5.6 Research and Development
Importance of research and development Creativity and Innovation
• research and development - the systematic process of developing new • Creativity - the process of coming up with new ideas,
ideas and processes that may be turned into future products
two types: Innovated creativity and adaptive creativity Factors affecting
• investment in R&D is expensive and offers no guarantee of results creativity and innovation
• competitors will attempt to copy any innovation
• Innovation - the commercial use of creative ideas,
• potential benefits of R&D
four area: product innovation, positioning innovation,
• growth process innovation, paradigm innovation • pace of change within
• product development - update their most popular models as seen • Innovative Creativity
with the Porsche 911 • the process of creating something completely
the industry
• diversification - rewards could be huge new • fashion and technology
• USP • products developed are unique and often create have short product life
• R&D should lead to new and improved products which can be entirely new markets, for example Virgin Galactic
protected by a patent
cycles, in these fast-
(space tourism)
• USP will allow them to increase sales and command a higher selling • Innovative creativity is risky as new markets are
moving industries,
price continued investment in
untested, this can be the reason why many
• for example, Amazon’s one-click payment button for a fast and
secure payment method
companies do not invest in this area R&D is key to ensuring
• Improved brand image • Adaptive Creativity companies don’t fall
• companies that continue to release successful, innovative products • changing or improving something that already
exists behind rivals
develop strong reputation among consumers
• Lower production costs • for example, mobile phones • Organisational culture
• process innovation leads to improvements in the manufacturing • adaptive creativity is less costly and carries less • a strong organisational
process, this can decrease production costs, thus enabling price risk than innovative creativity
leadership
culture is one where
• established suppliers can be used because it is
• Potential constraints on R&D normally only one element of the pre-existing employees collaborate
• no guarantee of future success product that is adapted and work together to
• having a large R&D budget does not necessarily lead to launching
innovative, profitable products or reputation for innovation
• adaptive creativity can be extremely profitable as test and improve new
new products are launched into mature or ideas
• PWC publishes an annual report of the top 1000 innovative companies
growing markets with large consumer bases
globally
• Innovation • Ethical considerations
• legal constraints
• infringing on intellectual property rights which restricts a firm • product innovation - the process of developing • can be argued that
producing a product or service and improving existing products research has reached
• human resources • positioning innovation - occurs when a product the extent of what is
• if a company doesn’t have the right mix of people working in their is marketed to a new target audience, for example
R&D departments, no amount of budget will lead to success Red Bull ethically possible in
• Past experience and culture • Process innovation - developing new methods of industries such as
• some cultures are more likely to breed innovation than others production or product delivery, can be an genetics and cloning
• level of competition extremely valuable USP
• competitors’ R&D results may result in them creating even more
successful products than your business • paradigm innovation - completely new ideas,
• Market demand
can change an entire industry, for example,
• some products may be launched and they do not find a suitable Netflix
target market, for example, the Facebook phone
Importance of research and development Creativity and Innovation
• research and development - the systematic process of developing new • Creativity - the process of coming up with new ideas,
ideas and processes that may be turned into future products
two types: Innovated creativity and adaptive creativity Factors affecting
• investment in R&D is expensive and offers no guarantee of results creativity and innovation
• competitors will attempt to copy any innovation
• Innovation - the commercial use of creative ideas,
• potential benefits of R&D
four area: product innovation, positioning innovation,
• growth process innovation, paradigm innovation • pace of change within
• product development - update their most popular models as seen • Innovative Creativity
with the Porsche 911 • the process of creating something completely
the industry
• diversification - rewards could be huge new • fashion and technology
• USP • products developed are unique and often create have short product life
• R&D should lead to new and improved products which can be entirely new markets, for example Virgin Galactic
protected by a patent
cycles, in these fast-
(space tourism)
• USP will allow them to increase sales and command a higher selling • Innovative creativity is risky as new markets are
moving industries,
price continued investment in
untested, this can be the reason why many
• for example, Amazon’s one-click payment button for a fast and
secure payment method
companies do not invest in this area R&D is key to ensuring
• Improved brand image • Adaptive Creativity companies don’t fall
• companies that continue to release successful, innovative products • changing or improving something that already
exists behind rivals
develop strong reputation among consumers
• Lower production costs • for example, mobile phones • Organisational culture
• process innovation leads to improvements in the manufacturing • adaptive creativity is less costly and carries less • a strong organisational
process, this can decrease production costs, thus enabling price risk than innovative creativity
leadership
culture is one where
• established suppliers can be used because it is
• Potential constraints on R&D normally only one element of the pre-existing employees collaborate
• no guarantee of future success product that is adapted and work together to
• having a large R&D budget does not necessarily lead to launching
innovative, profitable products or reputation for innovation
• adaptive creativity can be extremely profitable as test and improve new
new products are launched into mature or ideas
• PWC publishes an annual report of the top 1000 innovative companies
growing markets with large consumer bases
globally
• Innovation • Ethical considerations
• legal constraints
• infringing on intellectual property rights which restricts a firm • product innovation - the process of developing • can be argued that
producing a product or service and improving existing products research has reached
• human resources • positioning innovation - occurs when a product the extent of what is
• if a company doesn’t have the right mix of people working in their is marketed to a new target audience, for example
R&D departments, no amount of budget will lead to success Red Bull ethically possible in
• Past experience and culture • Process innovation - developing new methods of industries such as
• some cultures are more likely to breed innovation than others production or product delivery, can be an genetics and cloning
• level of competition extremely valuable USP
• competitors’ R&D results may result in them creating even more
successful products than your business • paradigm innovation - completely new ideas,
• Market demand
can change an entire industry, for example,
• some products may be launched and they do not find a suitable Netflix
target market, for example, the Facebook phone
