Capstone Business Simulation

R&D, Innovation, and NPD

Group 4, Section C
WHAT WE WILL BE DISCUSSING TODAY?
Research and Development (R&D)
The process by which a company works to generate new knowledge
that it might use to create new technology, products, services, or
systems that it will either use or sell.
New Product Development (NPD)
The complete process of turning an idea into a marketable new
product. A company may develop an idea for an entirely new product or
improve an existing product to meet new or evolving customers' needs.
Innovation
An innovation is the implementation of a new or significantly changed
product or process. A product is a good or a service. Process includes
production or delivery, organization, or marketing processes
Research &
Development
 CLASSIFICATION
Research

Based on purpose Based on the Methodology Based on the data

collection
a) Basic research a) Quantitative a) Primary research
This type of research is conducted to This type of research involves
increase fundamental knowledge and
research collecting new data directly from
This type of research is based on
understanding of a particular subject the source through surveys,
numerical data and involves
or phenomenon, without any interviews, experiments, or
statistical analysis to draw
immediate practical application in observations.
conclusions.
mind.

b) Applied research b) Qualitative research b) Secondary research

This type of research is conducted to This type of research is based on non- This type of research involves
solve a specific problem or answer a numerical data such as interviews, analyzing existing data collected by
practical question, with the aim of observation, and case studies, and others, such as government
producing results that can be aims to gain a deeper understanding agencies, research organizations, or
immediately applied to a real-world of a particular phenomenon academic institutions
situation
 R&D CYCLE
1.Research 3.Design
In this initial stage, researchers Once the concept is solidified,
conduct exploratory studies, the team can move to the
literature reviews, market design phase. This stage
analysis, and feasibility studies
2. Conceptualization involves the development of 4.Development
to identify potential areas for detailed plans and In the development stage,
Once the research phase is complete,
innovation and development. specifications for the product, the team builds and tests
the team works to develop a concept
system, or technology. prototypes, conducts
or idea that will address the
experiments, and refines
identified problem or need. This
the design to optimize
include developing design for new
performance and reduce
product, outlining the potential
risk.
benefits

6.Launch
Once the product or technology 5.Testing
has been developed and tested, it
7.Post-launch can be launched into the market.
The next stage involves rigorous
Finally, the R&D cycle continues testing to ensure that the product
The launch phase involves
even after the product has been or technology performs as expected
marketing, distribution, and other
launched. This phase may include and meets relevant quality
activities aimed at introducing the
ongoing product development standards. This may involve user
product to the target audience.
and improvement, as well as testing, stress testing, and other
customer support and feedback types of validation
analysis.
STRATEGIC PURPOSES OF R&D

Defend, support and

expand existing business

Strategic
Purposes of Drive New Business

R&D
Broaden, deepen technological
capabilities
R&D OPERATIONAL ACTIVITIES

Basic Research- Work of general nature intended to be applied to a

broad range of uses or to acquire new knowledge about an area.
Applied Research- Applying existing principles to find new solutions
and moving basic research toward new products.
Development- The application of known facts and theory to solve a
particular problem through an exploratory study.
Technical Service- Cost and performance improvements to existing
processes or systems.
ROLE OF R&D IN BUSINESS
Innovation :Research and development is essential to the innovation process. Businesses can
develop new goods and services that are more effective, efficient, and better suit client needs by
investing in R&D.
Competitive advantage : By developing innovative, distinctive products and services that are
challenging for rivals to imitate, R&D can give organisations a competitive edge. This can aid
companies in standing out in a congested market and drawing in more clients.
Cost reduction: R&D can also help businesses reduce costs by developing new processes that are
more efficient and cost-effective. By finding new ways to produce goods and services, businesses
can reduce their operating costs and improve their bottom line.
Market expansion: R&D can also help businesses expand into new markets by creating products and
services that are tailored to the needs of new customers. By understanding the needs and
preferences of customers in different markets, businesses can create products that are more likely
to succeed in those markets.
Future growth: Finally, R&D can play a critical role in ensuring the future growth of businesses. By
investing in R&D, businesses can create new products and services that will generate revenue and
profits in the future. This can help businesses stay relevant and successful over the long term.
WHEN TO DO R&D
Developing new products or services
Improving existing products or services
Competing in a rapidly changing market:
Complying with regulations
Meeting customer needs
PERCEPTUAL MAPS
A brand needs to be repositioned through R&D if it is too far from the target place
on the perceptual map or the chart of the semantic scales. Since all marketed
brands must be based on R&D initiatives, research and development must also be
used to launch new brands.

There are four steps in the process of using R&D to reposition a product or introduce
a new one:

Mark the desired location on the semantic scales chart or the perceptual map.
Calculate the physical attributes of the product based on this desired position
Publish a new brand or alter an existing one. R&D initiatives that have been
completed can be used to change the physical attributes that form the
foundation of consumers' perceptions in order to reposition already established
brands. They may also be utilised to launch fresh brands. A strategic advertising
effort will need to be launched concurrently in both situations to alert customers
to the changes.
USE CASE OF SUCCESSFULL R&D

PHARMACEUTICALS

TECHNOLOGY

AUTOMOTIVE
TECHNOLOGY
iPhone Microsoft Surface
iPad Microsoft HoloLens
Apple Watch Windows 10
Microsoft Teams
Azure

Google Search
Google Maps
Google Chrome
Google Assistant
Google Cloud Platform
USE CASE OF R&D: TENSORFLOW
The creation of the machine learning software library TensorFlow is
one of Google's most well-known R&D achievements. Since its initial
release as an open-source project in November 2015, TensorFlow has
grown to rank among the most popular and significant machine
learning frameworks globally.

The Google Brain team, which is Google's deep learning and AI

research team, created TensorFlow.

TensorFlow has been applied in a variety of fields, including robotics,

computer vision, natural language processing, and even the arts. It has
been adopted by academics, researchers, and business people all
around the world, and it has aided in the advancement of machine
learning.
 AUTOMOTIVE PHARMACEUTICALS

Battery Technology Covid Vaccine

Autopilot Technology (Comirnaty)
Solar power Technology Prevnar
Manufacturing Efficiency Ibrance
Chantix

Hybrid Synergy Drive Entresto

Toyota New Global Gilenya
Architecture (TNGA) Cosentyx
Safety Sense Zolgensma
Hydrogen Fuel Cell Technology
Connected Vehicle Technology
 USE CASE OF R&D IN TOYOTA: HYDROGEN FUEL CELL
Zero-emission vehicles: Toyota has developed the Mirai, a hydrogen fuel cell electric vehicle that
emits only water vapor. This vehicle is powered by a fuel cell stack that converts hydrogen into
electricity, which is used to drive the vehicle's electric motor. The Mirai has a range of over 400
miles and can be refueled in just a few minutes.

Power generation: Toyota's fuel cell technology can also be used for stationary power
generation. The company has developed a fuel cell generator that can produce up to 60
kilowatts of electricity, which can be used to power homes or businesses.

Material handling: Toyota has developed fuel cell forklifts that use hydrogen fuel cells instead of
batteries. These forklifts are more efficient, have longer run times, and can be refueled more
quickly than battery-powered forklifts.

Marine applications: Toyota has developed a hydrogen fuel cell system for boats. The system
uses a fuel cell stack to generate electricity, which is used to power an electric motor. This
technology could be used to power ferries, cruise ships, and other watercraft, reducing
emissions and improving efficiency.
AI KI KAHANI , AI KI ZUBANI
Innovation
 INNOVATION: WHAT IS IT, AND IS NOT
The Desirability, Feasibility, and Viability framework is an excellent way to find
innovation, and innovation is where the three overlap.
Desirability — something someone wants; feasibility — something we can do;
viability — something that makes business sense.
INVENTION V/S INNOVATION
Invention:
Development of a product or service for the very first time.
It is a unique scientific idea that has been created following intensive
research and experimentation.
The invention occurs when an individual comes up with a novel idea for a
product or a process that is not present in the market and is carried out by
scientists.
Innovation:
It refers to the changes brought about in a product or service that is already
present in the market.
Innovation is carried out when an individual can successfully convert an idea
into an actual product or service and is carried out by entrepreneurs.
These changes are usually believed to add value to the products or services so
as to ensure that customer requirements are fulfilled.
ACTIVITY
TIME
Entangled Hands Activity
TYPES OF INNOVATION
TYPES OF INNOVATION
Architectural innovation:
Occurs when new products or services use existing technology to create
new markets and/or new consumers that did not purchase that item
before.
Architectural innovation refers to destroying the usefulness of a company’s
architectural knowledge but preserving the usefulness of the knowledge
about the firm’s products components (a physically distinct portion of a
product that represents the core design concept and performs a well-
designed function).
Examples:
1. Digital Photocopier
2. Home exercise bicycles
3. Smart watches
TYPES OF INNOVATION
Radical innovation:
Radical innovation typically utilizes a technological breakthrough that
transforms industries and creates new markets.
This type of innovation completely changes how an organization interacts
with the marketplace. It changes the circumstances of a brand, whether in
terms of market or of business dynamics.
It can occur due to a complete change in a company's positioning, work
method, processes, services, and products offered, or how it relates to
customers.
Examples:
Apple's iPhone
Washing machines
Personal computers
TYPES OF INNOVATION
Incremental innovation:
It adds new features to a product, brand, or production methods without
promoting a very drastic change.
It's usually an evolution of an innovation already implemented by the
brand that complements and offers improvements, be it to employees,
customers, or features of a business.
The concept of growing or improving a company by making a series of
minor improvements to existing products, services, processes, and tools.
Examples:
Gillette razors
Coca Cola
WhatsApp
TYPES OF INNOVATION
Disruptive innovation:
Mostly associated with applying new technologies, processes, or
disruptive business models to existing industries. Sometimes new
technologies and business models seem, especially in the beginning,
inferior to the existing solutions but after some iterations, they surpass the
existing models and take over the market due to efficiency and/or efficacy
advantages.
An innovation that simplifies and makes more affordable products and
services to undesirable or ignored markets.
Examples:
Amazon, Netflix
5G Technology
3D Printing
STAGES IN INNOVATION PROCESS
STAGES IN INNOVATION PROCESS
STAGE 1: Idea Generation and Mobilization

New ideas are created during idea generation. Mobilization occurs when
the idea is moved to a different physical or logical location, such as an
outside firm or another department.
Inspiration for a new idea can originate from an improvement of an existing
idea, or something from scratch.
Managers must emphasize innovation to the right extent-
“overemphasizing need will cause some employees to leave for more
stable jobs,” while “not emphasizing it enough will decrease urgency and
idea generation across the board."
STAGES IN INNOVATION PROCESS
STAGE 2: Advocacy and Screening

Not all ideas are worth implementing. Advocacy and screening help
evaluate an idea and measure its potential benefits and problems. From
there, a decision can be made about an idea’s future.
One of the biggest advantages for the joint processes of advocacy and
screening is refinement. If the idea has potential, discussions and
arguments help enhance it.
Idea generators don’t always have the skills to advocate for their ideas,
managers working with the idea generator can facilitate, encourage and
support the person.
STAGES IN INNOVATION PROCESS
STAGE 3: Experimentation

The experimentation stage tests an idea, such as with a prototype or pilot

test. “Experimentation does not test an idea’s objective merits, but the
suitability for a particular organization at a particular time.”
Experimentation can remain continuous or exist in spurts, as advocates and
screeners reevaluate an idea. Sometimes, experimentation leads to new
ideas due to information that is gathered on the results and the overall
feasibility of the original idea.
Time is crucial in this process; individuals must be given adequate time to
run the experiments. As refinements and evaluations occur, they must be
given enough time to reflect on the experiments.
STAGES IN INNOVATION PROCESS
STAGE 4: Commercialization

Commercialization aims to create market value for an idea by focusing on

its potential impact. This step makes the idea appealing to the audience,
such as by packaging an idea with other ideas, clarifying how and when the
idea can be used, and using data or prototypes from experiments to
demonstrate benefits.
An important part of commercialization is establishing the specifications of
any given idea. “The promises and potentials of the earlier stages of
innovation must be discarded so that the actual benefits of the new
innovation can be perceived and communicated.”
STAGES IN INNOVATION PROCESS
STAGE 5: Diffusion and Implementation

“Diffusion and implementation are two sides of the same coin.”

Diffusion is the companywide acceptance of an innovative idea, and
implementation sets up everything needed to develop and utilize or
produce the innovation.
Diffusion happens at all levels of an organization. This process is often aided
by knowledge brokers, who are effective at presenting an innovation by
using their awareness of “the specific content and application into which
an idea, product or service can be inserted.” As a result, knowledge brokers
are able to assist with rapid implementation.
Importance of innovation for businesses

1. It allows adaptability: The recent COVID-19 pandemic disrupted

business on a monumental scale. Routine operations were rendered
obsolete over the course of a few months. Many businesses still sustain
negative results from this world shift because they’ve stuck to the status
quo. Innovation is often necessary for companies to adapt and
overcome the challenges of change.
2. It fosters growth: Stagnation can be extremely detrimental to your
business. Achieving organizational and economic growth through
innovation is key to staying afloat in today’s highly competitive world.
3. It separates businesses from their competition: Most industries are
populated with multiple competitors offering similar products or
services. Innovation can distinguish your business from others.
QUIZ
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Innovation Framework
As per Doblin, there are different types of innovation but all innovations are comprised of 10 basic
elements which can be further classified into 3 main areas- Configuration, Offerings and Experience
 USE CASE: TESLA
Configuration-
Profit Model- They pioneered the pre-order
model to help fund the development of their
upcoming cars and provide shareholders faith in
the future of the business.
Network- They’ve abandoned the dealer
network, focused on vertical integration to
eliminate complexities and overhead from their
supply chain.
Process Innovation- They have done a lot of
process innovation in order to get their prices to
be comparable with similar internal combustion
engine cars, to enable over the air software
updates for their vehicles first in the industry.
Contd...
USE CASE: TESLA

Offering-
Product Performance- Tesla has done hundreds of incremental
innovations throughout the years to improve their products beyond the
status quo across a wide range of performance metrics, such as price,
range, acceleration, safety, and infotainment system functionality.
Product System- They’ve also provided their customers with products
that complement the car well, such as their supercharger network and
home solar and energy storage.

Contd...
USE CASE: TESLA
Experience-
Channel- They were the first carmaker that really made it possible to buy a
car online, operate their own stores, as well as allow you to return the car if
you’re not fully satisfied with it after the first 7 days.
Service- They have a mobile service fleet that can come to fix the car
where you are, instead of you having to take it to the nearest service
station.
Brand- They’ve invested a lot of time and effort into being transparent
about their values and mission, which together with their pioneering
products, has helped create a very strong brand.
Customer Engagements- The brand making also helps them making
communities which is energizing the business now.
New Product
Development
PRODUCT LIFECYCLE
 STAGES IN PRODUCT LIFECYCLE
Introduction- The introduction phase is the first time customers are introduced
to the new product. In this stage, the companies normally focus on increasing
awareness of the product. Companies often experience negative financial
results at this stage as sales tend to be lower, promotional pricing may be low
to drive customer engagement, and the sales strategy is still being evaluated.

Growth- If the product is successful, it then moves to the growth stage. This is
characterized by growing demand, an increase in production, and expansion in
its availability. During the growth phase, the product becomes more popular
and recognizable. Marketing campaigns will likely be geared towards
differentiating its product from others as opposed to introducing the goods to
the market. Financially, the growth period of the product life cycle results in
increased sales and higher revenue.
 STAGES IN PRODUCT LIFECYCLE
Maturity- The maturity stage of the product life cycle is the most profitable stage,
the time when the costs of producing and marketing decline. Depending on the
good, a company may begin deciding how to innovate its product or introduce
new ways to capture a larger market presence. Sales levels stabilize, and a
company strives to have its product exist in this maturity stage for as long as
possible.

Decline- As the product takes on increased competition as other companies

emulate its success, the product may lose market share and begin its decline.
Product sales begin to drop due to market saturation and alternative products,
and the company may choose to not pursue additional marketing efforts as
customers may already have determined whether they are loyal to the company's
products or not. Should a product be entirely retired, the company will stop
generating support for it and will entirely phase out marketing endeavors.
 New Product Development (NPD)
The complete process of turning an idea into a marketable new product. A
company may develop an idea for an entirely new product or improve an
existing product to meet new or evolving customers' needs.

Changing performance capabilities of products

Eg: New improved washing detergent
Changing the application advice for the product
Eg: Use of liquid wash instead of detergent powder
Changing the aftersales service of the product
Eg: Frequency of service for a motor car
Changing the promoted image of a product
Eg: Use of 'green-image' refill packs
Changing the availability of the product
Eg: Use of a chocolate vending machine
 Categories of NPD
1.New to World
First of their kind and create a new market
Inventions having significant development in technology
Eg: Kodaks digital camera

2. New to product lines

Not new to the marketplace, but new to the company
Enter established market for the first time
Eg: Cadbury moving in to make Choco cakes

3. Additions to existing product lines

Subset of a new product line
Different from present product offering in the line
Eg: Cadbury silk as compared to regular Cadbury chocolate
 Categories of NPD
4. Improvements or revisions to existing products
Replacements of existing products
Eg: HP inkjet printers come with modifications in different models over
time

5. Cost Reductions
Added value potential
Reduced production costs with similar performance
Product Development Process
A Product Development Process refers to the entire range of
activities where a company conceptualizes and realizes a new
offering.
New Product Development (NPD)
Product Development Process
Product Development Process
Ansoff Matrix in NPD
Ansoff Matrix (NPD by cereal Company)
NPD ACROSS INDUSTRIES

Electronics Industry- Apple's success with NPD is not limited to its hardware
products. The company has also introduced new services, such as the App
Store and Apple Music, which have been highly successful. By consistently
introducing new and improved products and services that meet the needs
and wants of consumers, Apple has established itself as a leader in the
technology industry.
Pharmaceutical Industry - A new cancer treatment called Keytruda
(pembrolizumab) was developed by the pharmaceutical company Merck &
Co. Keytruda is an immunotherapy drug that works by helping the body's
immune system to recognize and attack cancer cells. The development of
Keytruda involved extensive research and development, including preclinical
studies, clinical trials, and regulatory approvals. The drug has been shown to
be effective in treating certain types of cancer, and it has provided new
treatment options for patients who previously had limited options.
NPD ACROSS INDUSTRIES
FMCG Industry- Coca-Cola Zero Sugar is a no-calorie soft drink that was launched in 2016 as a
replacement for Coca-Cola Zero. The new product was the result of extensive research and
development, including consumer testing and formulation work to create a product that
tasted like regular Coca-Cola but with zero calories.The product has since been expanded to
include several new flavors, including cherry, vanilla, and peach. it met a consumer need for a
no-calorie soft drink that tasted like regular Coca-Cola, and it has become a popular product
with a loyal customer base.
IT Industry- The development of AWS involved the creation of new technologies and services
that allowed businesses to store, manage, and process their data in the cloud. The platform
was designed to be scalable, flexible, and cost-effective, and it quickly gained a large
following among businesses looking for a cloud computing solution.Overall, the development
of AWS represents a successful example of NPD in the IT industry, as it met a growing need
among businesses for a more efficient and cost-effective way.
Food & Beverage industry- The introduction of Plant-Based Meat Alternatives by Beyond
Meat represents a successful example of NPD in the Food and Drinks industry. The products
met a growing consumer need for plant-based alternatives to meat, and they have had a
significant impact on the industry, inspiring other companies to develop similar products and
driving the trend towards plant-based eating.
CHALLENGES IN NPD

Global Competition

Time

Market Potential

Resistance to change

Technological Change

Distribution

Market Size
QUIZ
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DESIGN THINKING
Design Thinking is both an ideology and a process; it's all about solving
complex problems in a user-centric way.
Design thinking has a human-centered core. It encourages
organizations to focus on the people they're creating for, which leads to
better products, services, and processes.
When you sit down to create a solution for a business need, the first
question should always be what's the human need behind it?

Desirability: What makes sense to people

and for people?
Feasibility: What is technically possible
within the foreseeable future
Viability: What is likely to become part of a
sustainable business model?
PHASES OF DESIGN THINKING

Empathise: getting to know the user and understanding their wants,

needs, and objectives.
Define: defining the problem
Ideate: all about generating ideas
Prototype: all about experimentation and turning ideas into tangible
products
Test: see how your target users interact with your prototype, and gather
valuable feedback
EMPATHIZE
Empathy provides the critical starting point for Design Thinking.
The first stage of the process is spent getting to know the user and
understanding their wants, needs, and objectives.
This means observing and engaging with people to understand them
psychologically and emotionally.
During this phase, the designer seeks to set aside their assumptions and
gather real insights about the user.

Empathy Interviews
Immersion and Observation
What-how-why framework
Empathy Maps - Says, Thinks, Does, Feels
DEFINE
The define stage is dedicated to defining the problem: what user
problem will you try to solve? In other words, what is your design
challenge?
Once you have a good idea of who your users are and, most importantly,
their wants, needs, and pain-points, you’re ready to turn this empathy
into an actionable problem statement.

Space Saturation and Group

The Four Ws - who, what, where, why
The Five Whys
IDEATE
You’ll explore and develop as many ideas as possible in the ideation
phase.
Some of these ideas will go on to be potential solutions to your design
challenge; some will end up on the reject pile.
At this stage, the focus is on the number of ideas rather than quality.
The main aim of an ideation session is to uncover and explore new
angles and avenues—to think outside the box.

Analogies
Brainstorming
Challenging Assumptions
Mind mapping
SCAMPER
PROTOTYPE
Put simply, a prototype is a scaled-down version of your product, a
simulation or sample version which enables you to test your ideas and
designs before investing time and money into actually developing the
product.
Your prototypes will be based on everything you’ve done so far:
interviewing your users, defining your problem statement, and coming
up with potential solutions.

Low to mid-fidelity prototypes

High fidelity prototypes
TEST
Testing is simply the process of testing your prototype on real users.
During the test phase, you’ll see how your target users interact with your
prototype and gather valuable feedback.
You’ll learn where your prototype succeeds and where it needs to be
improved.
The insights gathered during the testing phase will enable you to iterate
on your prototype.

Concept Testing
A/B Testing
Usability Testing
First-Click Testing
Tree Testing
NPD USE CASE - iPOD
Due to the success of the Sony Walkman, Apple decided they wanted to
enter the music player market.
Apple invented iTunes from “scratch” (new technology emerges), which
was a push to produce iPods.
Apple recognized the change in market sentiment and behavior, were
other players persisted in alternative explanations (CD, mini disc, etc.).
Apple's iPod was a platform innovation created by Sony (The Walkman).
The iTunes is probably one of the reasons the iPod has
been such a hit, it allows customers to purchase music
and other content on the internet in a downloadable
legal form.
It was the first innovative program made specifically for
just one music player, making the iPod the only
compatible player to download onto.
NPD USE CASE - Microsoft Zune
Ever since iTunes was born, Microsoft has tried to copy it. In 2004, it
created MSN Music to compete, but the idea was short-lived. Two years
later, Microsoft shut it down and launched the Zune service.
The Zune was good. But not enough. It came with a small vial of
dissatisfaction; buyers knew that there was something out there that
already did most, if not all, and better.

Products like the Zune need to do two things: they either

fill a gap in the market, or they are so radical they
dominate. It did neither.
Microsoft's top product, the Zune HD, came two years after
Apple released the iPod touch. In tech, one year is too long.
Two are an eternity.
THANK YOU