311
See also: Gaining an edge 32–39 ■ Kaizen 302–09 ■ Quality sells 318–23 ■ Planned obsolescence 324–25 ■
Time-based management 326–27
DELIVERING THE GOODS
work and ignore these findings.
The Walkman went on to be one of
Sony’s most successful products.More products, more often
Intense competition resulting from
globalization, alongside rapid
technological advances, has
shortened the selling lives of many
products. To stay in business in
this tough trading environment,
companies need to launch new
products more regularly; those that
are complacent and fail to innovate
will be overtaken by their rivals.Satellites orbiting the Earth are
able to provide data on time and
location to a variety of GPS receivers
based on or near the planet.It could be argued that managers
who do not invest in R&D are
setting up businesses to fail.
Companies such as BMW
devote a sizable percentage of their
turnover to R&D for motives that
extend beyond self-preservation.
Those that launch a new product
first can charge premium prices
and will benefit from monopoly profit
until the competition arrives. In
addition, consumers’ brand loyalties
are usually established early on.
Companies that underinvest in R&D,
fine to imitate rather than innovate,
may have problems establishing a
strong customer base.
There is more to effective R&D
than spending money on technical
breakthroughs. According to Akio
Morita, converting these advances
into products that provide value and
benefits for consumers is more
important than the breakthrough
itself. Therefore, it makes sense
for R&D to be done by a multi-
disciplinary team that includes
a representative from marketing,
who understands the way the
consumer’s mind works. ■The global positioning system
Global positioning system (GPS)
technology was developed by the
US government during the 1960s
and 1970s to enable the US Navy
and Air Force to get an accurate
geographical fix on submarines
and aircraft.
In 1983, US President Reagan
decided to give businesses
access to GPS so that they could
use it for commercial purposes.
A number of companies saw the
opportunities in this and began
designing GPS satellite navigation
systems for motorists.GPS is an excellent example of a
revolutionary, technology-driven
innovation. However, in practice,
most new product innovations
are based on tweaking existing
products to make them better.
Companies such as TomTom,
who make GPSs, use R&D to
achieve evolutionary, rather
than revolutionary, product
development. The goal is to
launch new products every
year that are cheaper and better
designed, and that have new
updated features.market, as it did for the cereal
manufacturer Kellogg’s. Market
research showed that there was
a desire in the UK for a sweeter
breakfast cereal made from nuts,
which people perceived to be
healthy. To meet this need,
Kellogg’s instructed its R&D
department to design a new
breakfast cereal; the result was
Kellogg’s Crunchy Nut, which
has become the second most
popular cereal in the UK.
There have been some cases
in which market research pointed
companies in the wrong direction.
A prime example can be seen in
the creation of Sony’s Walkman.
This portable audio cassette player
was invented in 1978 by Nobutoshi
Kihara, an audio engineer working
for Sony. According to market
research, the Soundabout (the
name for the prototype Walkman)
would never sell because focus
groups declared that listening to
music was a social rather than a
solitary activity. However, Akio
Morita, Sony’s co-founder, told his
R&D department to continue its
Innovate or die.
Damon Darlin
Business editor, The New York Times
(1956 – )