An introduction to New Product Development (NPD)

An introduction to New Product Development (NPD)New products Development: Managing R&D ProjectsModule Code and Module TitleTitle of Slides1Asia Pacific University of Technology and Innovation#New Product Development- Managing Intellectual PropertyLearning ObjectivesRecognize the changing nature of R&D managementRecognize the factors that influence the decision whether to undertake internal or external R&D Recognize the value of providing scientific freedomExamine the link with the product innovation processRecognize the significant of evaluating R&D projectsExplain how prior knowledge affects a firms ability to acquire externally developed technology

Module Code and Module TitleTitle of SlidesSuccessful Technology ManagementEssential Ingredients for Successful Technology ManagementCapacity to orchestrate and integrate functional and specialist groupsQuestioning the appropriateness of the existing divisional markets; missions and skills for the exploitation of technological opportunitiesWillingness to take long term view of technological accumulationModule Code and Module TitleTitle of SlidesThe Changing Nature of R&D ManagementFactors of ChangesTechnology explosion- 90% of present technical knowledge generated in last 55 years

Shortening of technology cycle- market life of production cars decreased from 10 years in 1960 to 6 years in 1990

Globalization of technology- ability to acquire and assimilate technology into new products e.g. Technology transferModule Code and Module TitleTitle of SlidesShortening of technology life cycle- restyling to as short as 3 years

4Asia Pacific University of Technology and Innovation#Acquisition of External Technology/MatrixHighLowHighLevel of understanding of the technology by external third partiesLevel of understanding of the technology by the acquiring business ByGranstrand et al.Module Code and Module TitleTitle of SlidesOrganizing Industrial R&DForm of R&D Organization Structure

Centralized Laboratories- critical mass; collaborative ideas; synergy results e.g. 3M

Decentralized Laboratories- reinforce the link with the business products and market; foster improved communication and product development

Internal R&D Market- involves establishing functional cost centre; similar to decentralized R&D laboratoriesModule Code and Module TitleTitle of SlidesForms of External R&DContract R&D- Business has low level of technology, contracting to third party is often suitable e.g. University Research departmentR&D Strategic Alliances and Joint Venture- generic terms for all cooperation through sharing of cost and benefitsR&D Consortia- based on common membership and collaborate over a long period of time e.g. Keiretsus & ChaebolsOpen Source R&D- free to use e.g. web browser and WikipediaModule Code and Module TitleTitle of SlidesEffective R&D ManagementR&D RequirementCharacterized by1Growth OrientationA commitment to a long term growth rather than short-term profit2Organizational heritage and innovation experienceWidespread recognition of the value of innovation3Vigilance and external linksThe ability of the organization to be aware of its threats and opportunities4Commitment to technology and R&D intensityThe willingness to invest in the long term development of technology5Acceptance of risksThe willingness to include risky opportunities in a balanced portfolio6Cross functional cooperation and coordination within organizational structureMutual respect among individuals and a willingness to work together across functionsModule Code and Module TitleTitle of SlidesEffective R&D ManagementR&D RequirementCharacterized by7ReceptivityThe ability to be aware of, to identify and to take effective advantage of externally developed technology8Space for creativityAn ability to manage the innovation dilemma and provide room for creativity9Strategy towards innovationStrategic planning and selection of technologies and markets10 Coordination of a diverse range of skillsDeveloping a marketable product requires combining a wide range of specialized knowledge11 Project ManagementGood project management skills and systems12Market OrientationAn awareness of the needs and changing nature of the marketModule Code and Module TitleTitle of SlidesThe Effect of R&D Investment on ProductsProfitability and Growth PerspectiveDevelopment of existing products-capturing market share and improving profitabilityEarly introduction of a new product- strive to be technology leaders in their industryLate introduction of a new product- deliberately postponing until shown by competitors to be valid reduces the risk and costLong term projects- Looking into the future, developing products that public do not realize they requireModule Code and Module TitleTitle of SlidesR&D Project Evaluation CriteriaTechnicalResearch Direction and BalanceCompetitive RationalePatentabilityStability of the MarketIntegration and SynergyMarketChannel FitManufacturingFinancial Strategic FitModule Code and Module TitleTitle of SlidesEvaluation CriteriaCategories of Screening MethodsBenefit Measurement ModelsDerived from a group of well informed and experienced managersSubjective assessmentQuantitative and qualitative methodMathematical, scoring, decision trees (Holger, 2002)Module Code and Module TitleTitle of SlidesEvaluation CriteriaCategories of Screening MethodsFinancial/Economic ModelsMost popular project selection toolToo much emphasis on financial formulas and inherent short term biasLimited accurate future financial data, leading to inaccurate estimates of future revenuesModule Code and Module TitleTitle of SlidesEvaluation CriteriaCategories of Screening MethodsPortfolio Selection ModelsNewness- How new is the product likely to beTime of introduction- is the new product portfolio going to deliver a constant stream or case of feast and then famine?Markets- are the different business markets and business areas of the company receiving resources proportionate to size and importance?Module Code and Module TitleTitle of SlidesTutorialDiscuss the strengths and limitations of undertaking external R&D.What is meant by scientific freedom and why is it important?Discuss the benefits of open source R&D.Module Code and Module TitleTitle of Slides