The Concept

One of my favorite activities, and yes sorry I am that much of a business geek is sitting around with like minded friends thinking of ideas on how to make the world better through a product. One of the best ways I’ve heard new products explained is through the term R & D and how some people categorize it.

Research: this field of investment of resources is geared towards a revolutionary idea, something that did not exist before. That may fill/create a new need, or may answer a long unmet need within the industry.

Example of Research: The iPod, it delivered on the promise of true portability. The walkman and CD player created the new market for mobile media consumption, but created a new problem of portability. If someone wanted to bring with them 8 hours of music it was cumbersome. The iPod merged technology with a key customer requirement and a winner was born.

Development: this field of investment of resources is geared towards an evolutionary idea. Taking something that has existed and utilizing technology or modifications in the product offering to create a new space.

Example of development: The Toyota Prius took a customer requirement for cars, great gas mileage, and through innovations created an engine and power system that could deliver on this customer requirement in a profound way, thereby creating a runaway hit.

Now while both examples I have given were amazing successes it’s important to note that while the breakdown in spending (at least in the US ) is 75% on research, 25% on development, the typical return is actually the inverse where only 25% of profits come from research and 75% come from development?

When looking at your ideas understand what your product offering is, as this will be a big help in understanding how you price, who your audience is, and how to message the product. There are very different needs to be met, and if you don’t have a clear idea of what your product is neither will customers.