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2052 MGTSTRATEGIC THINKING AND INNOVATION

MODULE 2

(1)DEVELOPING NEWPRODUCTS

(2) NOTES ON GLOBALIZATIONLecturer: Dr Alan Burton-JonesEmail: alan@burton-jones.com

Tel: 07 3255 1772

mailto:alan@burton-jones.commailto:alan@burton-jones.com

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LEARNING OBJECTIVES OFPART 1

To understand the evolution of the newproduct development process To be aware of leading models of

product development including the stagegate process To appreciate the relevance of differentorganizational structures for facilitating

product development To gain a basic appreciation of the roleof the project leader in new productdevelopment

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Part 1:

Developing NewProducts

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EVOLUTION OF THE NEWPRODUCT DEVELOPMENT

PROCESSPhased project planning (NASA, 1960s)B. Preliminary analysisC. DefinitionD. Design

E. OperationProduct planning and development process (Booz

Allen Hamilton 1982)7. Development of new product development strategy8. Idea generation

9. Screening and evaluation10.Business analysis11.Development12.Testing

13.Commercialization

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FIVE GENERATIONS OF NEWPRODUCT DEVELOPMENT

MODELSGeneration Model type Model characteristicsFirst Technology

pushSimple linear sequential: R & D focus

Second Needs pull Simple linear sequential: marketdemand focus

Third Coupling Sequential with feedback loops: R&Dand marketing more in balance

Fourth Integrated Parallel development with integrateddevelopment teams: strong upstream

supplier links; close coupling withleading edge customers; R&D manufacturing integration; jointventuresFifth Systems

integratedandnetworking

Fully integrated parallel development;use of expert systems; strong customerlinks; horizontal links; increased focuson quality

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CULTURAL FACTORS IN THEDEVELOPMENT PROCESS

3 micro cultures of innovation ( Zien andBuckler 1997)

The fuzzy front end : experimental and

chaotic; requires high tolerance for ambiguityand uncertainty The product development process :

disciplined and focused on quantitative goalsand measures; high commitment to goal;schedule oriented; not receptive to newideas; teamwork important

Market operations : predictability and order;strong financial orientation; relies on

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THE STAGE-GATE PROCESS

Stage 1

Stage 2

Stage 3

Stage 4

Stage 5Gate

2

Gate1

Gate3

Gate4 Gate5

1.Preliminaryinvestigation

2.Buildbusiness case

3.Development

4. Testing&validation

5. Fullproduction andmarketlaunch

2.Secondscreen

3.Decision onbusiness case

4. Postdevelopmentreview

5. Testing&validation Post

implementation review

1.Initialscreen

Ideation

The Stage -Gate New Product Process by Robert G.Cooper

2.Buildbusiness case

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THIRD GENERATION NEWPRODUCT DEVELOPMENT

PROCESSCoopers four FsDevelopment process should be:3.Fluid: fluid and adaptable with overlapping

and fluid stages4.Fuzzy gates: conditional go decisions5.Focused; build on prioritization methods

that look at entire portfolio of productsand focus resources on the best bets6.Flexible: not a rigid stage-and-gate

system; each project unique and has ownrouting

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PRODUCT DEVELOPMENT ANDORGANIZATIONAL STRUCTURE

Type How it works Appropriate forFunctionalorganization

Project plannedand executed ina functionalstructure

Improvement to existing products; new low innovationproducts; sequential processing; fosters deepspecialization

Independen

t projectorganization

Self contained

group; projectmanager totallyresponsible; co-located team

Large projects justifying full time use of expert from

different functions; suitable for new solutions orproducts; suitable for firms in dynamic markets

Matrixorganization

Decision makingrests withproject team;

project managernegotiates withheads of functions forresources; highdemands onsocial andpolitical skills of project manager

Large complex projects requiring simultaneous effortsfrom multiple experts in different disciplines

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THE DEVELOPMENT FUNNEL

MarketAssessmentandForecasting

CapabilitiesAssessmentandForecasting

Post-projectlearning andimprovement

Developmentgoals &objectives

Projectportfolioplanning

ProjectMgt.andexecution

Capabilities

strategy:Core competencies Technology base/stage

cycle Technology integration

Product/marketstrategy:

New versus existingmarkets

Derivative or newproduct/concept

Financial contribution

Businessstrategy

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Component drivenproducts

e.g. machine tools

Engineer=Integrator?

Complex products

e.g. automobiles

Manager= integrator?

Simple products

e.g. packaged goods

Marketing type

productManager = integrator

Interface drivenproducts

e.g. consumerelectronics

Industrial designer=integrator?

High

High

Low

Low

TYPES OF PRODUCTS ANDPROJECT INTEGRATORS

Coordinationdifficulty of internal productstructure

Coordination difficulty of product user interface

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Part 2: Notes on

Globalization

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LEARNING OBJECTIVES OFPART 2

To understand what globalization meansand key factors supporting andconstraining organizations globaldevelopment To appreciate the factors influencingdecisions to operate R& D on a global orlocal basis and ways to manage theprocesses involved To be aware of human and culturalfactors in international businessoperations To understand issues relating to globalbrandin

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GLOBAL OR INTERNATIONAL? Some commentators argue that world markets are

becoming increasingly similar making it unnecessary tolocalize the marketing mix

Others take the view that while the world is moving towardsglobal markets, cultural and economic differences amongregions and nations limit globalization of consumer tastesand preferences

Trade barriers and differences in product and technicalstandards in different countries and regions limit firmsability to sell a standardized product to a global market buttrade barriers are progressively falling and global standardsare increasingly prevalent across product groups

Globalization is probably best viewed on three differentlevels: economic level : gradual moves to trade liberalization

worldwide organizational level: globalization varies by industry e.g.

globally relevant resources plus financial andprofessional services and the high technology sector arealmost completely global whereas some more traditional

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GLOBAL OR LOCAL R&D? KEY FACTORS TO CONSIDER

Degree of innovation Importance of speed to market Specificity of market knowledge Product uniformity across markets Ned for economies of scale Benefits of close R&D-Marketing

collaboration Cultural issues e.g. not invented here

syndrome

Benefits of having different organizational

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Autonomousregional R&Dcenters e.g.Unilever,Citibank, GM

Network of regionalR&D centerssupported by somecentral R&D e.g.DuPont, 3M

Autonomoustechnology R&Dcenters e.g. IBM,Pfizer

Network of technology R&Dcenters with centralcoordination e.g.Microsoft , Nokia, HP,

Novartis Matsushita

Single,Central R&Dcenter

RegionalMarket

Technology

Decentralized Centralized

Primary focus

APPROACH TO MANAGING GLOBAL

R&D

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MANAGING PEOPLE IN AGLOBAL CONTEXT

Structural Forms and Modes of Internationalization Typical People issues

Whether to staff foreign operationswith Parent or Host country nationals

Establishment of foreign production

Establishment of sales subs. & foreign

branches

Simple export Limited issues

How to transfer technology and managementknowledge to Host country nationals

Global product division How to staff and people managementfunctions in foreign subsidiaries

Transnational structure Issues with mixed use of host country parentcountry and third country nationals

Issues of management progression;staff loyalty

Cooperative ventures e.g. alliances,IJVs

Adapted from De Cieri, H. and Dowling . J. (1997) Strategic international human resource management: an Asia-Pacificperspective, Management International Review, 37/1:21-42

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Social structure : structure of social relationships : degree towhich the basic unit of social organization is the individual, asopposed to the group and the degree to which a society isstratified into classes or castesNational culture: the set of values and the norms of behaviorthat are approved or sanctioned by a society e.g. Hofstedes 5

dimensions : Power distance : e.g. between subordinates and superiors Uncertainty avoidance : e.g. how comfortable managers and

staff feel in unstructured situations evidenced in extent of rules-based compliance

Individualism versus collectivism : e.g. degree to whichindividuals areintegrated into groups for workplace bargaining, contracts

and incentives Masculinity versus femininity : assertiveness versus

interpersonal focus

GLOBAL SOCIOCULTURAL FORCES

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DIFFERENCES IN WORK-RELATED VALUES BY COUNTRY

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CONSIDERATIONS FOR GLOBALPRODUCT BRANDING

Us ing brand symbols with universally acceptedmeanings and /or positive connotations Whether to emphasize or deemphasize country

associations

Be willing to modify strategy to accommodate culturaldifferences across nations and regions When developing or delivering products be sensitive to

local social and ethical concerns

Be aware of local legal requirements Balance economies of scale with benefits of local

presence

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EXERCISE: ASSOCIATIVEEFFECTS OF BRAND SYMBOLS

For each of these words write down which you associate more with the IBM PC or more with theApple Mac :

Effeminate, beautiful Virile , macho Business, science Arts , design

Masculine Feminine Imaginative, associative Rational , linear Traditional , bland Cool, trendy

Left brain Right brain Right wing , conservative Left wing, liberal Catholic Protestant

Adapted from Danesi, M. ( 2006) Brands : Abingdon , Oxford, Routledge

SMALL GROUP EXERCISE

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SMALL GROUP EXERCISE:

Case study review: Walkingwith Dinosaurs

1.Working in small groups discuss your

individual responses to the 4 questionsat the end of the case study (see page41 in the textbook).2. Review and consolidate the findingsfrom your individual responses.3. A member of each group present thefindings of the group to the class andlead a class discussion.

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PREPARATION FOR NEXT WEEK

Read Case Study (3) on Black andDecker's Quattro (starts on p131 inthe textbook).

Prepare a one page documentcontaining your responses to the 2questions on page 137

Come prepared to discuss yourresponses in class.