Innovation Strategy Management Lecture 12

Programme Part 1 – The basis of Innovation Part 1 – The basis of Innovation Part 2 – Innovation and New Product Development Part 2 – Innovation and New Product Development Part 3 – Innovation and Technology development Part 3 – Innovation and Technology development Part 4 – Innovation and Intellectual Property Part 4 – Innovation and Intellectual Property Part 5 – EU Green paper of Innovation Part 5 – EU Green paper of Innovation Part 6 – Innovation policies in different countries Part 6 – Innovation policies in different countries

Part 3 Innovation and Technology development

Lecture 12: Managing of research and development R&D management and the industrial context R&D management and the industrial context R&D investment and company growth R&D investment and company growth R&D management and its link with business strategy R&D management and its link with business strategy Strategic pressures on R&D Strategic pressures on R&D

Management of R&D What is it? What is it? the discovery of new knowledge the discovery of new knowledge the use of old science to produce a new product the use of old science to produce a new product management of scientific research and development of new products management of scientific research and development of new products

R&D is the purposeful and systematic use of scientific knowledge to improve mans lot even though some of its manifestations do not meet with universal approval. R&D is the purposeful and systematic use of scientific knowledge to improve mans lot even though some of its manifestations do not meet with universal approval.

The R&D continuum

R&D management and the industrial context no single best way to manage R&D no single best way to manage R&D different in branches different in branches (aircraft, textile,...) (aircraft, textile,...) long history long history R&D as % of sales = R&D as % of sales = = (R&D expenditure/total sales income x 100 %) sales income x 100 %) large firms large firms small firms small firms

R&D expenditure across industry sectors Industry sector R&D expenditure as % of sales Pharmaceuticals14 Aerospace5 Automotive5 Chemicals8 Electrical and electronics 7 Food1,5 General manufacturing 6 Computers10

R&D investment and company growth On global scale, R&D investment increased by an average of 23 per cent On global scale, R&D investment increased by an average of 23 per cent from from This because companies realize that new products can provide a huge competitive advantage This because companies realize that new products can provide a huge competitive advantage

Leading international increases in R&D expenditure between 1991 and 1996

Classifying R&D In universities – new knowledge In universities – new knowledge Industrial research – guided by the aims of business strategy Industrial research – guided by the aims of business strategy

The main activities of industrial R&D have included the following: The main activities of industrial R&D have included the following: discovering and developing new technologies discovering and developing new technologies improving understanding of the technology in existing product improving understanding of the technology in existing product improving understanding of the technologies used in manufacturing improving understanding of the technologies used in manufacturing understanding research results from universities and other research institutions understanding research results from universities and other research institutions

Classification of areas of research emphasis in industry and university

Manipulating known scientific principles through technological development Example: Videocassette recorder VCR Example: Videocassette recorder VCR first introduced in early 1970s first introduced in early 1970s in 1950s firms started to develop a videotape recorder in 1950s firms started to develop a videotape recorder RCA, Ampex in USA RCA, Ampex in USA Toshiba in Japan Toshiba in Japan Ampex got first success commercially, price $ Ampex got first success commercially, price $ Sony in 1969 announced: magazine-loaded Sony in 1969 announced: magazine-loaded JVC half-inch tape JVC half-inch tape JVC VHS in 1976 JVC VHS in 1976

The operations that make up R&D Basic research Basic research Applied research Applied research Development Development Technical service Technical service

R&D management and its link with Business Strategy Environmental forecasts Environmental forecasts Comparative technological cost- effectiveness Comparative technological cost- effectiveness Risk Risk Capability analysis Capability analysis who?who? what?what? when?when?

Integration of R&D Defend, support and expand existing business Defend, support and expand existing business Drive new business Drive new business Broaden and deepen technological capability Broaden and deepen technological capability

The strategic role of R&D as viewed by the business

Strategic pressures on R&D The technology portfolio: The technology portfolio: core technologies core technologies complementary technologies complementary technologies peripheral technologies peripheral technologies emerging technologies emerging technologies

Strategic pressures on R&D

The difficulty of managing capital-intensive production plants in a dynamic environment The difficulty of managing capital-intensive production plants in a dynamic environment Which business to support and how? Which business to support and how?

The R&D strategic decision-making process

Technology leverage and R&D strategies Survival Survival Competitive Competitive Technology mastery Technology mastery Break the mould Break the mould Using the model Using the model Example / In-can system /: Example / In-can system /: Guinness plcGuinness plc Johnnie WalkerJohnnie Walker BellsBells GordonsGordons

Classifying the level of research using technology leverage