advancement, while applied research is more geared towards researching a more narrow scope.
  • The accounting for treatment for R&D costs can materially impact a company's income statement and balance sheet.

Understanding Research and Development (R&D)

The concept of research and development is widely linked to innovation both in the corporate and government sectors. R&D allows a company to stay ahead of its competition. Without an R&D program, a company may not survive on its own and may have to rely on other ways to innovate such as engaging in mergers and acquisitions (M&A) or partnerships. Through R&D, companies can design new products and improve their existing offerings.

R&D is distinct from most operational activities performed by a corporation. The research and/or development is typically not performed with the expectation of immediate profit. Instead, it is expected to contribute to the long-term profitability of a company. R&D may often allow companies to secure intellectual property, including patents , copyrights, and trademarks as discoveries are made and products created.

Companies that set up and employ departments dedicated entirely to R&D commit substantial capital to the effort. They must estimate the risk-adjusted return on their R&D expenditures, which inevitably involves risk of capital. That's because there is no immediate payoff, and the return on investment (ROI) is uncertain. As more money is invested in R&D, the level of capital risk increases. Other companies may choose to outsource their R&D for a variety of reasons including size and cost.

Companies across all sectors and industries undergo R&D activities. Corporations experience growth through these improvements and the development of new goods and services. Pharmaceuticals, semiconductors , and software/technology companies tend to spend the most on R&D. In Europe, R&D is known as research and technical or technological development.

Many small and mid-sized businesses may choose to outsource their R&D efforts because they don't have the right staff in-house to meet their needs.

Types of Research and Development (R&D)

There are several different types of R&D that exist in the corporate world and within government. The type used depends entirely on the entity undertaking it and the results can differ.

Basic Research

There are business incubators and accelerators, where corporations invest in startups and provide funding assistance and guidance to entrepreneurs in the hope that innovations will result that they can use to their benefit.

M&As and partnerships are also forms of R&D as companies join forces to take advantage of other companies' institutional knowledge and talent.

Applied Research

One R&D model is a department staffed primarily by engineers who develop new products —a task that typically involves extensive research. There is no specific goal or application in mind with this model. Instead, the research is done for the sake of research.

Development Research

This model involves a department composed of industrial scientists or researchers, all of who are tasked with applied research in technical, scientific, or industrial fields. This model facilitates the development of future products or the improvement of current products and/or operating procedures.

The largest companies may also be the ones that drive the most R&D spend. For example, Amazon has reported $1.147 billion of research and development value on its 2023 annual report.

Advantages and Disadvantages of R&D

There are several key benefits to research and development. It facilitates innovation, allowing companies to improve existing products and services or by letting them develop new ones to bring to the market.

Because R&D also is a key component of innovation, it requires a greater degree of skill from employees who take part. This allows companies to expand their talent pool, which often comes with special skill sets.

The advantages go beyond corporations. Consumers stand to benefit from R&D because it gives them better, high-quality products and services as well as a wider range of options. Corporations can, therefore, rely on consumers to remain loyal to their brands. It also helps drive productivity and economic growth.

Disadvantages

One of the major drawbacks to R&D is the cost. First, there is the financial expense as it requires a significant investment of cash upfront. This can include setting up a separate R&D department, hiring talent, and product and service testing, among others.

Innovation doesn't happen overnight so there is also a time factor to consider. This means that it takes a lot of time to bring products and services to market from conception to production to delivery.

Because it does take time to go from concept to product, companies stand the risk of being at the mercy of changing market trends . So what they thought may be a great seller at one time may reach the market too late and not fly off the shelves once it's ready.

Facilitates innovation

Improved or new products and services

Expands knowledge and talent pool

Increased consumer choice and brand loyalty

Economic driver

Financial investment

Shifting market trends

R&D Accounting

R&D may be beneficial to a company's bottom line, but it is considered an expense . After all, companies spend substantial amounts on research and trying to develop new products and services. As such, these expenses are often reported for accounting purposes on the income statement and do not carry long-term value.

There are certain situations where R&D costs are capitalized and reported on the balance sheet. Some examples include but are not limited to:

  • Materials, fixed assets, or other assets have alternative future uses with an estimable value and useful life.
  • Software that can be converted or applied elsewhere in the company to have a useful life beyond a specific single R&D project.
  • Indirect costs or overhead expenses allocated between projects.
  • R&D purchased from a third party that is accompanied by intangible value. That intangible asset may be recorded as a separate balance sheet asset.

R&D Considerations

Before taking on the task of research and development, it's important for companies and governments to consider some of the key factors associated with it. Some of the most notable considerations are:

  • Objectives and Outcome: One of the most important factors to consider is the intended goals of the R&D project. Is it to innovate and fill a need for certain products that aren't being sold? Or is it to make improvements on existing ones? Whatever the reason, it's always important to note that there should be some flexibility as things can change over time.
  • Timing: R&D requires a lot of time. This involves reviewing the market to see where there may be a lack of certain products and services or finding ways to improve on those that are already on the shelves.
  • Cost: R&D costs a great deal of money, especially when it comes to the upfront costs. And there may be higher costs associated with the conception and production of new products rather than updating existing ones.
  • Risks: As with any venture, R&D does come with risks. R&D doesn't come with any guarantees, no matter the time and money that goes into it. This means that companies and governments may sacrifice their ROI if the end product isn't successful.

Research and Development vs. Applied Research

Basic research is aimed at a fuller, more complete understanding of the fundamental aspects of a concept or phenomenon. This understanding is generally the first step in R&D. These activities provide a basis of information without directed applications toward products, policies, or operational processes .

Applied research entails the activities used to gain knowledge with a specific goal in mind. The activities may be to determine and develop new products, policies, or operational processes. While basic research is time-consuming, applied research is painstaking and more costly because of its detailed and complex nature.

R&D Tax Credits

The IRS offers a R&D tax credit to encourage innovation and significantly reduction their tax liability. The credit calls for specific types of spend such as product development, process improvement, and software creation.

Enacted under Section 41 of the Internal Revenue Code, this credit encourages innovation by providing a dollar-for-dollar reduction in tax obligations. The eligibility criteria, expanded by the Protecting Americans from Tax Hikes (PATH) Act of 2015, now encompass a broader spectrum of businesses. The credit tens to benefit small-to-midsize enterprises.

To claim R&D tax credits, businesses must document their qualifying expenses and complete IRS Form 6765 (Credit for Increasing Research Activities). The credit, typically ranging from 6% to 8% of annual qualifying expenses, offers businesses a direct offset against federal income tax liabilities. Additionally, businesses can claim up to $250,000 per year against their payroll taxes.

Example of Research and Development (R&D)

One of the more innovative companies of this millennium is Apple Inc. As part of its annual reporting, it has the following to say about its research and development spend:

In 2023, Apple reported having spent $29.915 billion. This is 8% of their annual total net sales. Note that Apple's R&D spend was reported to be higher than the company's selling, general and administrative costs (of $24.932 billion).

Note that the company doesn't go into length about what exactly the R&D spend is for. According to the notes, the company's year-over-year growth was "driven primarily by increases in headcount-related expenses". However, this does not explain the underlying basis carried from prior years (i.e. materials, patents, etc.).

Research and development refers to the systematic process of investigating, experimenting, and innovating to create new products, processes, or technologies. It encompasses activities such as scientific research, technological development, and experimentation conducted to achieve specific objectives to bring new items to market.

What Types of Activities Can Be Found in Research and Development?

Research and development activities focus on the innovation of new products or services in a company. Among the primary purposes of R&D activities is for a company to remain competitive as it produces products that advance and elevate its current product line. Since R&D typically operates on a longer-term horizon, its activities are not anticipated to generate immediate returns. However, in time, R&D projects may lead to patents, trademarks, or breakthrough discoveries with lasting benefits to the company. 

Why Is Research and Development Important?

Given the rapid rate of technological advancement, R&D is important for companies to stay competitive. Specifically, R&D allows companies to create products that are difficult for their competitors to replicate. Meanwhile, R&D efforts can lead to improved productivity that helps increase margins, further creating an edge in outpacing competitors. From a broader perspective, R&D can allow a company to stay ahead of the curve, anticipating customer demands or trends.

There are many things companies can do in order to advance in their industries and the overall market. Research and development is just one way they can set themselves apart from their competition. It opens up the potential for innovation and increasing sales. However, it does come with some drawbacks—the most obvious being the financial cost and the time it takes to innovate.

Amazon. " 2023 Annual Report ."

Internal Revenue Service. " Research Credit ."

Internal Revenue Service. " About Form 6765, Credit for Increasing Research Activities ."

Apple. " 2023 Annual Report ."

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Building an R&D strategy for modern times

The global investment in research and development (R&D) is staggering. In 2019 alone, organizations around the world spent $2.3 trillion on R&D—the equivalent of roughly 2 percent of global GDP—about half of which came from industry and the remainder from governments and academic institutions. What’s more, that annual investment has been growing at approximately 4 percent per year over the past decade. 1 2.3 trillion on purchasing-power-parity basis; 2019 global R&D funding forecast , Supplement, R&D Magazine, March 2019, rdworldonline.com.

While the pharmaceutical sector garners much attention due to its high R&D spending as a percentage of revenues, a comparison based on industry profits shows that several industries, ranging from high tech to automotive to consumer, are putting more than 20 percent of earnings before interest, taxes, depreciation, and amortization (EBITDA) back into innovation research (Exhibit 1).

What do organizations expect to get in return? At the core, they hope their R&D investments yield the critical technology from which they can develop new products, services, and business models. But for R&D to deliver genuine value, its role must be woven centrally into the organization’s mission. R&D should help to both deliver and shape corporate strategy, so that it develops differentiated offerings for the company’s priority markets and reveals strategic options, highlighting promising ways to reposition the business through new platforms and disruptive breakthroughs.

Yet many enterprises lack an R&D strategy that has the necessary clarity, agility, and conviction to realize the organization’s aspirations. Instead of serving as the company’s innovation engine, R&D ends up isolated from corporate priorities, disconnected from market developments, and out of sync with the speed of business. Amid a growing gap in performance  between those that innovate successfully and those that do not, companies wishing to get ahead and stay ahead of competitors need a robust R&D strategy that makes the most of their innovation investments. Building such a strategy takes three steps: understanding the challenges that often work as barriers to R&D success, choosing the right ingredients for your strategy, and then pressure testing it before enacting it.

Overcoming the barriers to successful R&D

The first step to building an R&D strategy is to understand the four main challenges that modern R&D organizations face:

Innovation cycles are accelerating. The growing reliance on software and the availability of simulation and automation technologies have caused the cost of experimentation to plummet while raising R&D throughput. The pace of corporate innovation is further spurred by the increasing emergence of broadly applicable technologies, such as digital and biotech, from outside the walls of leading industry players.

But incumbent corporations are only one part of the equation. The trillion dollars a year that companies spend on R&D is matched by the public sector. Well-funded start-ups, meanwhile, are developing and rapidly scaling innovations that often threaten to upset established business models or steer industry growth into new areas. Add increasing investor scrutiny of research spending, and the result is rising pressure on R&D leaders to quickly show results for their efforts.

R&D lacks connection to the customer. The R&D group tends to be isolated from the rest of the organization. The complexity of its activities and its specialized lexicon make it difficult for others to understand what the R&D function really does. That sense of working inside a “black box” often exists even within the R&D organization. During a meeting of one large company’s R&D leaders, a significant portion of the discussion focused on simply getting everyone up to speed on what the various divisions were doing, let alone connecting those efforts to the company’s broader goals.

Given the challenges R&D faces in collaborating with other functions, going one step further and connecting with customers becomes all the more difficult. While many organizations pay lip service to customer-centric development, their R&D groups rarely get the opportunity to test products directly with end users. This frequently results in market-back product development that relies on a game of telephone via many intermediaries about what the customers want and need.

Projects have few accountability metrics. R&D groups in most sectors lack effective mechanisms to measure and communicate progress; the pharmaceutical industry, with its standard pipeline for new therapeutics that provides well-understood metrics of progress and valuation implications, is the exception, not the rule. When failure is explained away as experimentation and success is described in terms of patents, rather than profits, corporate leaders find it hard to quantify R&D’s contribution.

Yet proven metrics exist  to effectively measure progress and outcomes. A common challenge we observe at R&D organizations, ranging from automotive to chemical companies, is how to value the contribution of a single component that is a building block of multiple products. One specialty-chemicals company faced this challenge in determining the value of an ingredient it used in its complex formulations. It created categorizations to help develop initial business cases and enable long-term tracking. This allowed pragmatic investment decisions at the start of projects and helped determine the value created after their completion.

Even with outcomes clearly measured, the often-lengthy period between initial investment and finished product can obscure the R&D organization’s performance. Yet, this too can be effectively managed by tracking the overall value and development progress of the pipeline so that the organization can react and, potentially, promptly reorient both the portfolio and individual projects within it.

Incremental projects get priority. Our research indicates that incremental projects account for more than half of an average company’s R&D investment, even though bold bets and aggressive reallocation  of the innovation portfolio deliver higher rates of success. Organizations tend to favor “safe” projects with near-term returns—such as those emerging out of customer requests—that in many cases do little more than maintain existing market share. One consumer-goods company, for example, divided the R&D budget among its business units, whose leaders then used the money to meet their short-term targets rather than the company’s longer-term differentiation and growth objectives.

Focusing innovation solely around the core business may enable a company to coast for a while—until the industry suddenly passes it by. A mindset that views risk as something to be avoided rather than managed can be unwittingly reinforced by how the business case is measured. Transformational projects at one company faced a higher internal-rate-of-return hurdle than incremental R&D, even after the probability of success had been factored into their valuation, reducing their chances of securing funding and tilting the pipeline toward initiatives close to the core.

As organizations mature, innovation-driven growth becomes increasingly important, as their traditional means of organic growth, such as geographic expansion and entry into untapped market segments, diminish. To succeed, they need to develop R&D strategies equipped for the modern era that treat R&D not as a cost center but as the growth engine it can become.

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Choosing the ingredients of a winning r&d strategy.

Given R&D’s role as the innovation driver that advances the corporate agenda, its guiding strategy needs to link board-level priorities with the technologies that are the organization’s focus (Exhibit 2). The R&D strategy must provide clarity and commitment to three central elements: what we want to deliver, what we need to deliver it, and how we will deliver it.

What we want to deliver. To understand what a company wants to and can deliver, the R&D, commercial, and corporate-strategy functions need to collaborate closely, with commercial and corporate-strategy teams anchoring the R&D team on the company’s priorities and the R&D team revealing what is possible. The R&D strategy and the corporate strategy must be in sync while answering questions such as the following: At the highest level, what are the company’s goals? Which of these will require R&D in order to be realized? In short, what is the R&D organization’s purpose?

Bringing the two strategies into alignment is not as easy as it may seem. In some companies, what passes for corporate strategy is merely a five-year business plan. In others, the corporate strategy is detailed but covers only three to five years—too short a time horizon to guide R&D, especially in industries such as pharma or semiconductors where the product-development cycle is much longer than that. To get this first step right, corporate-strategy leaders should actively engage with R&D. That means providing clarity where it is lacking and incorporating R&D feedback that may illuminate opportunities, such as new technologies that unlock growth adjacencies for the company or enable completely new business models.

Secondly, the R&D and commercial functions need to align on core battlegrounds and solutions. Chief technology officers want to be close to and shape the market by delivering innovative solutions that define new levels of customer expectations. Aligning R&D strategy provides a powerful forum for identifying those opportunities by forcing conversations about customer needs and possible solutions that, in many companies, occur only rarely. Just as with the corporate strategy alignment, the commercial and R&D teams need to clearly articulate their aspirations by asking questions such as the following: Which markets will make or break us as a company? What does a winning product or service look like for customers?

When defining these essential battlegrounds, companies should not feel bound by conventional market definitions based on product groups, geographies, or customer segments. One agricultural player instead defined its markets by the challenges customers faced that its solutions could address. For example, drought resistance was a key battleground no matter where in the world it occurred. That framing clarified the R&D–commercial strategy link: if an R&D project could improve drought resistance, it was aligned to the strategy.

The dialogue between the R&D, commercial, and strategy functions cannot stop once the R&D strategy is set. Over time, leaders of all three groups should reexamine the strategic direction and continuously refine target product profiles as customer needs and the competitive landscape evolve.

What we need to deliver it. This part of the R&D strategy determines what capabilities and technologies the R&D organization must have in place to bring the desired solutions to market. The distinction between the two is subtle but important. Simply put, R&D capabilities are the technical abilities to discover, develop, or scale marketable solutions. Capabilities are unlocked by a combination of technologies and assets, and focus on the outcomes. Technologies, however, focus on the inputs—for example, CRISPR is a technology that enables the genome-editing capability.

This delineation protects against the common pitfall of the R&D organization fixating on components of a capability instead of the capability itself—potentially missing the fact that the capability itself has evolved. Consider the dawn of the digital age: in many engineering fields, a historical reliance on talent (human number crunchers) was suddenly replaced by the need for assets (computers). Those who focused on hiring the fastest mathematicians were soon overtaken by rivals who recognized the capability provided by emerging technologies.

The simplest way to identify the needed capabilities is to go through the development processes of priority solutions step by step—what will it take to produce a new product or feature? Being exhaustive is not the point; the goal is to identify high-priority capabilities, not to log standard operating procedures.

Prioritizing capabilities is a critical but often contentious aspect of developing an R&D strategy. For some capabilities, being good is sufficient. For others, being best in class is vital because it enables a faster path to market or the development of a better product than those of competitors. Take computer-aided design (CAD), which is used to design and prototype engineering components in numerous industries, such as aerospace or automotive. While companies in those sectors need that capability, it is unlikely that being the best at it will deliver a meaningful advantage. Furthermore, organizations should strive to anticipate which capabilities will be most important in the future, not what has mattered most to the business historically.

Once capabilities are prioritized, the R&D organization needs to define what being “good” and “the best” at them will mean over the course of the strategy. The bar rises rapidly in many fields. Between 2009 and 2019, the cost of sequencing a genome dropped 150-fold, for example. 2 Kris A. Wetterstrand, “DNA sequencing costs: Data,” NHGRI Genome Sequencing Program (GSP), August 25, 2020, genome.gov. Next, the organization needs to determine how to develop, acquire, or access the needed capabilities. The decision of whether to look internally or externally is crucial. An automatic “we can build it better” mindset diminishes the benefits of specialization and dilutes focus. Additionally, the bias to building everything in-house can cut off or delay access to the best the world has to offer—something that may be essential for high-priority capabilities. At Procter & Gamble, it famously took the clearly articulated aspiration of former CEO A. G. Lafley to break the company’s focus on in-house R&D and set targets for sourcing innovation externally. As R&D organizations increasingly source capabilities externally, finding partners and collaborating with them effectively is becoming a critical capability in its own right.

How we will do it. The choices of operating model and organizational design will ultimately determine how well the R&D strategy is executed. During the strategy’s development, however, the focus should be on enablers that represent cross-cutting skills and ways of working. A strategy for attracting, developing, and retaining talent is one common example.

Another is digital enablement, which today touches nearly every aspect of what the R&D function does. Artificial intelligence can be used at the discovery phase to identify emerging market needs or new uses of existing technology. Automation and advanced analytics approaches to experimentation can enable high throughput screening at a small scale and distinguish the signal from the noise. Digital (“in silico”) simulations are particularly valuable when physical experiments are expensive or dangerous. Collaboration tools are addressing the connectivity challenges common among geographically dispersed project teams. They have become indispensable in bringing together existing collaborators, but the next horizon is to generate the serendipity of chance encounters that are the hallmark of so many innovations.

Testing your R&D strategy

Developing a strategy for the R&D organization entails some unique challenges that other functions do not face. For one, scientists and engineers have to weigh considerations beyond their core expertise, such as customer, market, and economic factors. Stakeholders outside R&D labs, meanwhile, need to understand complex technologies and development processes and think along much longer time horizons than those to which they are accustomed.

For an R&D strategy to be robust and comprehensive enough to serve as a blueprint to guide the organization, it needs to involve stakeholders both inside and outside the R&D group, from leading scientists to chief commercial officers. What’s more, its definition of capabilities, technologies, talent, and assets should become progressively more granular as the strategy is brought to life at deeper levels of the R&D organization. So how can an organization tell if its new strategy passes muster? In our experience, McKinsey’s ten timeless tests of strategy  apply just as well to R&D strategy as to corporate and business-unit strategies. The following two tests are the most important in the R&D context:

  • Does the organization’s strategy tap the true source of advantage? Too often, R&D organizations conflate technical necessity (what is needed to develop a solution) with strategic importance (distinctive capabilities that allow an organization to develop a meaningfully better solution than those of their competitors). It is also vital for organizations to regularly review their answers to this question, as capabilities that once provided differentiation can become commoditized and no longer serve as sources of advantage.
  • Does the organization’s strategy balance commitment-rich choices with flexibility and learning? R&D strategies may have relatively long time horizons but that does not mean they should be insulated from changes in the outside world and never revisited. Companies should establish technical, regulatory, or other milestones that serve as clear decision points for shifting resources to or away from certain research areas. Such milestones can also help mark progress and gauge whether strategy execution is on track.

Additionally, the R&D strategy should be simply and clearly communicated to other functions within the company and to external stakeholders. To boost its clarity, organizations might try this exercise: distill the strategy into a set of fill-in-the-blank components that define, first, how the world will evolve and how the company plans to refocus accordingly (for example, industry trends that may lead the organization to pursue new target markets or segments); next, the choices the R&D function will make in order to support the company’s new focus (which capabilities will be prioritized and which de-emphasized); and finally, how the R&D team will execute the strategy in terms of concrete actions and milestones. If a company cannot fit the exercise on a single page, it has not sufficiently synthesized the strategy—as the famed physicist Richard Feynman observed, the ultimate test of comprehension is the ability to convey something to others in a simple manner.

Cascading the strategy down through the R&D organization will further reinforce its impact. For example, asking managers to communicate the strategy to their subordinates will deepen their own understanding. A useful corollary is that those hearing the strategy for the first time are introduced to it by their immediate supervisors rather than more distant R&D leaders. One R&D group demonstrated the broad benefits of this communication model: involving employees in developing and communicating the R&D strategy helped it double its Organizational Health Index  strategic clarity score, which measures one of the four “power practices”  highly connected to organizational performance.

R&D represents a massive innovation investment, but as companies confront globalized competition, rapidly changing customer needs, and technological shifts coming from an ever-wider range of fields, they are struggling to deliver on R&D’s full potential. A clearly articulated R&D strategy that supports and informs the corporate strategy is necessary to maximize the innovation investment and long-term company value.

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13.1: An Introduction to Research and Development (R&D)

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Learning Objectives

  • Know what constitutes research and development (R&D).
  • Understand the importance of R&D to corporations.
  • Recognize the role government plays in R&D.

Research and development (R&D) refers to two intertwined processes of research (to identify new knowledge and ideas) and development (turning the ideas into tangible products or processes). Companies undertake R&D in order to develop new products, services, or procedures that will help them grow and expand their operations. Corporate R&D began in the United States with Thomas Edison and the Edison General Electric Company he founded in 1890 (which is today’s GE). Edison is credited with 1,093 patents, but it’s actually his invention of the corporate R&D lab that made all those other inventions possible.Andrea Meyer, “High-Value Innovation: Innovating the Management of Innovation,” Working Knowledge (blog), August 20, 2009, accessed February 22, 2011, http://workingknowledge.com/blog/?p=594 . Edison was the first to bring management discipline to R&D, which enabled a much more powerful method of invention by systematically harnessing the talent of many individuals. Edison’s 1,093 patents had less to do with individual genius and more to do with management genius: creating and managing an R&D lab that could efficiently and effectively crank out new inventions. For fifty years following the early twentieth century, GE was awarded more patents than any other firm in America.Gary Hamel, “The Why, What and How of Management Innovation,” Harvard Business Review , February 2006, accessed February 24, 2011, http://hbr.org/2006/02/the-why-what-and-how-of-management-innovation/ar/1 .

Edison is known as an inventor, but he was also a great innovator. Here’s the difference: an invention brings an idea into tangible reality by embodying it as a product or system. An innovation converts a new idea into revenues and profits. Inventors can get patents on original ideas, but those inventions may not make money. For an invention to become an innovation, people must be willing to buy it in high enough numbers that the firm benefits from making it.A. G. Lafley and Ram Charan, The Game-Changer (New York: Crown Publishing Group, 2008), 21.

Edison wanted his lab to be a commercial success. “Anything that won’t sell, I don’t want to invent. Its sale is proof of utility and utility is success,”A. G. Lafley and Ram Charan, The Game-Changer (New York: Crown Publishing Group, 2008), 25. Edison said. Edison’s lab in Menlo Park, New Jersey, was an applied research lab, which is a lab that develops and commercializes its research findings. As defined by the National Science Foundation, applied research is “systematic study to gain knowledge or understanding necessary to determine the means by which a recognized and specific need may be met.”National Science Foundation, “Definitions of Research and Development,” Office of Management and Budget Circular A-11, accessed March 5, 2011, http://www.nsf.gov/statistics/randdef/fedgov.cfm . In contrast, basic research advances the knowledge of science without an explicit, anticipated commercial outcome.

History and Importance

From Edison’s lab onward, companies learned that a systematic approach to research could provide big competitive advantages. Companies could not only invent new products, but they could also turn those inventions into innovations that launched whole new industries. For example, the radio, wireless communications, and television industry grew out of early-twentieth-century research by General Electric and American Telephone and Telegraph (AT&T, which founded Bell Labs).

The heyday of American R&D labs came in the 1950s and early 1960s, with corporate institutions like Bell Labs, RCA labs, IBM’s research centers, and government institutions such as NASA and DARPA. These labs funded both basic and applied research, giving birth to the transistor, long-distance TV transmission, photovoltaic solar cells, the UNIX operating system, and cellular telephony, each of which led to the creation of not just hundreds of products but whole industries and millions of jobs.Adrian Slywotzky, “How Science Can Create Millions of New Jobs,” BusinessWeek , September 7, 2009, accessed May 11, 2011, http://www.businessweek.com/magazine/content/09_36/b4145036678131.htm . DARPA’s creation of the Internet (known at its inception as ARPAnet) and Xerox PARC’s Ethernet and graphical-user interface (GUI) laid the foundations for the PC revolution.Adrian Slywotzky, “How Science Can Create Millions of New Jobs,” BusinessWeek , September 7, 2009, accessed May 11, 2011, http://www.businessweek.com/magazine/content/09_36/b4145036678131.htm .

Companies invest in R&D to gain a pipeline of new products. For a high-tech company like Apple, it means coming up with new types of products (e.g., the iPad) as well as newer and better versions of its existing computers and iPhones. For a pharmaceutical company, it means coming out with new drugs to treat diseases. Different parts of the world have different diseases or different forms of known diseases. For example, diabetes in China has a different molecular structure than diabetes elsewhere in the world, and pharmaceutical company Eli Lilly’s new R&D center in Shanghai will focus on this disease variant.“2011 Global R&D Funding Forecast,” R&D Magazine , December 2010, accessed February 27, 2011, www.battelle.org/aboutus/rd/2011.pdf . Even companies that sell only services benefit from innovation and developing new services. For example, MasterCard Global Service started providing customers with emergency cash advances, directions to nearby ATMs, and emergency card replacements.Lance Bettencourt, Service Innovation (New York: McGraw-Hill, 2010), 99.

Innovation also includes new product and service combinations. For example, heavy-equipment manufacturer John Deere created a product and service combination by equipping a GPS into one of its tractors. The GPS keeps the tractor on a parallel path, even under hands-free operation, and keeps the tractor with only a two-centimeter overlap of those parallel lines. This innovation helps a farmer increase the yield of the field and complete passes over the field in the tractor more quickly. The innovation also helps reduce fuel, seed, and chemical costs because there is little overlap and waste of the successive parallel passes.Lance Bettencourt, Service Innovation (New York: McGraw-Hill, 2010), 110.

Did You Know?

Appliance maker Whirlpool has made innovation a strategic priority in order to stay competitive. Whirlpool has an innovation pipeline that currently numbers close to 1,000 new products. On average, Whirlpool introduces one hundred new products to the market each year. “Every month we report pipeline size measured by estimated sales, and our goal this year is $4 billion,” said Moises Norena, director of global innovation at Whirlpool. With Whirlpool’s 2008 revenue totaling $18.9 billion, that means roughly 20 percent of sales would be from new products.Jessie Scanlon, “How Whirlpool Puts New Ideas through the Wringer,” BusinessWeek , August 3, 2009, accessed January 17, 2011, http://www.businessweek.com/innovate/content/aug2009/id2009083_452757.htm .

Not only do companies benefit from investing in R&D, but the nation’s economy benefits as well, as Massachusetts Institute of Technology (MIT) professor Robert Solow discovered. Solow showed mathematically that, in the long run, growth in gross national product per worker is due more to technological progress than to mere capital investment. Solow won a Nobel Prize for his research, and investment in corporate R&D labs grew.

Although R&D has its roots in national interests, it has become globalized. Most US and European Fortune 1000 companies have R&D centers in Asia.“2011 Global R&D Funding Forecast,” R&D Magazine , December 2010, accessed February 27, 2011, www.battelle.org/aboutus/rd/2011.pdf . You’ll see the reasons for the globalization of R&D in Section 13.3 .

The Role of Government

Governments have played a large role in the inception of R&D, mainly to fund research for military applications for war efforts. Today, governments still play a big role in innovation because of their ability to fund R&D. A government can fund R&D directly, by offering grants to universities and research centers or by offering contracts to corporations for performing research in a specific area.

Governments can also provide tax incentives for companies that invest in R&D. Countries vary in the tax incentives that they give to corporations that invest in R&D. By giving corporations a tax credit when they invest in R&D, governments encourage corporations to invest in R&D in their countries. For example, Australia gave a 125 percent tax deduction for R&D expenses. The Australian government’s website noted, “It’s little surprise then, that many companies from around the world are choosing to locate their R&D facilities in Australia.” The government also pointed out that “50 percent of the most innovative companies in Australia are foreign-based.”Committee on Prospering in the Global Economy of the 21st Century (U.S.), Committee on Science, Engineering, and Public Policy (U.S.), Rising Above the Gathering Storm (Washington, DC: National Academies Press, 2007), 195.

Finally, governments can promote innovation through investments in infrastructure that will support new technology and by committing to buy the new technology. China is doing this in a big way, and it is thus influencing the course of many companies around the world. Since 2000, China has had a policy in place “to encourage tech transfer from abroad and to force foreign companies to transfer their R&D operations to China in exchange for access to China’s large volume markets,” reported R&D Magazine in its 2010 review of global R&D.“2011 Global R&D Funding Forecast,” R&D Magazine , December 2010, accessed February 27, 2011, www.battelle.org/aboutus/rd/2011.pdf . For example, any automobile manufacturer that wants to sell cars in China must enter into a partnership with a Chinese company. As a result, General Motors (GM), Daimler, Hyundai, Volkswagen (VW), and Toyota have all formed joint ventures with Chinese companies. General Motors and Volkswagen, for example, have both formed joint ventures with the Chinese company Shanghai Automotive Industry Corporation (SAIC), even though SAIC also sells cars under its own brand.Brian Dumaine, “China Charges into Electric Cars,” Fortune , November 1, 2010, 140. The Chinese government made another strategic decision influencing innovation in the automobile industry. Because no Chinese company is a leader in internal combustion engines, the government decided to leapfrog the technology and focus on becoming a leader in electric cars.Bill Russo, Tao Ke, Edward Tse, and Bill Peng, China’s Next Revolution: Transforming The Global Auto Industry , Booz & Company report, 2010, accessed February 27, 2011, www.booz.com/media/file/China’s_Next_Revolution_en.pdf . “Beijing has pledged that it will do whatever it takes to help the Chinese car industry take the lead in electric vehicles,” notes industry watcher Brian Dumaine. Brian Dumaine, “China Charges into Electric Cars,” Fortune , November 1, 2010, 140. That includes allocating $8 billion in R&D funds as well as another $10 billion in infrastructure (e.g., installing charging stations).Gordon Orr, “Unleashing Innovation in China,” McKinsey Quarterly , January 2011, accessed January 2, 2011, www.mckinseyquarterly.com/Strategy/Innovation/Unleashing_innovation_in_China_2725 . The government will also subsidize the purchase of electric cars by consumers and has committed to buying electric cars for government fleets, thus guaranteeing that there will be buyers for the new electric vehicles that companies invent and develop.

Another role of government is to set high targets that require innovation. In the 1960s, the US Apollo space program launched by President John F. Kennedy inspired US corporations to work toward putting a man on the moon. The government’s investments in the Apollo program sped up the development of computer and communications technology and also led to innovations in fuel cells, water purification, freeze-drying food, and digital image processing now used in medical products for CAT scans and MRIs.Adrian Slywotzky, “How Science Can Create Millions of New Jobs,” BusinessWeek , September 7, 2009, accessed May 11, 2011, http://www.businessweek.com/magazine/content/09_36/b4145036678131.htm . Today, government policies coming from the European Union mandate ambitious environmental targets, such as carbon-neutral fuels and energy, which are driving global R&D to achieve environmental goals the way the Apollo program drove R&D in the 1960s.Martin Grueber and Tim Studt, “A Battelle Perspective on Investing in International R&D,” R&D Magazine , December 22, 2009, http://www.rdmag.com/Featured-Articles/2009/12/Global-Funding-Forecast-A-Battelle-Perspective-International-R-D .

After the 1990s, US investment in R&D declined, especially in basic research. Governments in other countries, however, continue to invest. New government-corporate partnerships are developing around the world. IBM, which for years closely guarded its R&D labs (even IBM employees were required to have special badges to enter the R&D area), is now setting up “collaboratories” around the world. These collaboratories are partnerships between IBM researchers and outside experts from government, universities, and even other companies. “The world is our lab now,” says John E. Kelly III, director of IBM Research.Steve Hamm, “How Big Blue Is Forging Cutting-edge Partnerships around the World,” BusinessWeek , August 27, 2009, accessed January 2, 2010, http://www.businessweek.com/print/magazine/content/09_36/b4145040683083.htm . IBM has deals for six future collaboratories in China, Ireland, Taiwan, Switzerland, India, and Saudi Arabia.

The reason for the collaboratory strategy is to share R&D costs—IBM’s partners must share 50 percent of the funding costs, which means that together the partners can participate in a large-scale effort that they’d be hard pressed to fund on their own. An example is IBM’s research partnership with the state-funded Swiss university ETH Zurich. The two are building a $70 million semiconductor lab for nanotech research with the goal of identifying a replacement for the current semiconductor-switch technology.Steve Hamm, “How Big Blue Is Forging Cutting-Edge Partnerships around the World,” BusinessWeek , August 27, 2009, accessed January 2, 2010, http://www.businessweek.com/print/magazine/content/09_36/b4145040683083.htm . Such a breakthrough could harken the creation of a whole new industry.

Of all the countries in the world, the United States remains the largest investor in R&D. One-third of all spending on R&D comes from the United States. Just one government agency—the Department of Defense—provides more funding than all the nations of the world except China and Japan. Nonetheless, other countries are increasing the amounts of money they spend on R&D. Their governments are funding R&D at higher levels and are giving more attractive tax incentives to firms that spend on R&D.

Governments can also play a big role in the protection of intellectual property rights, as you’ll see in Section 13.2 .

KEY TAKEAWAYS

  • R&D refers to two intertwined processes of research (to identify new facts and ideas) and development (turning the ideas into tangible products and services.) Companies undertake R&D to get a pipeline of new products. Breakthrough innovations can create whole new industries, which can provide thousands of jobs.
  • Invention is the creation of a new idea embodied in a product or process, while innovation takes that new idea and commercializes it in a way that enables a company to generate revenue from it.
  • Government support of R&D plays a significant role in innovation. It has been generally accepted that it’s desirable to encourage R&D for reasons of economic growth as well as national security. This has resulted in massive support from public funds for many sorts of laboratories. Governments influence R&D not only by providing direct funding but also by providing tax incentives to companies that invest in R&D. Governments also stimulate innovation through supporting institutions such as education and providing reliable infrastructure.

(AACSB: Reflective Thinking, Analytical Skills)

  • What benefits does a company get by investing in R&D?
  • Why do organizations make a distinction between basic research and applied research?
  • Describe three ways in which government can influence R&D.

Research and Development 

Research and development are the processes businesses follow to develop and introduce new products and improve existing services.  

Home > Research Glossary > Research and Development

What is research and development? 

Research and development (R&D) refers to the activities that businesses engage in to: 

  • Develop and introduce new products and services or
  • Innovate and improve on existing products and services 

R&D can be an invaluable tool for building and enhancing your business. It involves conducting a thorough investigation into your industry, your competitors, and your customers and uncovering the data and insights that are most important to your company.  

Armed with this information, you can be more strategic and better informed for meeting the needs of both your customers and your organization. So, finding this type of accurate, complete information in a timely fashion is essential to making smarter, more impactful business decisions. 

Why are data and insights important for your R&D strategy  

Data and the insights you draw from that data are critical to any R&D strategy. They help you: 

  • Paint a more complete picture of the industry landscape, of a competitor, or of a particular individual
  • Identify existing or emerging trends
  • Unlock new business opportunities
  • Build successful strategies so you can confidently make the right decisions for your organization
  • Mitigate market disruptions and be risk resilient 

What’s more, data provides crucial insights into the factors influencing your business not just today, but also well into the future. Equipped with this knowledge, you’re in a much stronger position to create long-term value for your customers, markets, and relationships.  

What kind of data do you need for your R&D strategy  

No one can dispute that the Internet is an amazing tool. With it, we have at our fingertips immediate access to seemingly immeasurable amounts of free data – facts, statistics, and insights. But the Internet also comes with its limitations and hazards, especially when it comes to important research. Some challenges of using only the open web to conduct research include: 

  • Questionable sources
  • Outdated information
  • Fake news or misinformation
  • Inconvenient paywalls or other research dead ends
  • Information gaps or, conversely, content overload 

In today's information-on-demand age, traditional search engines and general online research just won’t suffice for a robust R&D strategy. You need a smarter, more efficient approach, one that: 

  • Avoids these internet obstacles
  • Takes your research beyond the one-dimensional and draws from wide-ranging, first-rate sources
  • Indexes and filters the research, so you’re getting only the data that’s most important to your organization
  • Turns that data into actionable insights that strengthen your decision-making and help you achieve your business objectives 

So, it’s not about just any data – it’s about the right data. Trusted, well-vetted, and comprehensive information is critical for robust R&D. That means knowing where to get such valuable data and having the research tools in place to deliver it are key to developing a successful R&D strategy. 

How LexisNexis supports research and development 

Nexis ®    supplies content from the world's leading publishers. It aggregates information from more than 40,000 international news and business outlets, as well as from thousands of business-relevant websites, blogs, and forums. Tens of thousands of sources and millions of documents are at your disposal for company research. 

It enables you to search this expertly curated content for all the relevant, credible, quality information you need – all in one place – and access reports, data, and info that’s often locked behind a paywall. You can organize and keep track of your research using alerts, personalized dashboards, reports, and customizable analyses. 

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What Is Research and Development (R&D) and Why It's Important for Businesses

Rebecca woolf.

The practice of research and development (R&D) may help your company expand and flourish. R&D is the process of generating new, better goods and services to meet the demands of your customers after investigating your market and your client base.

Businesses with an R&D plan are more likely to succeed than those without one. An R&D plan may raise efficiency, foster innovation, and strengthen your company's competitive edge.

In-Depth Understanding of Research and Development (R&D)

Importance of research and development (r&d) for business.

R&D is frequently used to refer to innovation in the business and public sectors. It enables a business to maintain a competitive edge. Without a R&D program, a business might not be able to exist on its own. Instead, it may need to rely on alternative innovation methods, such as collaborations or mergers and acquisitions (M&A). Through R&D, companies can produce new products and improve their existing offerings.

Most of a corporation's operational tasks are distinct from R&D. Normally, research and/or development are not carried out with the hope of making money immediately. Instead, it is anticipated to help a firm become more profitable over the long run. Companies that focus to set up and employ entire R&D departments commit a sizable sum of money to the project.

There is no immediate payout, and the return on investment (ROI) is unpredictable. Thus they must estimate the risk-adjusted return on their R&D investment, which inherently entails capital risk. Although, R&D requires a considerable investment, so the level of capital risk increases.

The ability to do research and development (R&D) is not limited to large enterprises. R&D is another tool that small businesses may use to enhance operations, develop fresh, superior goods and services, boost profits, and become more competitive. Here are seven ways that R&D may help you realise an original concept for a new good or service:

Improve Productivity and Differentiate Products

Businesses get a competitive edge by outperforming their rivals in a way that is difficult for them to imitate. It is simpler to outperform competitors if R&D activities result in an enhanced business process—reducing marginal costs or raising marginal productivity.

R&D Tax Credits

The IRS began providing tax advantages to businesses in 1981, so they could spend money and hire people for research and development. Along with a special 20-year carry-forward provision for the credit, such costs may be applied to reduce tax liability.

Mergers and Buyouts

By offering their outstanding ideas to well-established companies with ample resources, many small company owners and entrepreneurs have amassed substantial sums of money quickly. Although buyouts are more frequent among Internet businesses, they can occur wherever there is a strong incentive for innovation.

R&D Advantages in Marketing and Advertising

Advertising is rife with boasts of ground-breaking new methods or previously unseen goods and technology. Customers frequently desire new and improved items only because they are brand-new. In the proper market, R&D departments may serve as advertising wings.

Leveraging R&D initiatives, companies may develop very successful marketing plans to introduce new products or updated versions of existing products. A business might develop cutting-edge marketing strategies that complement its imaginative items and boost market involvement. Innovative new things or features can grow market share by offering clients something they've never seen before.

Competitive Edge

You may get an edge over rivals and become the industry leader through research and development (R&D). The creation of new goods and services can also lead to the creation of new intellectual property for your company, which may have financial advantages for you as well.

Collaboration

R&D projects may benefit greatly from collaboration, which is frequently essential to its success. For example, your company may collaborate with another firm, a university, or a college. It enables the sharing of talents and knowledge, as well as access to resources, knowledge, and maybe fresh ideas that would not otherwise be available to your company.

Your brand and reputation may be strengthened by participating in R&D. The economic success of the ensuing goods and services might gain from the engagement of a reliable, trustworthy partner or a powerful scientific organisation.

Companies invest in R&D for various reasons, including improved market participation, cost management advantages, improvements in marketing capabilities, and trend-matching. A corporation may stay current by using R&D to track or stay ahead of market trends. While resources must be set aside for R&D, the innovations developed via this research can help to save costs by resulting in more efficient goods or production methods.

Given the degree of competition and the constant advancement of manufacturing techniques and procedures, research and development are crucial to a business. It is particularly critical in marketing, where companies maintain a sharp watch on competitors and clients to stay on top of current trends and assess their clientele's requirements, requests, and preferences. The outcomes are certain to be positive if a business has contributed significantly to R&D, but more R&D investment does not equate to increased inventiveness, profit, or market share.

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What Is Research and Why We Do It

  • First Online: 23 June 2020

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what is research and development and why is it important

  • Carlo Ghezzi 2  

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The notions of science and scientific research are discussed and the motivations for doing research are analyzed. Research can span a broad range of approaches, from purely theoretical to practice-oriented; different approaches often coexist and fertilize each other. Research ignites human progress and societal change. In turn, society drives and supports research. The specific role of research in Informatics is discussed. Informatics is driving the current transition towards the new digital society in which we will live in the future.

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In [ 34 ], P.E. Medawar discusses what he calls the “snobismus” of pure versus applied science. In his words, this is one of the most damaging forms of snobbism, which draws a class distinction between pure and applied science.

Originality, rigor, and significance have been defined and used as the key criteria to evaluate research outputs by the UK Research Excellence Framework (REF) [ 46 ]. A research evaluation exercise has been performed periodically since 1986 on UK higher education institutions and their research outputs have been rated according to their originality, rigor, and significance.

The importance of realizing that “we don’t know” was apparently first stated by Socrates, according to Plato’s account of his thought. This is condensed in the famous paradox “I know that I don’t know.”

This view applies mainly to natural and physical sciences.

Roy Amara was President of the Institute for Future, a USA-based think tank, from 1971 until 1990.

The Turing Award is generally recognized as the Nobel prize of Informatics.

See http://uis.unesco.org/apps/visualisations/research-and-development-spending/ .

Israel is a very good example. Investments in research resulted in a proliferation of new, cutting-edge enterprises. The term start-up nation has been coined by Dan Senor and Saul Singer in their successful book [ 51 ] to characterize this phenomenon.

https://ec.europa.eu/programmes/horizon2020/en/h2020-section/societal-challenges .

https://ec.europa.eu/programmes/horizon2020/en/h2020-section/cross-cutting-activities-focus-areas .

This figure has been adapted from a presentation by A. Fuggetta, which describes the mission of Cefriel, an Italian institution with a similar role of Fraunhofer, on a smaller scale.

The ERC takes an ecumenical approach and calls the research sector “Computer Science and Informatics.”

I discuss here the effect of “big data” on research, although most sectors of society—industry, finance, health, …—are also deeply affected.

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Research and Development is More Important Than You Think

February 23, 2021

Research and development is a key component in the successful discovery and development of new drugs and medical devices entering the market. It’s also an area of big business, with investments in R&D experiencing historic growth year after year.

With such impressive growth comes a need for companies to have a sound R&D strategy . Here, we talk about the importance of R&D and how to improve your R&D processes.

What is Research and Development?

Research and development is defined by innovation and obtaining new knowledge. Before introducing new products and services into the marketplace or improving existing similar tools, companies must first engage in the R&D process to fully understand the applications of that innovation.

Types of R&D

There are three main types of research and development as defined by the National Science Foundation :

  • Basic research is a broad approach to research that may not have specified end goals in mind. The focus is on gaining knowledge, which can then be linked to a company’s stated goals.
  • Applied research is a more defined approach with a means to an end in mind. A company may have identified a specific objective and is now looking for ways to meet that objective with a product or service.
  • Development is using research gathered in new innovations or in improving existing products and services. The development process can also lead to additional paths for research.

Why is Research and Development Important?

The importance of R&D, particularly in the biotechnology research and development space, is tangible. Innovation can lead to improvements in the overall health of a population. But research and development is also critical to the health of companies doing the research.

Important Results That Prolong and Save Lives

Consider the work being done with the genome-editing tool CRISPR-Cas9 , a tool that could have a wide range of applications in the treatment and cure of diseases that link back to genetics. This includes everything from cancer to high cholesterol.

While challenges certainly exist, particularly in the effective planning and execution of research and development programs, these programs’ value goes beyond innovation when run successfully.

Improve Upon Existing Products

Once products such as new drugs or medical devices hit the market, the need for continued research into the efficacy of those products continues.

Research teams consistently monitor data to account for potential side effects, unknown variables, or new applications for existing products. With the overwhelming amount of big data in medical science that emerges via R&D, working with a resource management team helps ensure ongoing data management is monetized properly.

In the coming years, R&D will explode with the possibilities of personalization. Patients are looking for personalized responses to their healthcare needs. The general public is becoming more and more aware of just how unique their genome and physiologies are. Research and product development that focuses on a more granular approach to health solutions will not only provide reliable revenue for biotech, but better answers for consumers.

Economic Growth

Despite research and development costs, investment in R&D is critical for biotech to remain competitive in the market. New, unique products mean fresh sales and fresh eyes on an organization, on top of tax credit opportunities . Aggressive research and development strategies are then critical to a company’s business plan.

R&D also supports economic growth on a global scale in both direct and indirect ways. In the biopharmaceutical industry alone, R&D is a top driver of high-quality, well-paid employment opportunities, generates revenue for a company through innovative products, and can be an internal investment tool in statewide clinical trials.

Recruitment Boosts

Companies known for innovation have an easier time recruiting and keeping talent. Talented researchers seek environments where they can do work that leads to important results. Therefore, these researchers will seek out companies that have a developed R&D process.

A robust R&D program drives not only new products and devices but also entices top talent. Progress comes as a result of efficient, effective teams doing the difficult work to improve health outcomes.

How to Improve Your R&D Process

Now that you know the importance of research and development, it’s just as important to ensure that your R&D strategy is sound. Take the following steps to improve your R&D process :

  • Set priorities that align with company-wide goals and growth strategies.
  • Improve, standardize and automate processes.
  • Take advantage of the wealth of data available and adopt big data strategies.
  • Prioritize risk assessment across all aspects of company operations.
  • Implement processes that preserve data integrity, such as electronic audit trails.
  • Pursue opportunities for strategic collaboration.

Trust the Experts

ProPharma experts support you in your endeavors to innovate and ensure that your R&D processes are efficient and effective. While many challenges exist, identifying and mitigating difficult obstacles often takes “fresh eyes,” something only outside, experienced consultants can provide.

ProPharma insights help you move your R&D strategy to the next level so you can focus on big picture innovations and exciting new products central to your market.

TAGS: R&D strategy R&D Clinical Research Solutions

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Research and development (R&D)

Research and development (R&D) is a valuable tool for growing and improving your business. R&D involves researching your market and your customer needs and developing new and improved products and services to fit these needs. Businesses that have an R&D strategy have a greater chance of success than businesses that don't. An R&D strategy can lead to innovation and increased productivity and can boost your business's competitive advantage.

Developing an R&D strategy

Your R&D strategy depends on the size of your business. In small businesses, R&D tends to focus more on product improvement because of budget and cost limitations. Larger businesses may be able to dedicate more time and resources to R&D to introduce new products as well as improve existing ones. The benefits of R&D are often long-term, so it's important to remember that your investment in it may not result in short-term profits. As well as product development and improvement, R&D can help you develop more efficient processes and new ways of delivering services.

Spending more time and money on R&D does not guarantee it will be successful. The key to successful R&D is extensive market research to identify the needs and desires of your customers. You will need to revisit this research regularly as customer preferences frequently change.

Find out more about researching customers .

Innovation in your business

R&D can lead to innovations in your business. These may be in terms of new products and services, improved processes and new ways to interact with your customers. These innovations can result in greater profits and lower costs. Innovation is also a useful way to grow your business .

Find out about innovation grants and support .

Support for R&D

Once new and improved products have been developed through R&D, businesses often seek to commercialise them so they can be sold on the market.

Australian businesses conducting R&D may also be eligible for a tax offset. Find out more about R&D tax incentives , including what you need to do to be eligible.

Also consider...

  • If you're thinking of starting a business, find out how to evaluate your idea , research your market , and develop and protect your idea to improve your chances of success.
  • Find out about renewable energy grants and support .
  • Last reviewed: 25 Jul 2019
  • Last updated: 2 Jun 2023

2.1 Why Is Research Important?

Learning objectives.

By the end of this section, you will be able to:

  • Explain how scientific research addresses questions about behavior
  • Discuss how scientific research guides public policy
  • Appreciate how scientific research can be important in making personal decisions

Scientific research is a critical tool for successfully navigating our complex world. Without it, we would be forced to rely solely on intuition, other people’s authority, and blind luck. While many of us feel confident in our abilities to decipher and interact with the world around us, history is filled with examples of how very wrong we can be when we fail to recognize the need for evidence in supporting claims. At various times in history, we would have been certain that the sun revolved around a flat earth, that the earth’s continents did not move, and that mental illness was caused by possession ( Figure 2.2 ). It is through systematic scientific research that we divest ourselves of our preconceived notions and superstitions and gain an objective understanding of ourselves and our world.

The goal of all scientists is to better understand the world around them. Psychologists focus their attention on understanding behavior, as well as the cognitive (mental) and physiological (body) processes that underlie behavior. In contrast to other methods that people use to understand the behavior of others, such as intuition and personal experience, the hallmark of scientific research is that there is evidence to support a claim. Scientific knowledge is empirical : It is grounded in objective, tangible evidence that can be observed time and time again, regardless of who is observing.

While behavior is observable, the mind is not. If someone is crying, we can see behavior. However, the reason for the behavior is more difficult to determine. Is the person crying due to being sad, in pain, or happy? Sometimes we can learn the reason for someone’s behavior by simply asking a question, like “Why are you crying?” However, there are situations in which an individual is either uncomfortable or unwilling to answer the question honestly, or is incapable of answering. For example, infants would not be able to explain why they are crying. In such circumstances, the psychologist must be creative in finding ways to better understand behavior. This chapter explores how scientific knowledge is generated, and how important that knowledge is in forming decisions in our personal lives and in the public domain.

Use of Research Information

Trying to determine which theories are and are not accepted by the scientific community can be difficult, especially in an area of research as broad as psychology. More than ever before, we have an incredible amount of information at our fingertips, and a simple internet search on any given research topic might result in a number of contradictory studies. In these cases, we are witnessing the scientific community going through the process of reaching a consensus, and it could be quite some time before a consensus emerges. For example, the explosion in our use of technology has led researchers to question whether this ultimately helps or hinders us. The use and implementation of technology in educational settings has become widespread over the last few decades. Researchers are coming to different conclusions regarding the use of technology. To illustrate this point, a study investigating a smartphone app targeting surgery residents (graduate students in surgery training) found that the use of this app can increase student engagement and raise test scores (Shaw & Tan, 2015). Conversely, another study found that the use of technology in undergraduate student populations had negative impacts on sleep, communication, and time management skills (Massimini & Peterson, 2009). Until sufficient amounts of research have been conducted, there will be no clear consensus on the effects that technology has on a student's acquisition of knowledge, study skills, and mental health.

In the meantime, we should strive to think critically about the information we encounter by exercising a degree of healthy skepticism. When someone makes a claim, we should examine the claim from a number of different perspectives: what is the expertise of the person making the claim, what might they gain if the claim is valid, does the claim seem justified given the evidence, and what do other researchers think of the claim? This is especially important when we consider how much information in advertising campaigns and on the internet claims to be based on “scientific evidence” when in actuality it is a belief or perspective of just a few individuals trying to sell a product or draw attention to their perspectives.

We should be informed consumers of the information made available to us because decisions based on this information have significant consequences. One such consequence can be seen in politics and public policy. Imagine that you have been elected as the governor of your state. One of your responsibilities is to manage the state budget and determine how to best spend your constituents’ tax dollars. As the new governor, you need to decide whether to continue funding early intervention programs. These programs are designed to help children who come from low-income backgrounds, have special needs, or face other disadvantages. These programs may involve providing a wide variety of services to maximize the children's development and position them for optimal levels of success in school and later in life (Blann, 2005). While such programs sound appealing, you would want to be sure that they also proved effective before investing additional money in these programs. Fortunately, psychologists and other scientists have conducted vast amounts of research on such programs and, in general, the programs are found to be effective (Neil & Christensen, 2009; Peters-Scheffer, Didden, Korzilius, & Sturmey, 2011). While not all programs are equally effective, and the short-term effects of many such programs are more pronounced, there is reason to believe that many of these programs produce long-term benefits for participants (Barnett, 2011). If you are committed to being a good steward of taxpayer money, you would want to look at research. Which programs are most effective? What characteristics of these programs make them effective? Which programs promote the best outcomes? After examining the research, you would be best equipped to make decisions about which programs to fund.

Link to Learning

Watch this video about early childhood program effectiveness to learn how scientists evaluate effectiveness and how best to invest money into programs that are most effective.

Ultimately, it is not just politicians who can benefit from using research in guiding their decisions. We all might look to research from time to time when making decisions in our lives. Imagine that your sister, Maria, expresses concern about her two-year-old child, Umberto. Umberto does not speak as much or as clearly as the other children in his daycare or others in the family. Umberto's pediatrician undertakes some screening and recommends an evaluation by a speech pathologist, but does not refer Maria to any other specialists. Maria is concerned that Umberto's speech delays are signs of a developmental disorder, but Umberto's pediatrician does not; she sees indications of differences in Umberto's jaw and facial muscles. Hearing this, you do some internet searches, but you are overwhelmed by the breadth of information and the wide array of sources. You see blog posts, top-ten lists, advertisements from healthcare providers, and recommendations from several advocacy organizations. Why are there so many sites? Which are based in research, and which are not?

In the end, research is what makes the difference between facts and opinions. Facts are observable realities, and opinions are personal judgments, conclusions, or attitudes that may or may not be accurate. In the scientific community, facts can be established only using evidence collected through empirical research.

NOTABLE RESEARCHERS

Psychological research has a long history involving important figures from diverse backgrounds. While the introductory chapter discussed several researchers who made significant contributions to the discipline, there are many more individuals who deserve attention in considering how psychology has advanced as a science through their work ( Figure 2.3 ). For instance, Margaret Floy Washburn (1871–1939) was the first woman to earn a PhD in psychology. Her research focused on animal behavior and cognition (Margaret Floy Washburn, PhD, n.d.). Mary Whiton Calkins (1863–1930) was a preeminent first-generation American psychologist who opposed the behaviorist movement, conducted significant research into memory, and established one of the earliest experimental psychology labs in the United States (Mary Whiton Calkins, n.d.).

Francis Sumner (1895–1954) was the first African American to receive a PhD in psychology in 1920. His dissertation focused on issues related to psychoanalysis. Sumner also had research interests in racial bias and educational justice. Sumner was one of the founders of Howard University’s department of psychology, and because of his accomplishments, he is sometimes referred to as the “Father of Black Psychology.” Thirteen years later, Inez Beverly Prosser (1895–1934) became the first African American woman to receive a PhD in psychology. Prosser’s research highlighted issues related to education in segregated versus integrated schools, and ultimately, her work was very influential in the hallmark Brown v. Board of Education Supreme Court ruling that segregation of public schools was unconstitutional (Ethnicity and Health in America Series: Featured Psychologists, n.d.).

Although the establishment of psychology’s scientific roots occurred first in Europe and the United States, it did not take much time until researchers from around the world began to establish their own laboratories and research programs. For example, some of the first experimental psychology laboratories in South America were founded by Horatio Piñero (1869–1919) at two institutions in Buenos Aires, Argentina (Godoy & Brussino, 2010). In India, Gunamudian David Boaz (1908–1965) and Narendra Nath Sen Gupta (1889–1944) established the first independent departments of psychology at the University of Madras and the University of Calcutta, respectively. These developments provided an opportunity for Indian researchers to make important contributions to the field (Gunamudian David Boaz, n.d.; Narendra Nath Sen Gupta, n.d.).

When the American Psychological Association (APA) was first founded in 1892, all of the members were White males (Women and Minorities in Psychology, n.d.). However, by 1905, Mary Whiton Calkins was elected as the first female president of the APA, and by 1946, nearly one-quarter of American psychologists were female. Psychology became a popular degree option for students enrolled in the nation’s historically Black higher education institutions, increasing the number of Black Americans who went on to become psychologists. Given demographic shifts occurring in the United States and increased access to higher educational opportunities among historically underrepresented populations, there is reason to hope that the diversity of the field will increasingly match the larger population, and that the research contributions made by the psychologists of the future will better serve people of all backgrounds (Women and Minorities in Psychology, n.d.).

The Process of Scientific Research

Scientific knowledge is advanced through a process known as the scientific method . Basically, ideas (in the form of theories and hypotheses) are tested against the real world (in the form of empirical observations), and those empirical observations lead to more ideas that are tested against the real world, and so on. In this sense, the scientific process is circular. The types of reasoning within the circle are called deductive and inductive. In deductive reasoning , ideas are tested in the real world; in inductive reasoning , real-world observations lead to new ideas ( Figure 2.4 ). These processes are inseparable, like inhaling and exhaling, but different research approaches place different emphasis on the deductive and inductive aspects.

In the scientific context, deductive reasoning begins with a generalization—one hypothesis—that is then used to reach logical conclusions about the real world. If the hypothesis is correct, then the logical conclusions reached through deductive reasoning should also be correct. A deductive reasoning argument might go something like this: All living things require energy to survive (this would be your hypothesis). Ducks are living things. Therefore, ducks require energy to survive (logical conclusion). In this example, the hypothesis is correct; therefore, the conclusion is correct as well. Sometimes, however, an incorrect hypothesis may lead to a logical but incorrect conclusion. Consider this argument: all ducks are born with the ability to see. Quackers is a duck. Therefore, Quackers was born with the ability to see. Scientists use deductive reasoning to empirically test their hypotheses. Returning to the example of the ducks, researchers might design a study to test the hypothesis that if all living things require energy to survive, then ducks will be found to require energy to survive.

Deductive reasoning starts with a generalization that is tested against real-world observations; however, inductive reasoning moves in the opposite direction. Inductive reasoning uses empirical observations to construct broad generalizations. Unlike deductive reasoning, conclusions drawn from inductive reasoning may or may not be correct, regardless of the observations on which they are based. For instance, you may notice that your favorite fruits—apples, bananas, and oranges—all grow on trees; therefore, you assume that all fruit must grow on trees. This would be an example of inductive reasoning, and, clearly, the existence of strawberries, blueberries, and kiwi demonstrate that this generalization is not correct despite it being based on a number of direct observations. Scientists use inductive reasoning to formulate theories, which in turn generate hypotheses that are tested with deductive reasoning. In the end, science involves both deductive and inductive processes.

For example, case studies, which you will read about in the next section, are heavily weighted on the side of empirical observations. Thus, case studies are closely associated with inductive processes as researchers gather massive amounts of observations and seek interesting patterns (new ideas) in the data. Experimental research, on the other hand, puts great emphasis on deductive reasoning.

We’ve stated that theories and hypotheses are ideas, but what sort of ideas are they, exactly? A theory is a well-developed set of ideas that propose an explanation for observed phenomena. Theories are repeatedly checked against the world, but they tend to be too complex to be tested all at once; instead, researchers create hypotheses to test specific aspects of a theory.

A hypothesis is a testable prediction about how the world will behave if our idea is correct, and it is often worded as an if-then statement (e.g., if I study all night, I will get a passing grade on the test). The hypothesis is extremely important because it bridges the gap between the realm of ideas and the real world. As specific hypotheses are tested, theories are modified and refined to reflect and incorporate the result of these tests Figure 2.5 .

To see how this process works, let’s consider a specific theory and a hypothesis that might be generated from that theory. As you’ll learn in a later chapter, the James-Lange theory of emotion asserts that emotional experience relies on the physiological arousal associated with the emotional state. If you walked out of your home and discovered a very aggressive snake waiting on your doorstep, your heart would begin to race and your stomach churn. According to the James-Lange theory, these physiological changes would result in your feeling of fear. A hypothesis that could be derived from this theory might be that a person who is unaware of the physiological arousal that the sight of the snake elicits will not feel fear.

A scientific hypothesis is also falsifiable , or capable of being shown to be incorrect. Recall from the introductory chapter that Sigmund Freud had lots of interesting ideas to explain various human behaviors ( Figure 2.6 ). However, a major criticism of Freud’s theories is that many of his ideas are not falsifiable; for example, it is impossible to imagine empirical observations that would disprove the existence of the id, the ego, and the superego—the three elements of personality described in Freud’s theories. Despite this, Freud’s theories are widely taught in introductory psychology texts because of their historical significance for personality psychology and psychotherapy, and these remain the root of all modern forms of therapy.

In contrast, the James-Lange theory does generate falsifiable hypotheses, such as the one described above. Some individuals who suffer significant injuries to their spinal columns are unable to feel the bodily changes that often accompany emotional experiences. Therefore, we could test the hypothesis by determining how emotional experiences differ between individuals who have the ability to detect these changes in their physiological arousal and those who do not. In fact, this research has been conducted and while the emotional experiences of people deprived of an awareness of their physiological arousal may be less intense, they still experience emotion (Chwalisz, Diener, & Gallagher, 1988).

Scientific research’s dependence on falsifiability allows for great confidence in the information that it produces. Typically, by the time information is accepted by the scientific community, it has been tested repeatedly.

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  • What is R&D? Its role in business and how it relates to R&D tax credits

What is R&D? Its role in business and how it relates to R&D tax credits

Stephen James CTA

In order to understand the role and impact of R&D, it is useful to define research and development, explore its role in business and its wider importance. This will put us in a better position to look at how R&D is funded including via the government’s powerful R&D tax credit incentives.

What does R&D stand for?

R&D stands for research and development. What R&D represents in a business context and its power is a much wider and more complex area that we will now explore.

What is research and development?

Research and development is the generation of new knowledge. In a business context, it is an activity that companies undertake in order to develop new products, processes or services, or improve those that already exist. In order to do this, businesses often take on risk. This is because uncertainties exist around if what they are attempting is technologically feasible, or, more commonly, they don’t know how they will achieve their objectives in practical terms.

R&D is an essential function for many businesses. Launching new offerings or improving existing ones is a way for a business to remain competitive and make profit.

When developing a new product, process or service, or refining an existing one, R&D is one of the earliest phases. Experimentation and innovation is often rife at this stage, along with risk. The R&D cycle often begins with ideation and theorising, followed by research and exploration and then into design and development.

What sectors does R&D occur in?

Research and development occurs across a wide range of sectors and industries, and in companies of all sizes. These range from intensive R&D industries that rely heavily on R&D projects like pharmaceuticals , life sciences , automotive, software and technology to areas like food and drink. R&D also plays a major role in the construction industry, in particular in manufacturing and engineering.

Types of research and development

All R&D tends to start with ideas and theories – this can relate to identifying issues or new opportunities. The R&D process then focuses on exploring and researching those ideas, seeing what’s feasible. There are two main types of research within R&D – basic research and applied research.

  • Basic research is all about acquiring knowledge and using it to build understanding and intelligence that a business can use to its advantage. This knowledge can be the foundation for further R&D projects and feed into strategic business decisions.
  • Applied research is a lot more defined, and often looks to achieve a specific objective. This could be using a new technology, reaching a new market, improving safety or cutting costs. Applied research is often what leads to the development phase.

The design and development phase is all about taking an idea and making it into a product or process. Effectively, it’s about translating the research into a commercial product or service. It often involves designs, prototyping, trials, testing and refinement.

Prototyping is key to the development phase as it allows you to identify and overcome issues, and improve the design. Eventually, for those in manufacturing development, you move into manufacturing trials where you look to produce the product on a larger scale.

R&D can be set-up to look at different outcomes as follows:

New product research and development

R&D and product development often go hand in hand. Rapid changes in consumer demands and emerging technologies means there’s always a need to adapt. Before developing new products, you need a deep understanding of the market and the user needs. This lays the groundwork for the development of the new product.

Various concepts are generated and tested at the outset. These can then be prototyped for further research and testing.

Improving existing products and processes

The continual evaluation of existing products, services and processes is also a key part of R&D. If a product, service or process is no longer profitable or adding value in a market then it risks stagnating.

It could also be that technology has been developed that could facilitate improvements that may cut costs, make efficiency gains or improve safety. This can include improvements to the manufacturing and production processes of the product.

Legislative changes or shifts in user wants can also mean a product or process must change or evolve to remain viable.

Research and development examples

What R&D looks like varies across industries, sectors and companies. It can include large R&D projects or everyday R&D activities. Take a look at our case studies to see some real life R&D examples.

R&D projects

Research and development projects are set up to achieve a range of objectives and business needs. These could be around introducing a new product or service, improving an existing process or utilising a new technology.

Often these R&D projects will have unknowns and uncertainties at their core – and the R&D is aiming to resolve these. It is this uncertainty that forms a core aspect to the definition of R&D for tax purposes.

An example of an R&D project could be to migrate a legacy system onto the cloud, automate an aspect of the manufacturing process, or utilise new materials to improve performance.

Research and development in business

With emerging technologies and fast-changing markets, R&D in business is more important than ever. Although many businesses have an R&D function, how R&D actually looks on the ground varies dramatically. R&D intensity also differs dramatically between industries and individual companies. We will explore this in a little more detail.

What is R&D in business?

Businesses will approach R&D in different ways, with different organisational structures implementing different R&D strategies. How R&D is leveraged internally also varies dramatically between businesses, having a significant bearing in terms of its overall impact.

Some businesses won’t have the capability to do R&D in house so will outsource their R&D, relying on others to drive innovation. Some businesses choose to outsource their R&D while others have R&D departments entirely dedicated to R&D.

R&D is a complex function within any business and often comes with its challenges. Many R&D leaders struggle to reduce development times as well as plan and roadmap more effectively for the future. Building a culture of innovation across a business through R&D is often a goal for many businesses but one that is also hard to achieve.

R&D strategy

It’s not enough to simply carry out R&D. In order to make the most out of an R&D function, you need to strategise. Regardless of your R&D objectives, whether you want a competitive edge, a first mover advantage to capitalise on a new technology, to keep up with a competitor or break into a new market – how you plan and strategise around R&D is essential.

An R&D programme that is strategic will reap benefits. When combined with R&D tax credits, it becomes even more advantageous. You may want to adapt your R&D processes and planning to make more use of R&D tax credits. The ultimate goal is for R&D to permeate a company’s culture and approach to business.

The uncertainty at the heart of the potentially most lucrative R&D projects can be mitigated financially by the use of R&D tax credits.  You can get rewarded for taking more risks. This helps effect a change in mindset when approaching risky projects. This is where our sector experts and chartered tax advisers come in. At ForrestBrown, we work closely  with businesses to help them make the most of their R&D.

How to promote a culture of R&D in your business

Read more about the benefits of promoting a culture of R&D in your business.

R&D costs

Research and development can be expensive. Emerging tech and highly specialised staff, all come with a price tag. The fact that the costs are upfront without any guarantees of ROI understandably makes many CEOs apprehensive. Yet it remains an essential function and R&D spending needs to be factored into budgets.

In some businesses, R&D expenditure can be one of the biggest outgoings. There are annual lists published of those companies that spend the most on R&D – Amazon, Samsung, and Apple spend billions of dollars on R&D and frequently top these lists.

The good news is that many of the R&D costs can be recovered with R&D tax credits. There are others though that don’t qualify. You can see a detailed breakdown of qualifying R&D costs here . As a business, you need to weigh up the total project cost against the qualifying costs for R&D tax credits, then decide if your project is feasible.

R&D investment

Although the costs are high, by investing in R&D a business is investing in their future capabilities. R&D investment is a good way for a business to stay competitive and keep up with shifting customer demands. Those businesses that invest in R&D can receive different forms of funding including R&D tax incentives. In terms of R&D tax credits, there’s the SME incentive as well as the RDEC incentive for large companies and grant-funded SMEs .

Find out more about ForrestBrown’s RDEC services for large companies .

R&D departments

Some businesses will have a small team responsible for R&D or just pick up R&D activities across various teams and individuals on a more ad hoc basis. Other companies have a dedicated R&D department. Larger companies may even establish R&D centres – these can give them access to local R&D leaders and specialised R&D functions.

What is an R&D department?

An R&D department can contain a whole range of professionals, from R&D engineers and chemists to R&D managers responsible for the outputs. Sometimes you will have R&D leaders that look to drive the R&D department in a business.

The role of an R&D department?

The role of an R&D department is to keep a business competitive by providing insights into the market and developing new services / products or improving existing ones accordingly. The future growth of the business sits in a large part with the R&D department.

The R&D department will have a range of responsibilities. This can be everything from understanding a target market’s needs to looking at new products to quality control.

Elmelin go into good levels of detail around the role of an R&D department .

Outsourcing R&D

Businesses of all sizes make the decision to outsource their R&D. It’s not always viable to carry out R&D in-house. R&D outsourcing means you engage other organisations to help support or run your activity. These partners can then provide you with something that you can use as a business. This spans everything from independent R&D labs to university research organisations to clinical research organisations.    

It’s always worth a business considering what R&D activities they can bring in-house as this can be beneficial. In particular, in terms of R&D tax credits. We use a few worked examples to explore who can claim for R&D in complex projects. 

R&D and innovation

Research and development is closely linked to innovation. Innovation is a broad term and can be difficult to define. It often refers to those ideas, products, services, and methods/processes that are new and different.  R&D activity and projects is one of the main ways a business will seek to innovate.

When it comes to R&D activity, innovation can mean new to your business or genuinely unique. InnovateUK summarise this: “‘new to me’ innovation encompasses proven technology being applied in new and creative ways. Whilst the technology itself might not be brand spanking new, the application or product is novel.”

Although not all R&D leads to innovation, it’s unlikely that innovation occurs without some degree of R&D.

The definition of innovation for R&D for tax purposes is narrower. This means that R&D tax credits can’t be a substitute for innovation. R&D for tax purposes focuses specifically on achieving an advance in science or technology and resolving uncertainty.

Why R&D is important for business

R&D is important for businesses because it provides powerful knowledge and insights, leads to improvements to existing processes where efficiency can be increased and costs reduced. It also allows businesses to develop new products and services to allow it to survive and thrive in competitive markets.

Benefits of R&D

As we’ve discussed, R&D is important to business growth and your ability to compete in a market. A business that can innovate and adopt new technologies as well as improving existing processes is more likely to succeed in the long run.

At a wider level, the benefits of R&D extend into entire sectors as well as positively impacting the wider economy. A sector that invests heavily in R&D will develop and achieve more, including providing real-world benefits to people.

For many countries, R&D and economic growth go hand-in-hand. Some form of R&D incentive often feature as part of a government’s plans to grow its economy. This is because they are designed to improve productivity. The new UK Government has made R&D tax credits a cornerstone of policy.

On a global level, spending on R&D has reached a record high of almost US$ 1.7 trillion – see Unesco . The United States and China lead the way in terms of R&D spending. The true benefits of R&D can really kick in on a global scale where advances are made that improve the lives of inhabitants, including those most in need.

Claiming R&D tax credits for the first time?

If you’re new to R&D tax credits, we can help you get started and set you up for your future investment in innovation. We will adapt to your business, offering a bespoke service to meet your unique requirements.

What is R&D for tax purposes?

When it comes to R&D tax credits, the government has set out a specific definition of R&D. It is defined in the following terms:

“R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology. The activities that directly contribute to achieving this advance in science or technology through the resolution of scientific or technological uncertainty are R&D.” 

Let’s break this down further. To count as R&D, you need to look for three things:

Project 

As well as your own R&D projects, an R&D tax claim can include work undertaken for a client. And remember, a project doesn’t have to have been successful to qualify.

Advance 

For the government’s accepted research and development definition, an R&D has to seek an advance in overall knowledge or capability in a field of science or technology.

Uncertainty

If you’re not sure if your R&D project is possible, or you don’t know how to achieve it in practice, you could be resolving technological uncertainties and be carrying out qualifying R&D.

If you have any questions around what constitutes as R&D for tax purposes or want to know if your projects contain qualifying R&D, ForrestBrown are happy to discuss it with you. Call us on 0117 926 9022.

R&D tax credits

At ForrestBrown, R&D tax credits is all we do. Day in day out, we see the positive impact R&D tax incentives have on supporting and supercharging the R&D function within businesses. From hiring new staff to embarking on bolder projects, it often has a transformational impact.

When used strategically, R&D tax credits create a virtuous circle of innovation. You receive your benefit and invest it in more innovation, and then receive more innovation. This can form part of a solution for overcoming challenges plagued by many businesses. This includes talent acquisition and retention, competitiveness and productivity.

With our expert award-winning team we help you mitigate risk and drive innovation throughout your business. We offer end-to-end claim services as well as one-off R&D tax consultancy .

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Unlock the power of R&D in your business with ForrestBrown

ForrestBrown is the UK’s leading specialist R&D tax credit consultancy. We will help you increase your R&D tax credit claim each year and create a culture of innovation. Contact ForrestBrown to discuss how R&D tax credits can help supercharge your R&D and grow your business.

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Maximising the benefits of research: Guidance for integrated care systems

England has a vibrant research and development ecosystem, with well-developed research infrastructure and research expertise within our health and care workforce. The value of research in transforming health and care is significant; additionally, staff satisfaction, recruitment and retention is higher among staff who are involved in research. The inception of integrated care systems (ICSs) provides the opportunity for systems to embed research within health and care for the benefit of our population. Supporting this opportunity, a clear research thread runs through ICS strategies and plans, from joint strategic needs assessments and joint health and wellbeing strategies , integrated care strategies , joint forwards plans , integrated care board (ICB) annual reports and the assessment by NHS England of the discharge of duties by ICBs.

The Health and Care Act 2022 (the 2022 Act) sets new legal duties on ICBs around the facilitation and promotion of research in matters relevant to the health service, and the use in the health service of evidence obtained from research. NHS England will assess ICBs for their discharge of these duties. The ICS design framework sets the expectation that in arranging provision of health services, ICBs will facilitate their partners in the health and care system to work together, combining expertise and resources to foster and deploy research and innovations. This guidance supports ICBs in fulfilling their research duties.

ICSs are encouraged to develop a research strategy that aligns to or could be included in their integrated care strategy. This strategy will enable the unification of research across ICS partners, and be consistently embedded to:

  • identify and address local research priorities and needs, and work collaboratively to address national research priorities
  • improve the quality of health and care and outcomes for all through the evidence generated by research
  • increase the quality, quantity and breadth of research undertaken locally
  • extend and expand research in settings such as primary care, community care, mental health services, public health and social care
  • drive the use of research evidence for quality improvement and evidence-based practice
  • influence the national research agenda to better meet local priorities and needs
  • improve co-ordination and standardisation within and between localities for the set up and delivery of research
  • harness the patient and economic benefits of commercial contract research
  • co-ordinate and develop the research workforce across all settings.

1. Introduction

This guidance sets out what good research practice looks like. It supports integrated care systems (ICSs) to maximise the value of their duties around research for the benefit of their population’s health and care and, through co-ordination across ICSs, for national and international impact. It supports integrated care boards (ICBs), integrated care partnerships (ICPs) and their partners to develop a research strategy that aligns to or can be incorporated into their integrated care strategy, and helps them and their workforce to build on existing research initiatives and activities across health and social care to improve sector-wide performance and best practice

  • explains the ICB legal duties and other requirements around research and the use of evidence from research, and that research is included in forward planning and reporting
  • encourages system leaders to develop a footprint-wide research strategy that aligns to local and national research priorities, develops and supports their workforce, takes the opportunities offered by commercial research and includes plans to embed research in their system’s governance and leadership
  • identifies best practice examples and other resources that ICBs may find useful as they develop their research strategies.

This guidance provides comprehensive information for use by:

  • those with senior responsibility, including at board level, for research strategy development and/or operationalising research
  • managers responsible for developing joint strategic needs assessments, integrated care strategies, joint health and wellbeing strategies, joint forward plans, other linked strategies, or reporting on ICB activities
  • research managers
  • research and development/innovation leads
  • heads of services
  • knowledge and library specialists.

It may also be useful to individuals involved in research, education, and partner organisations such as local authorities, social care services, the voluntary, community and social enterprise sector (VCSE) and other providers of healthcare services.

NHS England provides guidance on embedding research in the NHS and secure data environments, and the Office for Life Sciences (OLS ) champions research, innovation and the use of technology to transform health and care service. Other sources of guidance, support and information are signposted in this guidance to support ICSs in aligning to national visions, strategies and plans around research.

1.1 Definition of research

NHS England uses the UK Policy Framework for Health and Social Care Research definition of research:

“… the attempt to derive generalisable or transferable new knowledge to answer or refine relevant questions with scientifically sound methods. This excludes audits of practice and service evaluation. It includes activities that are carried out in preparation for or as a consequence of the interventional part of the research, such as screening potential participants for eligibility, obtaining participants’ consent and publishing results. It also includes non-interventional health and social care research (that is, projects that do not involve any change in standard treatment, care, or other services), projects that aim to generate hypotheses, methodological research and descriptive research”.

This broad definition encompasses the range of types of research:

  • clinical trials and other clinical investigations into the safety and effectiveness of medicines, devices and health technologies
  • public health research
  • observational studies
  • discovery science and experimental medicine
  • translational research in which results from basic research are developed into results that directly benefit people
  • applied research
  • research to support policy-making and commissioning
  • social care research and research in social care settings
  • research into NHS services and care pathways.

1.2 Why research is important

The UK is a world leader for research and invention in healthcare, with around 25% of the world’s top 100 prescription medicines being discovered and developed in the UK ( The impact of collaboration: The value of UK medical research to EU science and health ). Research in the health and care system is important because it underpins all advances in health and care and is the basis for evidence-based practice. Engaging clinicians and healthcare organisations in research is associated with improvements in delivery of healthcare ( Does the engagement of clinicians and organisations in research improve healthcare performance: a three-stage review) . To benefit service users and the public, the NHS and local government, and achieve return on investment, it is vital that research is disseminated, shared and translated into practice.

The National Institute for Health and Care Research (NIHR) is funded by the Department of Health and Social Care (DHSC) to transform research in the health and social care system, including through support for NHS research. Research led to the first proven treatments for Covid, for example the use of dexamethasone, estimated to have saved over a million lives worldwide . This success was in part due to how research is undertaken in the unique environment of the NHS, innovative trial designs, the support provided by the NIHR, frontline staff enabling research, and the awareness and readiness of the public to support research. We need to learn from these and other successes, and translate this across all health and care settings. ICSs will play a vital role in enabling research to be embedded in evolving patient pathways across their footprints.

Example: PRINCIPLE trial – finding treatments for Covid recovery at home

The Platform Randomised Trial of Treatment in the Community for Epidemic and Pandemic Illnesses (PRINCIPLE) was a UK-wide, clinical study to find Covid treatments for recovery at home without the need to attend hospital. The study was open to all with ongoing Covid symptoms, registration was easy, and the trial was run entirely remotely by delivering ‘participant packs’ to people’s homes. It was one of the first trials in the world to show that azithromycin and doxycycline did not benefit patients with Covid and to identify the effectiveness of a commonly used drug – inhaled budesonide –in reducing time to recovery.

The PRINCIPLE study team demonstrated the integral role that primary, secondary and ambulatory care staff can play in the delivery of studies. Local collaborators were trained in good clinical practice to allow them to assess and confirm the eligibility of potential participants, and were commended specifically for their use of patient data to contact people soon after they received a positive test result. It is this network of local staff contributing to research within their healthcare setting that has enabled over 10,000 people to be recruited onto this study so far – one of the largest at home Covid treatment studies worldwide.

This is an example of a study design that incorporates the vital contributions of healthcare providers across the system.

Policy-makers and commissioners need evidence to support their decision-making around the delivery and system-wide transformation of health and care services, including how health inequalities will be reduced.

There is also evidence that:

  • staff involved in research have greater job satisfaction and staff turnover is lower in research active trusts ( Academic factors in medical recruitment: evidence to support improvements in medical recruitment and retention by improving the academic content in medical posts)
  • research active hospitals have lower mortality rates, and not just among research participants ( Research activity and the association with mortality )
  • 83% of people believe that health research is very important ( Survey of the general public: attitudes towards health research)
  • healthcare performance improvements have been seen from the creation of academic research placements ( Experiences of hospital allied health professionals in collaborative student research projects: a qualitative study )
  • clinical academic research, and in particular the practice changes resulting from it, is associated with improved patient and carer experiences ( A qualitative systematic review and thematic synthesis exploring the impacts of clinical academic activity by healthcare professionals outside medicine ).

Key to having research embedded in health and care is having staff who can understand, undertake, use and generate new research, and share actionable research finding as part of a pro-research culture. Education and training are therefore critical for research to be sustainably embedded within health and care, and for people to develop careers in research and support it in their clinical or care roles.

DHSC, NHS England, the devolved administrations, NIHR and other partners expect to publish a clinical research workforce strategy in 2023/24 to help the UK realise the national clinical research vision outlined in Saving and Improving Lives: The Future of UK Clinical Research Delivery and deliver the Life Sciences Vision to see research embedded in the NHS as part of health and care pathways.

Research will support ICSs to deliver on their four key aims:

Improving outcomes

The NHS 2023/34 priorities and operational planning guidance emphasises the importance of research in improving patient care, outcomes and experience.

Research evidence will inform commissioning decisions to improve experience and outcomes. Research activities should align with the local health priorities identified through local joint strategic needs assessments, and may be best designed and delivered by collaborating with partners. Research priorities may be best addressed by collaborating with partners nationally to design and deliver research.

Tackling inequalities

Research can give a better understanding of local populations and the wider determinants of health, and with this the steps to maintain health and narrow health inequalities.

Enhancing productivity

The development of ICSs creates the opportunity to consider research delivery within the ICS and across ICS boundaries, increasing flexibility of workforce or recruitment while reducing bureaucracy and improving research productivity and value for money.

Supporting social and economic development

An active research ecosystem working in a co-ordinated way and to national standards brings revenue and jobs to regions. The NIHR Clinical Research Network (CRN) supports service users, the public and health and care organisations across England to participate in high-quality research. The 2019 impact and value report detailed the significant income and cost savings that commercial research generates for NHS trusts. Between 2016/17 and 2018/19 the NHS received on average £9,000 per patient recruited to a commercial clinical trial and saved over £5,800 in drug costs for each of these patients. This equates to income of £355 million and cost savings of £26.8 million in 2018/19.

In 2021 150 members of the Association of Medical Research Charities funded £1.55 billion of medical research, including the salaries of 20,000 researchers. Every £1 million spent by charities on medical research in the UK contributes £1.83 million to the economy.

Example: Research that cut problematic prescribing and generated cost savings in general practice – a local health priority

Analysis of routine patient data identified the need for strategies targeting clinicians and patients to curb rising opioid prescribing. From this, the Campaign to Reduce Opioid Prescription (CROP) was launched in 2016, urging GPs across West Yorkshire to ‘think-twice’ before prescribing opioids. This promoted the NICE guidance on chronic pain , which recommends reducing the use of opioids because there is little or no evidence that they make any difference to people’s quality of life, pain or psychological distress, but they can cause harm, including possible addiction.

Over a year 15,000 fewer people were prescribed opioids (a 5.63% relative reduction), a net saving to the NHS of £700,000. The biggest reduction was in people aged over 75, who are at higher risk of opioid-related falls and death, and there was no compensatory rise in the prescribing of other painkillers or referrals to musculoskeletal services.

The CROP campaign, led by researchers at the University of Leeds, has subsequently been rolled out across all ICBs in Yorkshire and the Humber, and the North East and North Cumbria ICB, and the 1,045 practices to which it has been delivered are reporting results similar to the above.

Foy R, Leaman B, McCrorie C, Petty D, House A, Bennett M, et al (2016) Prescribed opioids in primary care: cross-sectional and longitudinal analyses of influence of patient and practice characteristics | BMJ Open 69(5).

Alderson SL, Faragher TM, Willis TA, Carder P, Johnson S, Foy R (2021) The effects of an evidence- and theory-informed feedback intervention on opioid prescribing for non-cancer pain in primary care: A controlled interrupted time series analysis. PLOS Med .

2. ICS, ICP and ICB responsibilities and requirements

ICBs have legal duties and other requirements that relate to research. These are additional to the duties and responsibilities of individual providers within ICS footprints. This section sets out what these duties mean in practical terms and gives examples of how to meet them.

2.1 Legal duties relating to research in the Health and Care Act 2022

Part 1 of the 2022 Act includes specific legal duties for ICBs and NHS England in respect of research. In the Explanatory Notes to the 2022 Act, government sets out how ICBs could discharge their research duty.

Duty to facilitate or otherwise promote research

The ICB duty builds on the previous clinical commissioning group (CCG) duty to promote research, by requiring each ICB, in the exercise of its functions, to facilitate or otherwise promote research on matters relevant to the health service. This duty is intended to include a range of activities to enable research. Section 3 of this guidance outlines ways in which ICBs can do this.

The NHS Constitution also makes clear that patients should be enabled to take part in research: “the NHS pledges … to inform you of research studies in which you may be eligible to participate”.

The Provider Selection Regime (PSR) will be a new set of rules for arranging healthcare services in England, introduced by regulations made under the 2022 Act. The research component should be referred to once the PSR is published.

Duty to facilitate or otherwise promote the use in the health service of evidence obtained from research

This duty similarly builds on the CCG requirement to promote the use of evidence. ICBs must, in the exercise of their functions, facilitate or otherwise promote the use in the health service of evidence obtained from research. For example, ICBs should facilitate or otherwise promote the use of evidence in care, clinical and commissioning decisions.

Duty for ICSs to include research in their joint forward plans and annual reports

Joint forward plans are five-year plans developed by ICBs and their partner NHS trusts and foundation trusts. Systems are encouraged to use the joint forward plan as a shared delivery plan for the integrated care strategy and joint health and wellbeing strategy, aligned to the NHS’s universal commitments. The plan must explain how the ICB will discharge its duties around research, and the ICB must report on the discharge of its research duties in its annual report. These inclusions will raise the profile of research at board level and help embed research as a business-as-usual activity.

The joint forward plan and NHS Oversight Framework guidance set the minimum requirements for what needs to be included in plans and reports.

NHS England duty to include how each ICB is carrying out its duties relating to research in its annual performance assessment of each ICB

NHS England has a new legal duty to annually assess the performance of each ICB and publish a summary of its findings. For 2022/23 NHS England will complete a narrative assessment, identifying areas of good and/or outstanding performance, areas for improvement and any areas that are particularly challenged, drawing on national expertise as required and having regard to relevant guidance. This assessment will include a section considering how effectively the ICB has discharged its duties to facilitate or otherwise promote research and the use of evidence obtained from research.

This, alongside the implementation of the NHS Long Term Plan commitment to develop research metrics for NHS providers, will increase transparency across the system and enable more targeted support for research. Research metrics from NHS England, the Care Quality Commission (CQC) and NIHR will enable the monitoring of progress over time, and are under development with sector colleagues, including providers.

2.2 Legal requirement to work with people and communities

Working with people and communities is a requirement of ICBs, and statutory guidance is available to support them and their partner providers meet this legal duty. A co-ordinated approach across healthcare delivery and research will make it more likely that research reflects what matters to people and communities.

This will also help ICBs to fulfil their legal duty in the 2022 Act to reduce health inequalities in access to health services and the outcomes achieved. Section 3.9 includes links to resources to help guide engagement with underserved communities around research.

The Public Sector Equality Duty also applies and requires equality of opportunities between persons who share a relevant protected characteristic and persons who do not.

2.3 Research governance

While research can address local priorities, it typically operates across ICS boundaries and at national and international levels. Health and social care research is governed by a range of laws, policies, and international, national and professional standards.

The Health Research Authority (HRA ) is responsible for ensuring such regulation is co-ordinated and standardised across the UK to make it easier to do research that people can trust. The HRA is an executive non-departmental public body created by the Care Act 2014 to protect and promote the interests of patients and the public in health and social care research, including by co-ordinating and standardising the practice of research regulation. Local authorities and the NHS are obliged to have regard to its guidance on the management and conduct of research.

Before a research project can start in the NHS in England it must receive approval from the HRA. This includes research taking place in NHS trusts, NHS foundation trusts, ICBs or primary care providers of NHS commissioned services in England, and all research under an NHS duty of care, including that undertaken by NHS staff working in social care or other non-NHS environments.

The HRA schemes indemnify NHS organisations accepting these assurances against any claim covered by the NHS Litigation Authority arising as a result of incorrect assurances. If an NHS organisation duplicates the HRA assessments, it will be liable for any consequences of the decisions it bases on its own checks.

ICBs and partner organisations should have processes for the set up and delivery of research that comply with national laws and systems, and does not duplicate them. Such national systems include confirmation of capacity, National Contract Value Review (NCVR), management of Excess Treatment Costs (ETCs) and contracting arrangements (see section 2.4).

The UK Policy Framework for Health and Social Care sets out the roles and responsibilities of individuals and organisations involved in research.

2.4 Contractual requirements around research

NHS England mandates commissioner use of the NHS Standard Contract for all contracts for healthcare services other than primary care. The contract is updated annually. References to research in the current NHS Standard Contract and service conditions fall into three main areas.

Recruitment of service users and staff into approved research studies

The NHS Standard Contract obliges every provider of NHS-funded services to assist the recruitment of suitable subjects (whether patients or staff) into approved research studies. This requirement aligns to those in the 2022 Act that require ICBs to facilitate or otherwise promote research (see section 2.1). Section 3 considers how this requirement can best be met. Research involving people or their data requires ethical and potentially other approvals (see section 2.3).

National Directive on Commercial Contract Research Studies

Adherence to the National Directive is mandated as part of the NHS Standard Contract. The directive states that providers must:

  • Use the unmodified model agreements for sponsor-to-site contracting; HRA and Health and Care Research Wales (HCRW) approval of studies will be dependent on use of these templates.
  • Use the standard costing methodology to set prices for commercial contract research undertaken by NHS providers; this is currently in the NIHR interactive costing tool (NIHR iCT).
  • Introduce the National Contract Value Review (NCVR) process in line with national rollout. NCVR is a standardised national approach to costing commercial contract research within the NHS. It currently covers acute, specialist and mental health trusts, but the intention is to roll it out to all NHS providers. The creation of ICSs is the ideal opportunity to explore how commercial study set up can be supported across these footprints, reducing the resource needed and time taken.

Comply with HRA/NIHR research reporting guidance

The provider must comply with HRA/NIHR research reporting guidance, as applicable.

2.5 Excess treatment costs

Patients in a research study may receive healthcare that differs from what is standard in the NHS, requires more clinician time or is delivered in a different location. The associated NHS treatment costs may exceed or be less than those of standard treatment. If greater, the difference is referred to as the NHS Excess Treatment Costs (ETCs).

In the case of commercial contract research, the commercial funder will pay the full cost of the study. In the case of non-commercial research, the commissioner of the service in which the study operates is responsible for funding the ETCs.

ICBs as commissioners of services are responsible for ETCs in services that they commission. Guidance for the management of ETCs is available.

DHSC and NIHR are piloting interim arrangements to support non-NHS ETCs for research in public health and social care (non-NHS intervention costs). Please refer to the further detail on the NIHR website .

2.6 Care Quality Commission

The CQC is currently developing its approach for ICS-level assessments, and its new assessment framework will be introduced towards the end of 2023 .

CQC inspection of NHS providers continue, with research assessed as part of the review of the trust-level Well-led framework. Providers are asked:

  • Are divisional staff aware of research undertaken in and through the trust, how it contributes to improvement and the service level needed across departments to support it?
  • How do senior leaders support internal investigators initiating and managing clinical studies?
  • Does the vision and strategy incorporate plans for supporting clinical research activity as a key contributor to best patient care?
  • Does the trust have clear internal reporting systems for its research range, volume, activity, safety and performance?
  • How are service users and carers given the opportunity to participate in or become actively involved in clinical research studies in the trust?

3. Developing a research strategy

3.1 why develop a research strategy.

Like the health and care system, the research environment is complex. Developing a research strategy will help bring together the legal and other duties around research in a coherent way, and help the ICS understand its local research capability, workforce, activity and needs, set ambitions around research and maximise the benefits associated with commercial research. It will help demonstrate the benefit of research locally, nationally and internationally, and guide the production of clear plans.

Example: Value of research partnerships and integration with ICSs

Bristol Health Partners (BHP) Academic Health Science Centre (AHSC) has a fully integrated relationship as the new Research and Innovation Steering Group for the Bristol, North Somerset and South Gloucestershire (BNSSG) ICS, and reports directly to ICB chief executives.

The group provides the strategic direction and oversight for all research undertaken and delivered across the system. Membership includes directors of research, clinical strategy, public health, social care, senior innovation and education leaders from its core funding partners. It also includes public contributors and senior representatives from primary care, NIHR Applied Research Collaboration West, NIHR CRN West of England, West of England Academic Health Science Network (WEAHSN), Healthier Together ICS, university research institutes and People in Health West of England.

The group has reviewed ICS programmes, identified current and potential research and innovation connections, and begun to establish new connections. It has also supported work with the ICS Ageing Well programme and secured funding for innovative pilots to improve dementia care and increase physical activity for older adults.

Since 2016 BHP has directly contributed an estimated additional £1.1 million to support ICS priorities through Health Integration Team projects and other activities, and has attracted more than £33 million of external research, service redesign and infrastructure into the region.

3.2 General considerations

In developing its research strategy, the ICS may find it helpful to consider these overarching questions alongside the suggested focused content covered in the sections below:

  • What do you hope to achieve within a given timeframe?
  • Are all the right organisations involved in developing the research strategy?
  • How will the health and care workforce be enabled to deliver the research strategy?
  • How can research be embedded in existing health and care delivery and pathways?
  • What mechanisms are in place to translate actionable research findings into practice and decision-making?
  • What inequalities exist in different areas, communities or groups? How will you ensure planning and delivery of research aligns to CORE20plus5 priorities?
  • Are you considering equality, diversity and inclusivity and the Public Sector Equality Duty in facilitating and promoting research opportunities for service users and for health and care staff?
  • Is the ICS considering the opportunities of developing their commercial research portfolio?
  • Is research informing or being informed by population health management?
  • How will you plan and deliver research in a sustainable manner, aligning it to the Greener NHS agenda and the ICB’s duties in relation to climate change ?

Buy-in from NHS staff, patients and the public will be vital if ICBs are to discharge their research duties and deliver on their research plans. An important consideration is how to develop sustainable, routine and accessible information flows to ensure the ICB, partners, staff, patients and public can access up-to-date and appropriate information around local research activity, regional, national and international research opportunities and findings, and contact information.

3.3 Leadership and governance across the ICS

Executive leadership.

The Explanatory Notes to the 2022 Act suggest that ICBs have board-level discussions on research activity, the use of the evidence from research, the research workforce and research culture within the ICS. ICSs should refer to the NHS Leadership Competency Framework for board-level leaders at organisation and ICS level for the competencies relating to the research duties of ICSs, once published.

All ICBs are encouraged to have an executive lead responsible for fulfilling the research duties conferred by the 2022 Act. They should help give the ICB a clear understanding of research across the area, regularly reporting on progress towards agreed aims. An executive lead can take responsibility for ensuring clear research ambitions and a research strategy are developed; oversight of organisational research portfolios, diversity in research, alignment to national priorities; promotion of research skills and the need for research skills training; and succession planning.

Senior leaders could engage, consult and be supported by representatives of each registered health and social care professional group when developing strategic plans, and for oversight of training, succession planning, and equality and inclusivity. They could use the capacity and capability of the research and development leads within provider organisations, although established lead roles across social care settings are rare so extra effort may be needed to garner social care research insight.

Research steering group, board or forum

Some CCGs had research steering groups and some of these have expanded with the widening remit of ICBs. ICSs that do not have a such a group should consider adopting a model similar to one in other ICSs where research is effectively embedded in ICS governance structures.

A dedicated steering research group, board and/or forum can:

  • provide dedicated time to plan, oversee and report on research
  • bring a range of representatives from research infrastructure organisations, patients and the public together with representation from across the ICS, to develop a common aim and objective
  • ensure board-level sight of research
  • take a cross-ICS approach to research, increasing participation and diversity in research, and reducing bureaucracy.

Example: A dedicated research and innovation subgroup

East and North Hertfordshire Health Care Partnership established a formal research and innovation subgroup to support its objectives to transform services, reduce health inequalities and improve patient health and wellbeing. This subgroup is dedicated to determining and supporting local research priorities and developing an innovation agenda. With effective patient and public involvement, it is working to ensure the local population has access to more research opportunities.

Bringing together the NIHR, academia, industry and local health and care services, the subgroup develops collaborative work plans that support the design, implementation and evaluation of local transformation needs, sharing resources, staff, expertise and facilities. Its work exemplifies a sustainable approach to partnership working and supports Hertfordshire and West Essex ICS’s developing strategy.

HWE ICS Partnership Board 14 September 2021

3.4 Understanding your research activity and working with local and national research infrastructure

Research in NHS and non-NHS settings across an ICS footprint will be supported by different organisations. In some areas networks or collaboratives already exist to bring these organisations together, but in others the links are not as well formed. ICBs would benefit from having a clear map of the research infrastructure and pre-existing local or national investment into research in their area.

It may be valuable to consider:

  • Who are the research leaders in your local health and care system, NIHR, higher education institutions, VCSE sector and businesses?
  • Are there any pre-existing local or regional research, researcher or research engagement networks?
  • What are the opportunities to inform, participate in, collaborate with or lead national and international research efforts in addition to local opportunities?

A list of organisations involved in research including NIHR-funded infrastructure and programmes is included in Annex 1 .

Much of the research undertaken in NHS and other health and care settings is funded though national calls and grants provided by funders such as NIHR, research charities , UK Research and Innovation (UKRI) , including the Medical Research Council (MRC ) and Economic and Social Research Council (ESRC) , and is aligned to national priorities. Other research may include national or international commercial or non-commercial clinical trials funders.

Partners within ICS systems can use NIHR research portfolio data to monitor and plan research activity; however, not all research is included within the NIHR’s portfolio, so this will not give a full picture of the research within the footprint. Mechanisms to map and monitor research more widely could be incorporated in ICB research strategies.

Some local needs may best be addressed through public health or social care research rather than research in primary, secondary or tertiary healthcare settings. Public health and social care research are described in Annex 2 .

Example: Mapping health and care research activity, expertise, interests and infrastructure

The Nottingham and Nottinghamshire Integrated Care System Research Partners Group meets bi-monthly and is chaired by the ICB Head of Research and Evidence. It brings together senior managers from the NHS providers, ICB, two local authorities, two universities and the NIHR CRN East Midlands, providing a forum for ICS-wide research discussions and the development of a system-wide collaborative approach to health and care research across the ICS. Among its aims, the group seeks to increase participation in research at both the organisational and population level, enable equity of access to research opportunities and generate impact on health and care pathways.

The group have mapped health and care research activity, expertise, interests and infrastructure in the constituent organisations. With this the ICS can see the research capabilities, strengths, expertise, and areas of synergy and opportunities for future collaboration that align to its needs and priorities, and also gaps for future development, recognising that organisations are at different stages of research development.

3.5 Understanding local needs

Universal NHS priorities will be reflected in local research needs, and each ICS footprint is likely to have its own specific local research needs. Joint strategic needs assessments (JSNAs) are undertaken jointly by local authorities and ICBs through health and wellbeing boards (HWBs) to identify current health and social care needs of local communities, where more information is needed to do so or to understand how best to address the need. People and communities should be directly involved in identifying local need, including by working with local charities, specific communities or groups who face inequalities in access to, experience of or outcomes from healthcare, eg to target health research at those areas and populations with greatest need.

ICPs are required to develop an integrated care strategy informed by JSNAs and the joint health and wellbeing strategy (JHWS). The integrated care strategy sets out how the assessed needs can be met through the exercise of the functions of the ICB, partner local authorities or NHS England, and is informed by research and practice-based evidence, as stated in the health and wellbeing guidance. In considering where such evidence is lacking, HWBs should identify in JSNAs those research needs that ICBs, local authorities and NHS England could meet through the exercise of their research functions.

Systems are encouraged to use their joint forward plan to develop a shared delivery plan for the Integrated Care Strategy and the JHWS that is supported by the whole system, including local authorities and VCSE partners. ICBs and trusts must also use their Joint Forward Plan to describe how the ICB will discharge its duty in respect of research.

The Explanatory Notes to the 2022 Act suggest how ICBs can discharge their duties around research. These include the articulating local research needs when assessing local needs and how they will be addressed when preparing strategies and plans, and encouraging partner organisations to play an active and collaborative role in pursuing these.

3.6 Supporting delivery of research

Once an ICS has a clear picture of its local research infrastructure it can consider how best to target and support research and the research workforce across its footprint and how research findings will be used. For this, the ICB should ensure that its approaches reflect national approaches to costing, contracting, approvals and information governance, and that they are also informed by learning from effective practices across equivalent ICBs.

As healthcare shifts into communities, ICSs should support the parallel shift in research by embedding research in health and care. Increasing access to research opportunities will give service users earlier access to new treatments, and faster research set up and delivery may provide the evidence needed to support improvements to local care sooner. Inclusive recruitment practices will be needed to ensure that all groups in society have the opportunity to help shape and take part in research, and benefit from research findings.

In developing its research strategy, an ICS has opportunities to reduce bureaucracy, and make research more efficient and effective across its own and with other ICS footprints, and across NHS and non-NHS boundaries, while meeting national regulatory guidance. ICBs will be expected to work with the HRA to co-develop, build on and implement strategies for further co-ordination and standardisation of study set-up and delivery processes. Any regional systems and processes that ICBs do establish must support consistent national practice in relation to the management and regulation of research, and should not duplicate them. The HRA will work with ICBs to address barriers to efficient and rapid study set-up, including model agreements, information governance and R&D office functions.

Other potential areas for streamlining and cross-organisational working include:

  • cross-ICS research proposals to identify research needs
  • research delivery – identifying how ICS-wide approaches could accelerate patient recruitment and deployment of research delivery staff
  • shared data architecture, including the NHS Secure Data Environment for Research Network and its subnational secure data environments (SDEs). Subnational SDEs cover multiple ICSs to achieve access to multimodal data at a scale of approximately 5 million citizens, and over time will achieve technical and governance interoperability
  • a greater focus on translation and implementation of research findings into health and care practice, supporting faster improvements
  • sharing access to and funding for knowledge and library services
  • shared processes and repositories for research assets.

The Explanatory Notes to the 2022 Act suggest that one way an ICB could discharge its research duty would be to have a dedicated research office or team supporting research.

3.7 Enabling cross-provider research

Health and care priorities can often only be addressed with complex, multiorganisational approaches and as such the research to inform these needs to span organisational boundaries. Organisational policies should promote cross-organisational research and dissemination of research findings, including through participation in collaborative research to address national priorities, joint staff posts, honorary contracts, and administratively easier movement of researchers between health and care organisations and other sector partners, including higher education, industry, charities and local authorities.

The HRA and ICS partners are developing national guidance to support cross-provider research.

The NIHR CRN can offer ICSs opportunities to participate in national and international research studies, including those the NIHR, industry and others commission.

3.8 Commercial research

Commercial contract research is research funded solely by industry, where NHS providers are contracted to carry out the research. Most of these research studies in the NHS are interventional clinical trials, such as the NHS-Galleri trial and Astra Zeneca’s COVID-19 vaccine development . Commercial research can give patients access to a wider range of research opportunities, earlier access to novel therapies and treatments, provide drugs free of charge to patients in trials, accelerate the development of new treatments and devices, generate income for providers, and fund NHS staff. It is vitally important for the benefit of patients, the NHS and the UK economy that we create an environment in the NHS that makes it easy and efficient for the NHS to undertake commercial research. This is particularly important when it comes to international commercial research, where companies can place their studies in a number of different countries and consideration of anticipated set up and recruitment times informs where they place trials.

Data gathered during some commercial research is specific to the study and is the property of the company, as is any Intellectual Property (IP) generated. In other cases, where the NHS contributes to the foreground IP – such as through the use of NHS data for research or where NHS expertise provides important contributions to a commercial product – it is important that the NHS shares in the value of IP generated as a consequence of its contributions.

The establishment of ICSs is an ideal opportunity for their creation of ambitions to enable, grow and benefit from commercial research. ICSs should explore how efficient commercial study set up and delivery could be streamlined across sites within their footprint, and should set ambitions around commercial research.

3.9 Involving patients, service users, carers and the public in research

In developing a research strategy ICSs should set out their approach to diverse public and patient involvement (PPI) in relation to research.

Areas where working with people and communities could add value in the context of research include:

  • identification of local research needs, including through JSNAs and JHWSs
  • designing research proposals in partnership with local or national experts
  • raising awareness of research opportunities and recruitment of participants
  • developing research outcome reports and identification of how and when participants will be able to access these
  • consideration of how members of the public can access the outputs from publicly-funded research
  • how volunteers should be involved and what they should be paid.

The UK Standards for Public Involvement sets out the core components of good public involvement. A guide outlining good practice in engaging underserved communities around research is available from NHS England. Resources about good practice around PPI in designing and delivering research, including around incentivisation , are also available from the HRA and NIHR .

It will be useful to link into established community involvement approaches. NIHR infrastructure organisations may have established networks of expert PPI representatives, and ICSs have extensive VCSE Alliances. A co-ordinated community engagement approach across health and care delivery and research will reduce the risk of overburdening communities with organisations wanting to work with them, and will support the identification of under-served communities.

3.10 Ensuring anyone can participate in research

Making research more visible within communities and increasing the public’s understanding of research can ensure greater diversity in research participation. Research findings will then be more generalisable to a broader range of groups or communities, or can be targeted and specific to relevant communities.

ICSs should seek mechanisms to ensure that opportunities to take part in research are available to all. They should consider encouraging patients and members of the public to register on NIHR Be Part of Research (a national registry where people can express their interest in being contacted about research that is relevant to them), widely disseminate research opportunities and make provision for inclusive access for communities to take part in research. Decentralised or virtual trials are remote access trials recruited to and delivered using electronic tools, making it easier for people to participate in some studies without needing to visit a recruiting hospital or attend appointments in person. ICBs should consider ways in which research delivery can increase access to research opportunities for people within their area. ICBs should also advise the public how they can access research outputs.

NIHR and UK Research and Innovation provide resources that help organisations address issues of equality, diversity and inclusion in research settings.

Example: RELIEVE-IBS decentralised trial

In 2020, Newcastle researchers launched RELIEVE-IBS, one of the first interventional decentralised clinical studies in the UK to trial Enterosgel, a new treatment for irritable bowel syndrome with diarrhoea (IBS-D). Decentralised trials are remote access trials that use electronic tools for trial recruitment and delivery, without the patient needing to visit a recruiting hospital site, which could be miles from their homes – a convenient option for patients with IBS-D. By running the trial remotely, researchers could reach beyond the small proportion of those with this condition who attend specialist clinics, as well as save resource for the sponsor.

Not only did this trial embrace technological developments to deliver research, but it empowered more patients to become involved regardless of where they lived. With in-depth patient input, the research team were able to shape the recruitment approach to be highly accessible to participants and were offered feedback on how to refine the trial design by the sponsors. The resulting patient-centric design ensured a good recruitment response when the trial opened.

NIHR (2020) Virtual trial recruits 67% faster led by NIHR Patient Recruitment Centre in Newcastle in collaboration with Enteromed

NIHR (2021) Pushing virtual boundaries to improve patient engagement and accessibility

NIHR (2022) RELIEVE IBS-D trial case study

3.11 Health data in research

Health data generated through care of service users in the NHS can fuel a revolution in the research and development of new diagnostics and treatments, maximising the potential to improve service user outcomes and experiences, support diversity in research, and minimise health inequalities through research. To do this, researchers need access to high quality and timely data to generate insights. The public expect data to be used legally and efficiently to conduct and support research.

National commitments around data for research can be found in Data saves lives: reshaping health and social care with data . This strategy shows how data will be used to bring benefits to all parts of health and social care. To achieve this vision, the NHS will be making a strategic move away from a system of data dissemination to one of data access when making NHS health and social care data available for research and analysis. This will be facilitated by the implementation of secure data environments (SDEs).

SDEs are data storage and access platforms with features that enable organisations to have greater control and oversight over their data. SDEs allow approved users to view and analyse data without it having to leave the environment. The SDE policy guidelines provide a clear signal to the sector that SDEs will become the default way of accessing NHS data for research.

This change is supported by major investments in digital infrastructure through the Data for Research & Development Programme, which is funding the development of national and subnational SDEs. The subnational SDEs will cover the entirety of England and individual platforms will cover several ICS.

ICBs should seek ways to promote and enable the use of these rich data sources for research and include them in their research strategy.

3.12 Using evidence for planning, commissioning and improving health and care

Evidence-based commissioning has advantages for the commissioner, workforce and service users, as it can:

  • lead to innovation in service design and delivery
  • enhance the quality of health and care provision
  • reduce clinical variation between locations and providers
  • improve equity of access to services
  • improve patient and population outcomes.

As part of the commissioning process, commissioners are expected to use evidence-based clinical policies, as per the Roadmap for integrating specialised services within integrated care systems . Knowledge and library services can help source and interpret evidence.

The Provider Selection Regime will reflect the research duties of the 2022 Act and should be referred to when commissioning provider services, once it has been published.

NHS knowledge and library services provide access to evidence and support for knowledge management; they train people in searching for, handling and publishing information. The Knowledge for Healthcare strategy encourages and equips NHS knowledge and library services to support NHS organisations with the translation of knowledge for the spread and adoption of research and innovation. To fulfil their obligations under the 2022 Act, ICBs could commit to active knowledge translation.

Evidence for commissioning information is available from a number of sources:

  • NHS Library and Knowledge Hub
  • Health Libraries and Information Services Directory
  • NICE guidance
  • NIHR evidence
  • NHS evidence works toolkit
  • Academy of Medical Royal Colleges: Evidence-based Intervention
  • A million decisions

The infographic for the role of research and evidence in commissioning also provides sources for evidence-based commissioning.

Example: Evidence mobilisation, knowledge sharing and improving outcomes

The STEMClub (Sustaining Transformation by Evidence Mobilisation) is a network in the North East and North Cumbria that brings together local policy and decision-makers with NHS knowledge and library specialists to facilitate evidence-based decision-making. The input of knowledge specialists ensures timely access to published research and provides knowledge management expertise to shape how soft intelligence is translated into knowledge assets.

As members within the STEMClub network, knowledge and library specialists are providing ongoing detailed evidence reviews and information management expertise to facilitate system-wide working , eg:

  • North East North Cumbria Frailty Framework
  • North East and North Cumbria Maternity Clinical Network
  • a review of optimal patient transfer times in the North East and North Cumbria
  • regular evidence summaries for the ICS Mental Health Evidence and Evaluation subgroup.

3.13 The health and care workforce and research

Staff involved in research have greater job satisfaction and research active trusts have lower staff turnover [3] . Clinical academic roles [7] , having research colleagues within services [8] and taking students on research placements [6] are felt to foster an increase in knowledge and skills across the wider staff workforce. The General Medical Council (GMC) and the Royal College of Physicians (RCP) and NIHR have issued position statements and recommendations around research, with additional signatories including UKRI, UKRD, the Academy of Medical Royal Colleges and the Royal College of Surgeons of England. Learning resources, including programmes for ongoing professional development of the research delivery workforce, are available through NIHR Learn.

In developing a research strategy ICSs could ensure that, as part of their people function and approach to workforce planning :

  • Staff roles in leading, delivering or facilitating research and in supervising those developing research skills are recognised, supported and enabled across all staff groups and health and care settings as part of a positive research culture.
  • The value of evidence is recognised, and education and training around research are facilitated. Opportunities to develop research careers or in overseeing the development of other researchers are enabled; this may include having protected time, inclusion in job plans and joint appointments across health and care providers and academic institutions.
  • Ensuring that there is capacity and systems that support research through services like imaging, pathology and pharmacy, as well as finance and human resources.
  • Individual organisations do not always have the necessary skills or services to support effective research and its impact, such as IP management, methodological expertise, regulatory compliance, statistical analysis, knowledge mobilisation expertise, genomics expertise, health informatics and data analytics. Mechanisms are needed to ensure that these can readily and rapidly be accessed across other health and care organisations, including from local authorities and other non-NHS care providers.

A UK Clinical Research Workforce Strategy is under development. ICSs should update their approaches to their research workforce once DHSC publishes this in 2023/24.

Example: Investing in the research workforce – developing capacity for chief investigators

Across the West Midlands NIHR CRN, an investment of approximately £750,000 to develop capacity for chief investigators returned additional research grant income of over £18 million in three years. This was achieved primarily by increasing the programme activity for consultants in areas where chief investigators were underrepresented.

The funding was provided through a competitive process and co-supported by the local NIHR CRN, with several local trusts jointly funded these scholars.

Kirk J, Willcocks J, Boyle P, Brocklehurst P, Morris K, Kearney R, et al (2022) Developing chief investigators within the NHS: the West Midlands clinical trials scholars programme. Clin Med 22(2): 149–52.

Kirk J, Reynolds F, Adey E, Boazman M, Brookes M, Brocklehurst P (2022) Developing paediatric chief investigators within the NHS: the Clinical Trials Scholars programme . Arch Dis Child Educ Pract Published online first: 22 February 2022. doi: 10.1136/archdischild-2021-322186

4. References

  • Varnai P, Rentel M, Dave A, De Scalzi M, Timmerman W, Rosemberg-Mantes C, Simmonds P, Technopolis Group (2017) The impact of collaboration: The value of UK medical research to EU science and health .
  • Boaz A, Hanney S, Jones T, Soper B (2015) Does the engagement of clinicians and organisations in research improve healthcare performance: a three-stage review. BMJ Open 5: e009415. doi:10.1136/ bmjopen-2015-009415 .
  • Rees MR, Bracewell M (2019) Academic factors in medical recruitment: evidence to support improvements in medical recruitment and retention by improving the academic content in medical posts. Postgrad Med J 95(1124): 323-327. doi:10.1136/postgradmedj-2019-136501 .
  • Ozdemir BA, Karthikesalingham A, Singha S, Poloniecki JD, Hinchliffe RJ, Thompson MM, et al (2015) Research activity and the association with mortality. PLoS ONE 10(2): doi.org/10.1371/journal.pone.0118253 .
  • Hunn A (2017) Survey of the general public: attitudes towards health research . Health Research Authority.
  • Angus RL, Hattingh HL, Weir KA (2022) Experiences of hospital allied health professionals in collaborative student research projects: a qualitative study. BMC Health Services Research 22(1). Available at: https://doi.org/10.1186/s12913-022-08119-7 .
  • Newington L, Wells M, Adonis A, Bolten L, Bolton Saghdaoui L, Coffey M, et al (2021) A qualitative systematic review and thematic synthesis exploring the impacts of clinical academic activity by healthcare professionals outside medicine. BMC Health Serv Res 21(1). Available at: https://doi.org/10.1186/s12913-021-06354-y .
  • Wenke RJ, Hickman I, Hulcombe J, Phillips R, Mickan S (2017) Allied health research positions: A qualitative evaluation of their impact. Health Res Policy Syst 15(6). Available at: https://doi.org/10.1186/s12961-016-0166-4

Annex 1 – Organisations that may be involved in regional or local research

  • Clinical Research Networks (CRNs) , which will be retendered and renamed regional research delivery networks (RRDNs) from April 2024
  • Applied Research Collaborations (ARCs)
  • Biomedical Research Centres (BRCs)
  • Experimental Cancer Medicine Centres (ECMCs) , jointly funded with Cancer Research UK
  • Research Design Services (RDSs) and Clinical Trials Units (CTUs) which will be replaced by the NIHR Research Support Service from 1 October 2023
  • Patient Recruitment Centres (PRCs)
  • MedTech and In vitro diagnostic Co-operatives (MICs) , which will be replaced with HealthTech research centres from April 2024
  • School of Public Health Research, School of Primary Care Research and School of Social Care Research
  • Health Determinants Research Collaborations (HDRCs)
  • Clinical Research Facilities (CRFs)
  • Patient Safety Research Collaborations (PSRCs)
  • Translational Research Collaborations (TRCs)
  • Academic Health Science Centres (AHSCs)
  • university teaching hospitals and all trusts that deliver research activity
  • primary care organisations, including GP practices, that deliver research activity
  • higher education institutions (HEIs)
  • local authorities
  • social care partners
  • Local Government Association
  • local and national charities that fund, collaborate in or support participation in research
  • research and development offices in providers or CSUs, including primary care providers and ambulance, community and mental health trusts, and those in the VCSE sector
  • UKRD members
  • NHS subnational secure data environments for research
  • NHS R&D Forum
  • NHS Genomic Medicines Service Research Collaborative
  • NHS Knowledge and Library Services
  • Academic Health Science Networks (AHSNs) are often well linked with research organisations and infrastructure as part of their roles in development, adoption and spread of innovation.

Annex 2 – Public health and social care research

Public health research investigates issues that impact at a population rather than an individual level. This can be done within the NHS with system-level studies, such as secondary prevention of cardiovascular disease and examining the impact on health inequalities of changes to the NHS resource allocation formula, and outside the NHS for the wider determinants of health such as air quality, transport systems and housing. There is a substantial body of public health evidence for the clinical and cost effectiveness of prevention, health protection, health service redesign and addressing health inequalities.

Social care research aims to improve the lives of children and adults who need to draw on personal or practical care and support, and family members or other unpaid carers. It can include research around the introduction, use and impact of technologies, and changing social care interventions, policies and practice. Social care research also examines issues pertaining to the safeguarding of adults and children and workforce, commissioning of services, and questions about organisational and professional practice, including decision-making, training and the quality of care.

Publication reference: PR1662

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