Research and Development (R&D)
Research and Development is the foundation of everything that happens in the simulation. Before you can set a price, plan production, or calculate your financing needs, you must first determine what your products actually are. In this department you decide how each sensor evolves over time by adjusting its performance, size, and reliability. These technical choices determine where your products will appear on the perceptual map, how long they will be considered “young” in the eyes of customers, and what level of material cost you must carry into every other part of the business.
It is not an exaggeration to say that three-quarters of a customer’s purchase decision originates here. Position on the map, the product’s apparent age, and its MTBF rating are all decided in Research and Development. The only remaining variable—price—is set in Marketing. This is why experienced players and instructors insist that R&D is the most important department. A product can survive with imperfect pricing, mediocre promotion, or even limited capacity, but if it does not align with customer expectations on the perceptual map it will not sell at all.
Every decision in R&D also comes with timing considerations. Changes do not happen instantly; they require an engineering cycle. If you plan poorly and your revision date slips into the following year, your product will go through an entire round unchanged, leaving you unable to adjust it again until the backlog clears. This is one of the most common mistakes and it has consequences that cascade into every other department. Production will build the wrong units, Marketing will advertise a product that does not meet customer needs, and Finance will be forced to cover the shortfall in revenue.
Because R&D drives so many outcomes, it is always the starting point of the decision cycle. You begin each round by studying your reports to see where customer expectations have shifted, and then you decide how to move each product. Once these changes are set you can move into Marketing to establish prices and budgets, then into Production to plan schedules and capacity, and finally into Finance to make sure there is enough cash to fund everything. The simulation is designed this way deliberately: if you set R&D incorrectly, every subsequent department will be working with flawed assumptions.
Think of R&D as the compass of your company. If it points in the wrong direction, no amount of effort in other departments can correct the course. If it is aligned with customer preferences, then Marketing has a product worth selling, Production has a product worth building, and Finance has a product that will return value. This centrality is what makes the Research and Development chapter of the simulation not just the first decision you make each year, but the one that defines the entire trajectory of your strategy.