labs, animal testing labs and extreme environmental testing labs.
The overall industry and environment that you’re working in
can also have an effect on R&D funding. Your company’s organizational strategy may affect what R&D areas you will be focused
on, what your competitors are pursuing also may have an effect,
your position within your industry (improving or declining)
may have special considerations, and your organization’s sales
and sales support situation may need to be considered.
Potential mergers and acquisitions your company may be
involved in and what new technologies have been developed
over the past year or are anticipated in the next year may also
affect your R&D budgeting. Telecom and electronic equipment companies, for example, who are involved in the finalization and implementation of 5G systems are likely to have
substantial short-term glitches in their R&D budgets over the
next two years in order to compete or even stay in business.
The building of a completely new research facility or the
extensive renovation of an existing facility can have short- or
medium-term glitches to an R&D budget during the construction transition period, and again after the construction is
completed. These are almost always special considerations and
being successful at creating an appropriate R&D budget for
these situations can be really difficult.
Temporary research considerations always have problems
in transportation, regulatory approval, construction delays,
personnel issues, product and testing quality issues, materials
deliveries, safety, security and cost-containment (and especially
the areas that you don’t consider). You’re almost guaranteed to
be over budget for the first iteration in these situations—this
is the perfect situation for contingency budgets. Maintaining
a modicum of your existing R&D capabilities during the construction process is always considered to be a smart decision.
Non-stop R&D During Difficult Times
We live in a period of change. Research labs can be vulnerable
to extreme weather disturbances such as hurricanes, flooding
Maintaining a modicum of your
existing R&D capabilities during
the construction process
is always considered to be
a smart decision.
and fires. R&D operations can be vulnerable to materials shortages or delivery disruptions.
Additionally, R&D operations can be vulnerable to social
upheavals, tariff-induced cost changes and rapid technological changes.
All of these and more considerations must be evaluated and
adjusted for, in one way or another, in a new R&D budget. The
lessons of hurricane Katrina in 2005 and Harvey in 2017 in the
Houston area for example, are reminders of the level of damage
that can be experienced and may be seen in an increasingly violent weather-related future.
The overall industry and
environment that you’re
working in can also have an
effect on R&D funding.
Effects on R&D Funding
Product market share
0% 10% 20% 30% 40%