1. KNOWLEDGE, INNOVATION & NEW PRODUCT DEVELOPMENT 2UZB614
Lecture-1
KNOWLEDGE, INNOVATION & NEW PRODUCT DEVELOPMENT 2UZB614
Mamurjon Rahimov and
Farhod Karimov
Academic year

2. Research and Development

3. 3M’s ergonomic mouse

4. Outline
1. Introduction 2. Background: The management of R&D within organizations 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

5. Best Practice in Innovation
Understand customer & market needs. How?
Culture of innovation> vision, leadership & support. Commercial imperatives to innovate, flexibility.
Open innovation-collaboration model, partnerships
Funding. Willingness to invest in R&D, balance current and future needs.
Execution. Commit resources, continuous improvement, benchmark, goals, strategy.
Creativity. Skills, knowledge base, learn, change
Intellectual property. Manage and protect

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) “To develop new knowledge and apply scientific or engineering knowledge to connect the knowledge in one field to that in others.” (Roussel et al., 1991)

7. 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

8. 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.

9. Government incentives & priority areas
Allows companies certain deductions on R&D expenditure
Aim is to make firms more internationally competitive
ICT
Biotechnology
Food sector
Nanotechnology

10. Innovation in consumer goods firms
R&D is often associated with high-tech firms that are on the cutting edge of new technology
But many established consumer goods companies spend large sums of money on improving old products.
For example, Gillette spends quite a bit on R&D each year in ongoing attempts to design a more effective shaver.
On average, most companies spend only a small percentage of their revenue on R&D (usually under 5%).
However, pharmaceuticals, software and semiconductor companies tend to spend quite a bit more.

11. Why is R&D important? Crucial to survival Fast changing environment
Continuous technology change
Competition
Changing consumer preferences
Fundamental to “marketing”
Advantage in markets come from:
Understanding what markets need (MR)
In case of technology – selling what is possible to make
Efficient production processes

12. Traditional R&D About gaining competitive advantage
Technical developments in industries such as chemical, electronics, auto, pharmaceuticals, was responsible for economic growth of nations
R&D was a staged process: moving from research to engineering to manufacture
Large investments in R&D such as the space race, which resulted in many products and fueled economic growth

13. University vs. Industry research
Universities provide the fundamental and basic research, which tends to be more general
Universities concentrate on pursuit of knowledge
Industry research focuses more on:
product development
new technologies
understanding of technologies in existing products
technologies in manufacturing
application of knowledge for commercial purpose

14. Classification of research

15. R&D operational activities
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.

16. Components of R&D (1) Basic research:
general in nature, apply to a broad range of uses and technologies
Universities and large corporations
New scientific discoveries eg antibiotics
Applied research:
Apply existing principles to find new solutions, application of science (ergonomic mouse)
Moving basic research towards new products.

17. Components of R&D (2) Development:
Focuses on products and commercializing these
Several prototypes may be developed
Design improvements occur
Trials, modifications and improvements occur
Technical service:
Service support systems around existing products and processes
Cost and performance improvements
Modifications to specifications to improve costs
Marketing considerations

18. 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 e.g. climate change
Risk analysis
Capability analysis

19. Integrating R&D to overall business strategy
R&D should not be independent of business strategy
R&D is part of the business support infrastructure
AIMS:
Provide support of existing businesses by keeping them competitive and supporting efficiencies
Drive new businesses and opportunities e.g. 3M’s discovery of temporary adhesive led to creation of Post-it notes.
Broaden and deepen technological capability for long-term benefits

20. Extended product life cycle

21. Classification of new product development activities across different industries

22. Strategic management of research and technology

23. Strategic role of R&D

24. Evaluating research projects

25. What to spend on R&D? 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

26. For extracurricular reading…
“And who would deny that the consumer demand for ever more stuff at ever cheaper prices is one of the great deterministic forces in history?” 
“People like Justin Frankel and Daniel Sheldon linger on the fringe until they dream up something that has great commercial potential. Then some big company swoops in and buys them, or they give birth to the big company themselves.” 
“The only thing capitalism cannot survive is stability. Stability—true stability—is an absence of progress, and a dearth of new wealth.” 
“Inside every alienated hacker who thinks he stands for the “good things that ultimately don’t matter to most businesses” there is a tycoon struggling to get out.”
― Michael Lewis, Next: The Future Just Happened

27. Conclusion R&D is important for business
R&D is supported by governments worldwide
R&D should be integrated to overall business strategy
Collaboration at all levels speeds up R&D.

29. Recommended Reading Essential Reading Recommended Reading
Trott, P. (2012) Innovation Management & New Product Development. FT Prentice Hall.
Recommended Reading
Davis, S.M. & Moe, K. (1997). Bringing innovation to life. Journal of Consumer Marketing, 14 (5),
Kao, S-C., Wu, S-H. & Su, P-H. (2011). Which mode is better for knowledge creation? Management Decision, 49 (7),
Mitchell, R. & Boyle, B. (2010). Knowledge creation measurement methods. Journal of Knowledge Management, 14 (1),
Witell, L., Kristensson, P., Gustafsson, A. & Löfgren, M. (2011). Idea generation: customer co-creation versus traditional market research techniques. Journal of Service Management, 22 (2),
Yelkur, R. & Herbig, P. (1996). Global markets and the new product development process. Journal of Product and Brand Management, 5 (6),
KNOWLEDGE, INNOVATION & NEW PRODUCT DEVELOPMENT