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Research and Development Chapters 8 and 9
Research and Development Chapters 8 and 9
Lecture 5
Chapters 8 and 9
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.2
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.3
Structure of lecture
1. Introduction
2. Background: The management of R&D within
organisations
3. R&D and the link with corporate strategy
4. R&D strategic planning
5. R&D operational activities
6. Allocating funds to R&D
7. Summary and recap
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.4
Nov 2007
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.5
$bn % sales
Ford 8.0 5
Pfizer 7.4 15
Siemens 6.5 7
Johnson & Johnson 6.3 12
Microsoft 6.1 16
GlaxoSmithKline 5.7 14
Samsung 5.4 7
Nokia 4.7 11
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.6
What is R&D?
“R&D is the purposeful and systematic use of
scientific knowledge to improve man’s lot even
though some of its manifestations do not meet with
universal approval.” (Twiss, 1992)
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.7
R & D in Pharmaceuticals
Theoretical mechanisms
Universities
Proof of concept
drug)
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.8
R&D in Business
Critical for marketing
Competition has made R&D important
Consumers trends, needs, demands
No guarantees that higher spending on R&D will
lead to:
high profits
greater market share
more creativity
better products and services
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.9
Definition
Investigative activities that a business makes a
deliberate decision to conduct
Intention is generally strategic (future growth)
Aim is to make a discovery that can either lead
to the development:
new products or
procedures, or
to improvement of existing products or
procedures.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.10
R&D in Australia
$10.1 b of business spending on R&D in 2006-06
Manufacturing $3.9b
Property & business services $1.7b
Mining industries $1.7b
Mining R&D fastest growing
In Australia in 2004-05, 119000 FT employed in
R&D activites
Government direct funding + tax subsidies
2007 – 6295 reported R&D expenditure
Source: ABS
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.11
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.12
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.13
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.15
Future oriented
Long-term activities
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.16
R&D in Industry
More about application of old science and new
science to produce new products
R&D is continuous process, difficult to define
start and end times
Measure outcomes in terms of new products
Large proportion of R&D in industry is technology
based
The diversity of technology means no one firm
can gain expertise in all areas. So there is
greater reliance on alliances
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.17
Traditional R&D
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.18
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.19
Classification of research
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.20
Basic research
Work of a general nature intended to apply to a broad range
of uses or to new knowledge about an area.
Applied research
Work involving basic knowledge for the solution of a problem.
Development
The application of known facts and theory to solve a particular
problem through exploratory study.
Technical service
Cost and performance improvements to existing products,
processes or systems.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.21
Applied research:
Apply existing principles to find new solutions,
application of science
Moving basic research towards new products eg
Dyson vacuum cleaner
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.22
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.23
Business strategy
A parallel support infrastructure required to
ensure business success
Need to Match R&D to market realities and
opportunities
Study and forecast state of the operating
environment
Capacity to adjust to changes eg climate change
Risk analysis
Capability analysis
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.24
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.25
Introduction
scientific verification application and
suggestion, product Revenue
engineering Growth
discovery,
recognition, Maturity
new concept. Decline
Investment
Accumulated investment
Time
-12 -10 -8 -6 -4 -2 0 2 4 6
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.26
Source: UK R&D scoreboard 2001, DTI (2002). Crown copyright material is reproduced with the permission of the Controller of Her Majesty’s Stationery Office and the
Queen’s Printer for Scotland
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.27
Industrial products
Marketing FMCG
activities
Food and drinks industries
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.28
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.29
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.30
• Complementary technologies
Additional technologies
• Peripheral technologies
Whose application contributes
to the business
• Emerging technologies
Long-term significance
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.31
Types of technology
Core: central to most if not all products of
company. Eg photographic technologies are core
to the photocopying industry
Complementary: eg microprocessor technology
and paper-handling technology in photocopying
(lifting, turning, stapling etc)
Peripheral: eg computer software. The
photocopying industry is using software to add
features and benefits to its products, eg security,
emailing etc
Emerging: In photocopying more use of
telecommunications as standard features, pdf
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.32
• Inter-firm comparisons
• A fixed relationship to turnover
• A fixed relationship to profits
• Reference to previous levels of expenditure
• Costing of an agreed programme
• Internal customer–contractor relationship
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.33
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.34
References
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.35
Chapter 9
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.36
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.37
£bn %sales
Siemens 3.792 11
GlaxoSmithKline 2.936 18.7
Microsoft 2.675 17.9
Ericsson 2.090 22
Boeing 1.018 4.9
Procter & Gamble 0.994 8.2
Unilever 0.760 5.1
Dyson 0.008 9.6
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.38
Technology Risks
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.39
Introduction
verification application and
suggestion, Revenue
product engineering
discovery, Growth
recognition, Maturity
new concept.
Decline
Investment
Accumulated investment
Time
-12 -10 -8 -6 -4 -2 0 2 4 6
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.40
Industry %
Pharmaceuticals 15
Aerospace 5
Automotive 5
Chemicals 8
Electrical and electronics 7
Food 1.5
General manufacturing 6
Computers 12
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.41
• Complementary technologies
Additional technologies
• Peripheral technologies
Whose application contributes to the business
• Emerging technologies
Long-term significance
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.42
Communication bottlenecks
Multi-processor
Rate of Speed of light
computer
technological
progress
Single-processor
computer
Amount of effort
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.43
Centralised laboratories
Internal R&D Decentralised laboratories
Internal market
Industrial
R&D
Contract
Collaborative
External R&D
Consortium
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.44
Technological collaboration
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.45
Business 1
Corporate objectives Business 2
•objectives Unplanned projects worth exploiting
•strategy
•plans
2 products launched
1 successful
product
Evaluation of research project ideas
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.47
• Technical
• Research direction and balance
• Competitive rationale
• Patentability
• Stability of the market
• Integration & synergy
• Market
• Channel fit
• Manufacturing
• Financial
• Strategic fit
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
Slide 8.48
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008