Business Simulation Seminar

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Business Simulation Seminar

• Research and Development

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Research Development (RD)

• What is it?
• Who does it?
• How much is spent on it?
• How is it done?
• How do you manage it?
• Special Considerations

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Research Development (RD)

• The creation of new products and services
• Can you name new products have been introduced
  recently?
• Can you name services that need to be developed?
• What does it take to create these products and
  services?
• People?
• Resources?
• The difference between research and
  development

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RD Who does it?

• Typically a dedicated organization
• May not be if a small business
• People have detailed expertise in the product or
  service
• May be very technical engineers
• E.g. Tesla, Microsoft
• May be very creative industrial designers
• E.g. Oxo
• May be technical and creative
• E.g. Apple

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RD How much is spent on it?

• RD is typically 7 of sales
• May be more in a technical company
• E.g. Google, Microsoft
• May be less in a commodity company
• E.g. American Paper, Coke

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RD How is it done?

• Can set out to create totally new, disruptive
  products
• E.g., Tesla, Volt, iPod, XM
• Can incrementally change a product, i.e. new
  versions
• E.g., new DVD recorder, Cheerios with Berries,
  Double Stuff Oreos, 2010 Ford Mustang
• What are benefits and risks of each approach?

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RD How is it done?

• Create product requirements
• Ideally, requires marketing input
• What do customers want?
• Can not do this for new, disruptive products
  never been done before
• Get input from manufacturing, others
• Create a prototype
• Test to see if thats what is wanted
• Understand costs, manufacturing and delivery
  issues
• Create an initial product
• Test internally Alpha testing
• Test externally Beta testing

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RD How is it done?

• In addition to product or service, need to
  develop documentation and training
• Measure readiness according to acceptance
  criteria
• Formally hand off to manufacturing and marketing

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When to deploy?
Pressure to deploy
Pressure
Pressure to improve
Time
Practical answer you deploy the product or
service when the pressure to deploy it is greater
than the pressure to improve it.
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RD How do you manage it?

• Requires strong project management skills
• Manage resources (people, capital)
• Manage time
• Manage features
• Manage trade-offs between resources, time, and
  features
• Know the critical path and watch it like a hawk!
• RD staff are typically different than other
  employees
• Self motivated (Theory Y)
• Critical
• Often perfectionists (why could this be a
  problem?)

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RD Special Considerations

• Long projects involve greater risk
• Need to develop new products before they are
  needed
• RD needs to consider
• Customers
• Manufacturing
• Training
• Sales marketing
• RD is critical to the long-term health of the
  business

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RD and the Simulation

• What is your RD strategy?
• Short or long projects?
• Modify products or develop new ones?
• How new will your products be?
• What is the RD interaction with production?
• Automation?