Innovation leads to profit. Sadly, many companies limit their R&D budgets after finishing development ahead of major product releases. It’s not enough to do the legwork in spurts — if you want your company to succeed, you must create a consistent process that provides a steady stream of new insights.

To get ahead of the competition and stay there, follow these essential R&D tips:

1. Build a culture that prioritizes innovation.

“We continually reinvest in R&D to stay ahead of customer needs and expectations,” says Ryan Napierski, president of Nu Skin. “We place a strong emphasis on science, technology, and ingredient sourcing. From our experience, R&D provides a platform for creativity and innovation to flourish and stay relevant.”

Create systems that allow employees to explore their best ideas without fear of repercussions. Everyone hates the boss who claims to encourage risk-taking, then turns around and punishes people who fail. Instead of assigning expected outcomes to specific employee-led ventures, set an expectation that employees will spend a certain percentage of working hours on personal passions. Most projects will lead nowhere, but the best ones will more than justify the man-hours invested in exploration.

Don’t punish employees whose projects fail to bear fruit, but do reward those who come up with the best ideas. Use public praise, monetary bonuses, and other incentives to show workers that the company sincerely wants its teams to take chances. People who see others enjoying the benefits are more likely to seek those benefits for themselves.

2. Take advantage of tax credits.

The U.S. government wants small businesses to develop innovative solutions, and companies that answer the call can enjoy substantial tax credits. Even businesses that don’t employ scientists or other traditional researchers can take advantage of the incentive.

“It’s not only high-tech or life sciences companies with dedicated research departments that qualify for the R&D tax credit,” says Brian Short and Travis Riley of R&D Tax Services. “Indeed, most companies don’t have R&D laboratories and instead perform R&D in their test kitchens or fields, wineries or distilleries, or on production floors. Wherever experimentation occurs, R&D may be found.”

Not all businesses are eligible for R&D credits. Talk to your tax professional about which existing activities may qualify for these incentives. If you don’t have anything in place yet, work with your tax professional to ensure the programs you design qualify.

3. Remove barriers between potential collaborators.

People who never see each other rarely innovate together. To encourage multidisciplinary innovation, tear down the barriers between departments (physical and otherwise). Give employees opportunities and reasons to mingle with one another and combine their talents to create solutions they couldn’t discover on their own.

“When you get people out of the cubicles and create opportunities for cross-department connections, you’re essentially creating an atmosphere where innovation can flourish,” says Jason Albanese, CEO of Centric Digital. “And aside from the logistics of the physical work environment, consider re-imagining the digital work environment as well.”

Employees need to know they can trust their colleagues before they feel comfortable working with new teams. Host events that encourage employees to get to know people in other areas. Create innovation contests that pair members of different departments together. Help employees become familiar with one another beyond surface-level conversations to set the groundwork for productive internal partnerships.

4. Create prototypes quickly.

What’s the point of wasting weeks or months developing a product that never stood a chance in the first place? Avoid misplaced effort by encouraging employees to create working prototypes of their ideas as quickly and cheaply as possible.

Though mostly popular in the development sphere, rapid prototyping works in every industry.

“When used well, rapid prototyping will improve the quality of your designs by enhancing communication between the various parties and reducing the risk of building something that no one wants,” says Anant Jain, cofounder of CommonLounge. “A prototype is not designed to be a fully functional version of a system, but is only meant to help visualize the user experience of the final product.”

Don’t worry about the bells and whistles, even if they feel like major value adds. Instead, identify the most significant part of the project, then focus solely on bringing that part to life. If that central component works, great — build outward from there. If it doesn’t, though, you just saved weeks of wasted time and budget.

Even if you built your company on one great product, your R&D philosophy determines your long-term success. Companies that rest on their past successes quickly find themselves struggling to keep up when the market passes them by. Whether you have one product or 1,000, build a culture that values innovation and continue to invest in R&D to stay at the top of your game.

Brad Anderson

Editor In Chief at ReadWrite

Brad is the editor overseeing contributed content at He previously worked as an editor at PayPal and Crunchbase. You can reach him at brad at