Professional Documents
Culture Documents
R&D management can be defined as where the tasks of innovation management (i.e., creating and
commercializing inventions) meet the tasks of technology management (i.e., external and internal creation
and retention of technological know-how). It covers activities such as basic research, fundamental research,
technology development, advanced development, concept development, new product development, process
development, prototyping, R&D portfolio management, technology transfer, etc., but generally is not
considered to include technology licensing, innovation management, IP management, corporate venturing,
incubation, etc. as those are sufficiently independent activities that can be carried out without the presence of
a R&D function in a firm.
The Term research means the systematic approach to the discovery of new knowledge.
Roussel 1991 define technology as the application of knowledge to achieve a practical result. To develop new
knowledge and apply scientific or engineering knowledge to connect the knowledge in one field to that in
others.
Twiss 1992 defines RnD as: It is the purposeful and systematic use of scientific knowledge to improve man's lot
even though some of its manifestation do not meet with universal approval.
Basic Research
Applied Research
Development
Technical Service
Physical Products
Traditional View of RnD is to pour vast amounts of money to get the exciting research done, and develop a
technology if it is intriguing, even if it is has no apparent commercial value.
The fundamental dilemma facing all companies is the need to provide an environment that fosters creativity
and at the same time providing a stable environment that enables the business to be managed in an efficient
and systematic way.
&
&
3. Development: This activity is similar to Applied Research that it involves the use of known scientific
principles, but activities here are more focused on products. It may involve overcoming a technical
problem associated with a new product, or may involve an exploratory study to improve a product's
performance.
4. Technical Service: This activity focuses on providing a service to existing products and processes. This
involves cost and performance improvements to existing products, processes or systems. This would
also include design changes to lower the manufacturing costs.
R&D Managers should take future predictions into their planning process as well:
1. Environmental Forecasts: These are concerned with changes in technology that will occur in the
future.
2. Comparative Technological cost-effectiveness: It is argued that technologies have life cycles and that
after a period further research produces negligible benefit. When this stage is reached, a new branch
of technology is likely to offer far more promising rewards. This may require a significant shift in
resources.
3. Risk: The culture of the organization and its attitude to risk will influence decision making. Planning
cannot remove the risk but it can help to ensure that decisions are reached using a process of rational
analysis.
4. Capability analysis: Companies have to consider their own strengths and weaknesses. This analysis can
help them ensure that they have the necessary capabilities for the future.
Expenditure by competitors.
Company's long-term growth objectives.
The need for stability.
Distortions introduced by large projects.
Technology Explosion> Too much technology developed in relatively short amount of time.
Shortening of the technology cycle.
Globalization of technology.
Distributed and open nature of networked research.
Growth of externally sourced R&D.
Diminishing barriers towards the increased productivity and effectiveness of R&D.
The continued globalization of R&D.
Shift from Manufacturing oriented R&D towards Service oriented R&D.
Open Source
Relies on people
enthusiastic.
who
are
passionate
and
Design
Manufacturing
Choice of materials to be used
Required Shelf Life
Effects of Transportation
Packaging.
Intellectual property rights
Product safety
R&D Activities contribute to the overall profit and growth of the company in the following ways:
1. Development of existing products: R&D's role is to extend the life of the product by continually
searching for product improvements. R&D Can also aid in lowering the production costs hence
capturing a larger market share and improving profit margins. All of this extends the product lifecycle.
2. Early introduction of a new product: Many companies strive to be technological leaders in their
industry. Their aim is to introduce innovative products into the market before the competition to gain
a competitive advantage. In some Industries, this approach is very SUCCESSFUL.
3. Late Introduction of a new product: Deliberately postponing entry into a new market until it has been
shown by competitors to be valid, reduces the risk and costs. It is also helpful in maximizing profits.
4. Long-Term projects: Looking further into the future, R&D will also be developing products that the
public do not yet realize they require. It includes starting new initiatives and new areas of research.
Technology intensive companies.
Time of Introduction- Is the product being introduced at the right time relative to the market
demand.
Markets: Are the different markets and business areas of the company receiving resources
proportionate to their size and importance.
1960s. The concept is related to user innovation, cumulative innovation, know-how trading, mass innovation
and distributed innovation.
Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal
ideas, and internal and external paths to market, as the firms look to advance their technology. Alternatively,
it is "innovating with partners by sharing risk and sharing reward." Innovations can easily transfer inward and
outward.
The central idea behind Open innovation is that, in a world of widely distributed knowledge, companies
cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions
(i.e. patents) from other companies. In addition, internal inventions not being used in a firm's business should
be taken outside the company (e.g. through licensing, joint ventures or spin-offs).
The economic perspective of technology transfer states that the Existing R&D Projects and developed
technology which as already been paid for can be transferred to industry and private enterprise.
The Bayh-Doyle legislation (Sponsored by two senators Birch Bayh of Indians and Robert Doyle of Kansas),
created an emerging industry by transferring ownership for any intellectual property that was developed
with federal research funding to the developing institution. This transfer of ownership allowed universitites
the right to license or sell their intellectual property rights to industry for further development and
profitable commercialization. Thus, this legislation cleared the way for technology transfer to become a
factor both in driving the US economy and contributing to the greater social good.
Potential for the hosting organization to lose their competitive advantage as a consequence of
revealing intellectual property
Increased complexity of controlling innovation and regulating how contributors affect a project
Realigning innovation strategies to extend beyond the firm in order to maximize the return from
external innovation
Technology Transfer is the application of technology to a new use or user. It is the process by which
technology developed for one purpose is employed either in a different application or by a new user. The
activity principally involves the increased utilization of the existing science/technology base in new areas of
application as opposed to its expansion by means of further research and development.
4. Directory model: Some companies and Universities offer directories listing technology that is available
for license.
5. knowledge Transfer Partnership model: Previously called the "Teaching company scheme", this type
of programme aims to transfer technology between Universities and small companies through PostGraduate Training. The student studies part time at the University, and works on the company project
at the same time. The university provides support to the student and offers other expertise to the
company.
6. Ferret model: The ferret model was first used by Defense Technology Enterprises (DTE). DTE resulted
from a joint initiative between the UK Ministry of Defense (MOD), and a new consortium of companies
experienced in encouraging, exploiting and financing new technology. Scientists and engineers look for
interesting defense technology that could have wider commercial opportunities.
7. Hiring Skilled employees: Hiring people with the necessary skills and knowledge, is a fastest method of
gaining the necessary technology. People are either recruited from other organizations, or from
university research departments that have the relevant expertise.
8. Technology Transfer Units: In 1980s, the US federal labs and other research based organizations,
including universities, established industrial liaison units and technology transfer units to bring in
technology from outside and/or to find partners to help exploit in house developments.
9. Research Clubs: To bring companies together with common interests in particular research areas. DTIDepartment of Trade and Industry in UK
10. European Space Agency (ESA): ESA offers access to space research in virtually all fields of science and
technology. It is achieved through three models: The intermediary agency model, the directory model,
and the ferret model.
11. Consultancy: Consultants are able to offer help, advice and useful contacts to get the research project
off the grid. Frequently, consultants remain part of the research group during the early years of the
project.
These four factors have resulted in a new market of knowledge. Knowledge is not anymore proprietary to the company.
It resides in employees, suppliers, customers, competitors and universities. If companies do not use the knowledge they
have inside, someone else will. Innovation can be generated either by means of closed innovation or by open innovation
paradigms. There is an ongoing debate on which paradigm will dominate in the future.
OPEN SOURCE vs OPEN innovation
Open source and open innovation might conflict on patent issues. This conflict is particularly apparent when considering
technologies that may save lives, or other open source appropriate technologies that may assist in poverty reduction or
sustainable development. However, open source and open innovation are not mutually exclusive, as participating
companies can donate their patents to an independent organization, put them in a common pool, or grant unlimited
license use to anybody. Hence some open source initiatives can merge the two concepts: this is the case for instance for
IBM with its Eclipse platform, which the company presents as a case of open innovation, where competing companies
are invited to co-operate inside an open innovation network.
In 1997, Eric Raymond, writing about the open source software movement, coined the term the cathedral and the
bazaar. The cathedral represented the conventional method of employing a group of experts to design and develop
software (though it could apply to any large-scale creative or innovative work). The bazaar represented the open source
approach.
Seaton and Cordey-Hayes (1993) argue that inward technology transfer can only be successful if an organization has
not only the ability to acquire but also the ability effectively to assimilate and apply ideas, knowledge and devices.
Members of the organization must show an awareness and receptivity towards knowledge acquisition. Inward
Technology transfer requires an organization to create or raise the capability for innovation by:
1. Awareness- Describes the processes by which an organization scans for and discovers what information
technology is available. To search and scan for external knowledge and information which is new to the
organization, an organization needs to have thorough understanding of its internal organizational capabilities.
This can be achieved by internal scanning.
2. Association- Describes the processes by which an organization recognizes the value of this technology/ideas for
the organization. To recognize the potential benefits of this information by associating it with the internal
organizational needs and capabilities.
3. Assimilation- Describes the processes by which the organization communicates these ideas within the
organization and creates genuine business opportunities. Communicate these business opportunities to and
assimilate them within the organization.
4. Application- Describes the processes by which the organization applies this technology for competitive
advantage. To apply them for competitive advantage.
When used across firms and models, there are many challenges primarily related to the constraint of factory
sequencing or architectural structure of the brand (Brand Operations)
Product Planning
The product planning phase takes place before substantial resources are applied to a project. Product
planning considers the range of projects that a firm might pursue and over what time frame. It is closely
linked to the broader business strategy of the firm and addresses such questions as:
What product development projects will be undertaken?
What is the mix of the portfolio of projects?
What is the timing and sequence of the projects?
The product planning activity clearly requires substantial input from R&D.
development opportunities, they are of 4 types:
New Product Platforms, Derivatives of Existing Platforms, Incremental Improvements to existing products,
Fundamentally new products.
New Product Strategy is a cluster of strategies (Marketing Strategy, Technology Strategy and overall
Corporate Strategy).
Competitive Strategy: New products are not needed just because they are new products, they are needed
because they serve a customer need and an organizational need. Competitive strategy can drive new product
planning on a short term or long term basis.
Product Portfolios: Analyzing the organization's total collection of products by viewing it as a portfolio as in an
investment portfolio, may give fresh insights. This approach was initiated by the share-growth matrix, or
Boston Matrix, which used Market Share and market growth as dimensions against which to plot the
positions of products.
Product Differentiation:
more attractive to a particular target market. This involves differentiating it from competitors' products as well
as a firm's own products. The concept was proposed by Edward Chamberlin in his 1933 Theory of Monopolistic
Competition. According to Levitt, there are 4 levels of product differentiation:
1.
2.
3.
4.
Product Positioning refers to the perceptions customers have about the product. Although there are
different definitions of brand positioning, probably the most common is: identifying and attempting to occupy a market
niche for a brand, product or service utilizing traditional marketing placement strategies (i.e. price, promotion,
distribution, packaging, and competition). Positioning is also defined as the way by which the marketers attempt
4. Comparing the company's positioning to its competitors' to identify viable areas for differentiation
5. Developing a distinctive, differentiating and value-based positioning concept
6. Creating a positioning statement with key messages and customer value propositions to be used for
communications development across the variety of target audience touch points (advertising, media,
PR, website, etc.).
Product positioning process
Generally, the product positioning process involves:1. Defining the market in which the product or brand will compete (who the relevant buyers are)
2. Identifying the attributes (also called dimensions) that define the product 'space'
3. Collecting information from a sample of customers about their perceptions of each product on the
relevant attributes
4. Determine each product's share of mind
5. Determine each product's current location in the product space
6. Determine the target market's preferred combination of attributes (referred to as an ideal vector)
7. Examine the fit between the product and the market.
Positioning concepts
More generally, there are three types of positioning concepts:
1. Functional positions
o
Solve problems
2. Symbolic positions
o
Self-image enhancement
Ego identification
Affective fulfillment
3. Experiential positions
o
Deschamps and Nayak identified five distinct product strategies that firms have used in competition:
1.
2.
3.
4.
5.
Product Proliferation
Value
Design
Innovation
Service
Branding System
Brand strategy is the spearhead of the organization's competitive intentions. It carries the company or product
name into the market and shows how it is positioning itself to compete. It involves choices between having no
brand name at all, so that the product is sold as a commodity, and the attempt to develop a distinctive brand
name with a distinctive set of associations and expectations.
Brand Extension
A Brand Extension is the use of an established brand name on a new product in the same product field or in a
related field. The brand name might also be stretched to an unrelated product field. A simple brand extension
would be when a new or unconventional size is brought out, so that the original brand name is given a prefix
(Giant, Jumbo etc.), or for some technical products this could be a new alphanumeric code. Operating within
the same product field, but attempting to attract a new market segment, the extension might have a modified
design and there could be added words to the brand name indicating whom it is intended for, such as for men
or for women.
Potential carry over effects from the original brand can be advantageous for the brand extension strategy if
the original brand is well known. Three kinds of carry over effects are:
Expertise: If the original had established and maintained itself, probably over a fairly long period, as the best
available for that application or usage, then it is likely to have accrued a reputation for high level competence
in its field. Users may feel comfortable and assured in making repeat buys.
Prestige: Some brands have enviable images and some consumers may believe that these images confer
status on those that use them.
Access: A well established original may have developed and held good access to the best supplies and to the
best distributors. An extension would capitalize upon these relationships and it may have a better reception to
its initial launch than a new brand that had no reputation.
Market Entry
Decisions about how and when to enter the market can make a substantial difference to the new product's
prospects. There are three factors>
1. Entry Timing
2. Positioning
3. Scale of entry
Market Launch
Success of a product is dependent on how it is launched, its reception by customers, and the continuing
attention given to its improvement.
Managing Mature Products
As growth slows and the level of competition intensifies, profit margins will come under pressure. Product and
brand managers will need to make decisions on medium and long term futures of the brand. Mature products
usually make up the majority of a firm's source of cash generative lines (hence the term cash cow in portfolio
planning). Profit margins may decline due to increasing numbers of competitive products, cost economies
used up, decline in product distinctiveness etc. The low margins act as a barrier to entry and those firms
remaining in an industry can generate sustained profits over a long period in the maturity and decline stages
of a product's life cycle.
Within the maturity and decline stages of a product's life cycle Schofield and Arnold (1988) distinguished 4
phases to the mature phase of the traditional product life cycle:
1.
2.
3.
4.
Late Growth
Early maturity
Mid Maturity
Late Maturity
Brand management is a communication function that includes analysis and planning on how that brand is positioned in
the market, which target public the brand is targeted at, and maintaining a desired reputation of the brand. Developing
a good relationship with target publics is essential for brand management. Tangible elements of brand management
include the product itself; look, price, the packaging, etc.
The competition between companies is assed using financial measures such as return on capital employed
(ROCE), profits and market share. Non-Financial measures such as design, innovativeness and technological
supremacy may also be used.
According to Krishnan and Uldrish (2001), five basic decisions to be made related to concept development:
1.
2.
3.
4.
5.
Within the decisions surrounding supply chain design, Krishnan and Uldrich include following aspects:
Choice of Components, Designer, Supply Chain Configuration, Type of assembly process, process equipment
developer.
New products bring Prosperity
Ansoff's Directional Policy matrix to identify the variety of growth options available to a business
Market Penetration: Growth opportunities are said to exist within a business's existing markets through
increasing the volume of sales. Increasing the market share of a business's existing products by exploiting the
full range of marketing mix activities is the common approach adopted by many companies and may include
branding decisions. Kellogg promoted usage of cornflakes at times other than the breakfast also.
Market Development: Growth opportunities are said to exist for a business's products through making them
available to new markets. Eg. Mercedes decided to enter small car market.
Product Development: Growth opportunities are said to exist for a business through offering new or improved
products to existing markets. This is an ongoing activity for most companies.
Diversification: Growth opportunities are said to exist for a business beyond a business's existing products and
markets. The selection of this option, however would be significant as the business would have to move into
markets that it currently does not operate in. Eg. 3m entering into stationary market with post it notes.
The Development of Ansoff's directional policy matrix was: Johnson and Jones (1957) matrix for product
development strategies. This matrix replaces Ansoff's product variable WITH Technology. The use of
technology as a variable better illustrates the decisions a company needs to consider. Many other matrices
have since been developed to try to help firms identify the range of options available.
Dimensions of a product
(A product is multidimensional)
6. Repositioning
Liner NPD Model
Idea Generation
Idea Screening
Concept Testing
Business Analysis
Product development
Test Marketing
Commercialization
Departmental-Stage Models
Activity-Stage Models and concurrent engineering
Cross-Functional Models (Teams)
Decision-Stage Models
Conversion-Process Models
Response Models
Network Models
Outsourced
Characteristics of Packaging
1.
2.
3.
4.
5.
6.
7.
Dispensing
Storage
Stability
Handling
Opening/Resealing
After use
Disposal
Rogers (1962) cites a number of reasons why profit margins decline in relation to Product
Packaging:
1.
2.
3.
4.
5.
6.
7.
Increasing number of competitive products leading to over capacity and intensive competition.
Market leaders under pressure from smaller companies.
Strong increase in R&D to find better versions of the products.
Cost economies used up.
Decline in product distinctiveness.
Dealer apathy and disenchantment with a product with declining sales.
Changing market composition where the loyalty of those first to adopt beings to waver.
Packaging Systems:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
There are 3 key areas that need to be addressed to revitalize labeled mature packaged goods:
1. Reminding consumers about the brand
2. Improving where the product is sold
3. Improving the packaging
KIBS: Knowledge intensive business services. They include traditional business services such as accountancy
and law, but also a new generation of KIBS.
Intangibility
Heterogeneity
Simultaneous production and consumption
Perishability
Major Innovation
Start-up business
New services for the market presently
Served
Service line extensions
Service Improvements
Style changes
3. Idea Screening
4. Concept Development
5. Concept Testing
6. Business analysis
7. Project authorization
Idea Generation
Idea Generation
Idea Screening
Idea Screening
Concept Testing
Business Analysis
Formation of Cross Funct. Team
Business Analysis
Service Design and Process System Design
Product development
Personal Training
Service Testing and Pilot
Test Marketing
Test Marketing
Commercialization
Commercialization
Monitoring and Evaluation