Professors Reinhard Angelmar and Christoph Loch
INSEAD
Research and development of products and services are emerging as one of the key themes of competitiveness for the 1990s. And yet, it is still treated in many firms as a "black hole" into which management pours lots of money, hoping that enough useful things come out to sustain the company for a few years. Have you worked in marketing, manufacturing, finance, or sales? Then you are likely to be familiar with this view.
Development of high quality new technologies, products and services represents a process that needs to be managed. This process requires integration across the traditional line functions. As companies try to make radical improvements in their product and service creation, they are breaking down the traditional walls between R&D, manufacturing, marketing, and sales/field services. Competitive advantage increasingly comes out of management capabilities in the development process, rather than from individual breakthrough products.
This course offers you a systematic overview of the management issues with tools both for linking development to strategy and for managing the development process for speed, efficiency and market impact. We encourage interested students from all backgrounds to join (not only engineers!!) and share their perspectives. Everyone in a company can contribute to successful commercialization of new products, and we want to stress general management's responsibility to orchestrate such cooperation. We will co-deliver the course, both being together in the classroom for the whole course to illustrate the contributions of and the typical tensions between the line functions. Grades will be based on class participation, 3 small assignments, and a group project (no exam).
The course is structured in three modules. The first addresses project management, starting with a hands-on experience of managing a challenging project in a team game. The second module deals with the difficulty many organizations have to really incorporate all functions into the development process, even though all have by now heard the buzzword of "crossfunctional" development. How does one really integrate development across line functions, even extending to suppliers? Finally, the third module discusses strategy and resource allocation, as well as networks of development organizations, a topic increasingly relevant for international companies.
There is no required textbook for the course. Copies of cases and reading materials are provided in the course pack. Additional material will be distributed in class.
Evaluation will be based on three elements:
1. Three homework assignments will account for 20% of your grade. They are:
1. Your process redesign for the development team game, measured by your performance in the
second round of the game in class 3 (5%)
2. The presentation on the alliance agreement that you have negotiated between Alza and Ciba
(class 15). (15%)
2. Class participation will account for 30% of your grade.
3. A project in the area of product or service development, corporate entrepreneurship and innovation (in groups of up to three persons) will account for 50% of your grade. The topic is not restricted to new product development; it may also be an innovation in organization or procedures in a corporation. The project report must not be longer than 10 pages of text (5 to describe the situation, and five to apply the class concepts) plus 5 pages of exhibits. Two varieties of projects are feasible:
a. Analysis of a company which is known for its outstanding innovation performance, or of a highly innovative product. This project will require field research and / or search of secondary information sources.
b. A project which draws on your own past personal experience as a participant in an innovation project.
Your report should cover the following points:
- a description of the nature of the innovation(s), and an assessment of innovation performance
- a description of the key events and processes through which the innovation(s) came about
- what, if anything, are particularly interesting features of this case?
- an evaluation of the innovation process drawing on the course concepts: positive and negative aspects of the way the process was managed
- your personal, retrospective recommendations for improving the effectiveness of this process
- the key learning points from this project, and your assessment of the extent to which these learning points are context-specific or can be generalized broadly.
Please submit a project proposal to the instructors by Session 4.
Session 1: Introduction: The Innovative Organization
Reading: Bank, David: "The Java Saga," Wired, December 1995, 166 ff.
Questions:
1. What are the main characteristics of the process through which Saga came about? Was this a
typical innovation process?
2. What is it about the way Sun is managed that made Java possible?
Optional Reading:
Burgelman, R. A., and L. R. Sayles, "Transforming Invention into Innovation," Chapter 3 in: Inside Corporate Innovation, The Free Press 1986, 31-49.
Module 1 - Managing Development Projects
Session 2: Development Team Game I
Case: NPISim: A product and process development team game
Session 3: Development Team Game II
Case: NPISim, second round Homework: Redesign of your NPISim development process to be implemented!
Session 4: Concurrent Engineering
Case: Jalopy Concurrent Engineering
Optional Readings:
Takeuchi, H., and I. Nonaka, "The New Product Development Game," Harvard Business Review January - February 1986, 137-146.
Krishnan, V. "Managing the Simultaneous Execution of Coupled Phases in Concurrent Product Development," IEEE Transactions on Engineering Management 42, 1996, 210 - 217.
Module 2 - Integrating R&D Across Functions
Session 5: Inputs From The Market
Case: Capital (A)
Questions:
1. What do you think of the way in which Prisma Presse used market inputs during the
development of Capital? What would you have done differently and why?
2. Would you launch Capital? If not, what should Prisma Presse do next?
3. Assume they were to launch in September: how should they do it, and how successful do you
expect the magazine to be?
Reading: Aaker, D. A., and G. S. Day, "New Product Research," Chapter 21 in: Marketing Research, 4th ed., John Wiley 1990, 653 - 685.
Optional Reading:
Cooper and de Brentani, "New Industrial Financial Services: What Distinguishes the Winners," Journal of Product Innovation Management, 1991, 75 - 90.
Session 6: Sales Forecasting
Case: Zenith: Marketing Research for High Definition Television (HDTV)
Questions:
1. How would you go about forecasting the demand for HDTV?
2. Would you do the Aspect Ratio study a) as described? b) in a modified way?
Reading: Bayus, B. L.: "High Definition Television: Assessing Demand Forecasts For a Next Generation Consumer Durable," Management Science 39, 1993, 1319 - 1333.
Session 7: Development Cooperation Across Functions
Case: Aquagliss/Ultraglide
Questions:
1. How well did marketing and the other functions (research, engineering, manufacturing and
design) work together during the product development process prior to 1972? What are the pros
and cons of the way this process was managed?
2. What do you think of the way the interface was managed a) between 1972 and 1977; b)
between 1977 and 1980?
3. What do you think of the "Innovation Charter"?
4. What do you think of the role marketing has played in the FVD project? Why did the project get
stuck?
5. What are the similarities / differences of Paul Rivier's approach to new product development
compared to the previous approach? How effective is it? What would you change?
6. How would you go about institutionalizing the new approach to new product development at
Calor and diffusing best new product development practices throughout the SEB group?
Session 8: Supplier Relationships
Reading: Dyer, J. H., "Dedicated Assets: Japan's Manufacturing Edge", Harvard Business Review November - December 1994, 174 - 178.
Optional Readings:
Tagliabue, J., "New Economics of Economy Cars," The New York Times, Jan. 15, 1997.
Simonian, H., "Prophet of the Production Line," Financial Times, March 29, 1996, 15.
Session 9: Guest Speaker
The head of the prototyping lab at BMW in Munich will discuss current issues and problems that they are facing in the interface between development and manufacturing. The date of this session is subject to change (possible switch with another session).
Module 3 - Strategy and R&D Networks
Session 10: Technology Strategy and Performance Measurement
Reading: Cusumano, M.A., Y. Mylonadis, and R. S. Rosenbloom, "Strategic Maneuvering and Mass-Market Dynamics: The Triumph of VHS over Beta," Business History Review 66, 1992, 51 - 94.
Optional Readings:
Porter, M. E.: "Technology and Competitive Advantage," Chapter 5 in: Competitive Advantage, The Free Press 1985, 164 - 200.
Krogh, L. C., J. H. Prager, D. P. Sorensen, and J. D. Tomlinson (1988): "How 3M Evaluates Its R&D Programs," Research Technology Management , November - December, 10 -14.
Clark, K. B., and T. Fujimoto, "The Parameters of Performance: Lead Time, Quality, and Productivity," Chapter 4 in: Product Development Performance, HBS Press, Cambridge 1991, 67-95.
Session 11: The Project Portfolio and Resource Allocation
Case: American Switching Systems Development Project Choice
Questions:
1. Use the concept of the R&D portfolio to evaluate AS's collection of development projects, and
make a recommendation to Pete Bilinsky on which projects to undertake.
2. How would you evaluate AS's process of selecting projects?
Reading: Roussel, P. A., K. M. Saad, and T. J. Erickson: "The R&D Portfolio," in: 3rd Generation R&D, HBS Press 1991, 93 - 122.
Optional Reading:
Hise, R. T., and J. C. Groth, "Assessing the Risks New Products Face," Research Technology Management, July - August 1995, 37 - 41.
Session 12: Evaluating Projects
Case: Bank of Boston Treasury Systems (A)
Questions:
1. What is the goal of undertaking one or more of the three projects?
2. How do you evaluate the three options? What criteria do you use? How do they rank?
Optional Readings:
Newton, D. P., and A. W. Pearson, "Application of Option Pricing Theory to R&D," R&D Management 24, 1994, 83 - 89.
Faulkner, T. W., "Applying 'Options Thinking' to R&D Evaluation," Research Technology Management, May-June 1996, 50 - 56.
Session 13: Organizational Structures for New Businesses
Case: The Development of Nopane
Questions:
1. What are the strengths of the development process used for Nopane?
2. What are the factors that contributed to the ultimate failure of Nopane? 3. How would you
answer to John Hammer's suspicion that there may be an underlying management failure at Alpex?
Optional Readings:
Lemonick, M. D., "Redux - the New Miracle Drug?" Time, September 23, 1996, 60 - 67.
Staw, B. M., and J. Ross, "Knowing When to Pull the Plug," in: Managing Projects and Programs, Harvard Business Review Book Series, Boston: HBS Press 1989, 189 - 202.
Session 14: International Product Development
Case: Product Development for Line Transmission Systems within Alcatel NV
Questions:
1. What do you think of the new product development process within the ATC-department a)
before 1988, and b) after 1988?
2. What are the main issues in Alcatel's international new product development, and what causes
them?
3. What do you recommend to improve Alcatel's international new product development process?
Optional Reading:
Bartlett, C. and S. Ghoshal: "Managing Innovation in the Transnational Corporation," Chapter 9 in: C. Barlett, Y. Doz and G. Hedlund, Managing the Global Firm, 1990, 215 - 255.
Session 15 and 16: Strategic Partnerships and Course Wrapup
Case: Alza/Ciba-Geigy: Advanced Drug Delivery Systems (A) Alza Corporation (A) Ciba-Geigy Pharmaceuticals Division (A)
Each participant will be assigned either to Ciba-Geigy or to Alza. Both corporations have to negotiate an agreement, which is to be presented in class. The assignments to the groups and the specific tasks will be handed out in a preceding class.