Business Administration

Lecture No. 20: Process/Organization/Performance ofProduct Development
1.Research and Development
2.Process of Product Development
3.Organization of Product Development
4.Performance of Product Development

Takahiro Fujimoto
Department of Economics, University of Tokyo
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So far ・・・Management of Production systemcost management

work improvement process/inventory management

quality management personnel/labor management facility management
purchasing management

Another core function in manufacturing companies ・・・
research & development/product development
process and organization of product development
development period (lead-time)development efficiency (development productivity)
product capability (design quality)
Problem of measurement and system for management/improvement
Main focus to be placed on new product development activities at the level
for an individual productR & D Organization of Contemporary Manufacturing Company (example of NHK Spring Co.)‡
Author making (reference: 'Company overview''Corporate profile'1993')
Reference: Takahiro Fujimoto 'Introduction to Production Mmanagement' Nihon Keizai Shimbun, Inc. 2001 (Ⅱp166)

1.Research and Development
Many of contemporary manufacturing companies have a research and development
sector within themselves,
investing a few odd percent to ten odd percent of their sales amount to R&D activities.

Organizational R&D activities by manufacturing companies
・・・begun nearly in early 20th century
Clue to a research center within a company was in a gigantic
chemical maker in Germany in 1870s.
In early 20th century, GE, Dupont, Bell Telephone, Kodak, etc.
In major countries, R&D cost expended by companies (industries)
occupies nearly 70% of their national R&D costs in total.

Transition of Private Sector's R&D Expenditures
Ratio vs. GNP in 5 Major Advanced Countries

R&D Expenditures of JapanJapan

Its ratio vs. GNP is still at
the highest level in theworld. (more than 3%)West Germany

USA

UK

FranceNote: Classification of expenditure bearings by government and private sector
government --- nation, local public institutions, government-affiliated firms
private sector --- industry --- companies, private research institutions---university --- private universities

Private Companies Share 2/3 of Nation's Research Cost
Constituent Ratio of Research Cost by Research Entity
companies/others

research organizations universities/others‡'Survey Report on Scientific and Technological Research' MIC Statistics Bureau 1988

Constituent Ratio of Research Cost by Organization in Major Countries
Japan (1997)
Japan (1997)(Only a natural science)
Japan (1997)(Work conversion)
The US (1998)

Government
research laboratories.
University.
Industry

Germany (1997)
France (1997)

Britain (1997)

Tamiitona
research laboratories.

Transition of Number of Employees Affiliated with Research

universities/others
total number

research organizations

companies/others‡'Survey Report on Scientific and Technological Research' MIC Statistics Bureau 1988

Various Concepts Concerning Research and Development
diagramConcept of R&D/Innovation/Science and Technology

basic research

discovery

applied research

inventionsciencetechnology（development→ application ）development

innovation

Note: □ to indicate knowledge stock, → flow of knowledge/information
And "innovation " can be considered as a concept including "invention".
‡
Takahiro Fujimoto 'Introduction to Production Management' Nihon Keizai Shimbun, Inc. 2001 (Ⅱp167 figure.13.2)

(1)"Research" ( R ) and "Development" (D)“Development” ＝ on the assumption to commercialize/commoditize
design of new product/new process, trail product,
experiment, etc.
“Research” ＝ procurement of new knowledge not directly linked tocommercialization“Basic Research” ＝ targeted at procuring scientific knowledge itself
relative to natural/social phenomena“Applied Research” ＝ activity to apply procured knowledge to reality

(2)"Discovery" and "Invention"“Discovery”＝ procurement of new knowledge concerning
natural/social phenomena“Invention” ＝ to create idea, sketch, trial product, etc.
concerning product, process, and others, that havepotentialities to be put into practical use (commercialized)“Innovation” ＝ to bring something into the first"commercialization", not just limiting tomere trial product or sketch"Product technology innovation" (product innovation)"Process technology innovation" (process innovation)

(3)"Science" and "Technology"“Science” ＝ structure of rational knowledge concerning a generalrelation of cause and effect between each phenomenon“Technology” ＝ structure of rational knowledge concerning a
relation of cause and effect between concrete
Mono (artificial article) and its function
It was in the early 20th century that the relationship between scienceand technology became close.
Scientists expressed their achievements in words by writing theses,
while technologists did in Mono's.
In reality, things do not necessarily proceed on such linear tracks
as "basic research →applied research →development", "discovery→ invention → innovation ", "science → technology".

2. Process of Product Development“Product development”＝ corporate activity to create"product design information" fornew products to be sold in market
to include, in a broad term, preparations for process design andproduction process
Example of automobile・・・ product development of a car being a
relatively complicated consumption good

Product Development Process of Automobile“Development project” ＝ bundle of a series ofdevelopmental activities to develop a specificmodel a bundle of developmental activities
a few hundred people, over 3-4 years
Planning stage“draw up concept”“product basic plan”
Full-fledged development stage (engineering)“product engineering”“process engineering (production preparation)”

Product
Development
as Information
Production
Process

Takahiro Fujimoto'Introduction to Production Management'
Nihon Keizai Shimbun, Inc. 2001
(Ⅱp174 figure.13.3)‡

Product development is
a process to create
design information
asset through aproblem-solving cycle.

(1) Drawing Up Concept"Product concept" ＝vision concerning how to solve customer problem andthereby achieve customer satisfaction with that new productSpecify target customers, and plot a rough framework on needs
information and customer satisfaction,
which can be expressed in variety of ways, such as sentence, sketch,key word, rough product specification, etc.
Example: Eunos Roadster --- "Jinba Ittai (= man-horse unity)"

(2) Product Basic Plan
"Basic design" = "function design", and rough "structural design"
Translation of "product concept"
Such as styling, layout, product specification, design format forparts, etc.
Approval of top management
Example of Eunos Roadster
technological translation of "Jinba Ittai (man-horse unity)“
shorter axle interval, tight indoor layout, weight distribution prioritizing swirling
performance, suspension form with emphasis on running capability

Exterior Design Sketch

Exterior Design: clay model in 3 dimensions

Interior Design Sketch

Interior Design and Modeling (3 dimensional)

Interior Mockup (actual 3 dimensional model for sake of appearance evaluation)

Layout Diagram (basic design for parts assignment)

Evaluation of Aerodynamics by Clay Model

Facility for Wind
Tunnel Experiment(3) Product Engineering
Cycle of detail design, trial manufacturing, experiment
Expenditure of development to expand from this stage on
To repeat a problem-solving cycle of design/trialmanufacturing/experiment, until an objective set at the
product-planning stage comes to be achieved.
Detail design drawing of product --- file of computerassisted design (CAD) now

Design of Engine and Developmental Trial ManufacturingDetail Design and Developmental Trail Manufacturing of Parts(basically computerized now)Manufacturing of Developmental Prototype Car (auto body)・・・Universe of Super-Skilled Workers

Manufacturing ofDevelopmental
Prototype Car
handmade(ranging Yen 50 million- 100 million)

First Prototype Car (Yen 100 million)

Experiment/Evaluation
Using Developmental
Prototype Car

Experiment/Evaluation Using Developmental Prototype Car

Experiment/Evaluation Using Developmental Prototype Car(noise test in anechoic room)

Experiment/Evaluation
on Collision Safety
Using Developmental
Prototype Car

(4) Process Engineering
To create information asset of machinery facility, jig, tool, mold, layout,
work manual, numerical control, etc. for sake of mass production
To be also named "production preparation"
To include "pilot line" (volume production experiment) and "start up"
In broader term.
Up-stream/down-stream relationship where the result of a preceding
activity (product design) constitutes the prerequisite condition to thesucceeding stage (process design)
Both, in actuality, being duplicating/interactive in terms of time period
Cooperative activity among companies involving parts makers andfacility/mold makers, etc.

Advanced Technology Development
To develop "element technology" (technology embodied in partsand material) in advance ("refrigerator")
In case of machine product consist of functional parts, much of"product technology" is buried in an individual constituent part as"element technology".
・・・"Advanced development" at the level of parts, separated froma development of an entire product
Example of large computer ：success and failure of a product to determine thefeasibility of new element technology

General Model of Innovation
Conceptual model to regard a product innovation as aprocess of "information processing" "problem solving"Three steps:(1) "Idea creation" (problem finding)(2) "Problem solving" (quest for alternative, evaluation)(3) "Implementation" (in commercial production)

Development Process as System ofInformation Creation/Information Processing

Product development = "process of information creation/information processing"Integration of knowledge on market needs and knowledge ontechnological possibility
To be translated to a group of information stock required forcommercial production"Single item production of the stock of product design information"‡"Takahiro Fujimoto 'Introduction to Production Management' Nihon Keizai Shimbun, Inc. 2001 (Ⅱp174 figure.13.3)

Development Process as Bundle ofProblem-Solving Cycle

Bundle of "problem solving cycle" (H. Simon)

Input = objective to achieve
Output = means to achieve objective with (solution)

Case where knowledge on cause and effect is inadequate ・・・
to search an alternative,
to simulate the result of each idea

Standard (in H. Simon model) Cycle for Problem Solving‡
Takahiro Fujimoto 'Management organization and New product development' Yuhikaku Publishing Co., Ltd. (p.228 figure.3)
Referenct: 'Corporate system of Japan (volume 2)' Yuhikaku

Example: "Product Engineering" of Automobile
Input = targeted performance/specification/style/layout
Detail design information as an alternative (drawing and computer file)
Trial manufacturing and simulation model based on detail design information (CAE)
Experiment/evaluation of trail model ・・・
Design verification to technically check the achievement of product specification
Confirmation of design validity to evaluate merchantability from the stand point ofcustomer satisfaction
Design change, back in an up-stream, when the objective is not achieved
Product development project = "multiple bundle of mutually combined cycle ofproblem-solving"Development Process as Simulation
Process of product development is a simulation of process forgenerating customer satisfaction in future.

"Process for generating customer satisfaction" = cause-and-effectchain comprised of production/sales/consumption

Product development process ＝
to simulate in advance process for generating customer
satisfaction that has not yet been realized in a form ofadversely tracing back

Product development is to simulate production/consumption
process by adversely tracing it back.
Production
development process and process to create customer satisfaction
図 製品開発過程と顧客満足創造過程（シミュレーションする側とされる側）(party to simulate and one to be simulated)
process to create customer satisfaction(party to be simulated)
顧客満足創造過程（シミュレーションされる側）
production
生産consumption
消費production
生産process
工程設計
designproduct
製品機能
function

product
製品構造
structure

production
生産工程
processcustomer
顧客解釈
interpretation

usage
使用

structure
構造設計
designcustomer
顧客満足
satisfaction

function
機能設計
designproduct development (party to simulate)
製品開発（シミュレーションする側）

product
製品コンセプト
concept‡

Takahiro Fujimoto 'Introduction to Production Management' Nihon Keizai Shimbun, Inc. 2001 (Ⅱp178 figure.13.6)

Inseparability of Development/Production/Sales
Viewed from Information's Aspect"Competitiveness" =power of influence, held by a bundle of information embodied in a
product, onto a customer
Development and production are an inseparable total system
Development and production in partnership transmit an information via a product as
medium to the market place"Product design information" is the key to combine development and production(1) product development ＝ to create a new product design information by
combining market information and technology information(2) production ＝ to transcribe product information arrayed in process onto material(3) sales/marketing ＝ to actually transmit information embodied in a product,
and to convey it to consumers
Thus, the point is a coordinated play among development, production, and marketing.

Development and Manufacturing: Similarities in Pattern
Production (JIT-TQ model)

Development (high speed/ high efficiency model)

pattern of process flow
・ frequent set-up change
・ frequent model change
・ short lead-time for development
・ short throughput time・ decrease in informational stock among development steps
・ decrease in in-work product inventory among processes
・ frequent transmission of information from upstream of・ "one-by-one production" (not batch transaction) of parts
development to downstream (not batch transaction)from upstream process to downstream process
・ early discovery of potential problem in developmental
・ quick feedback of trouble/problem in downstream process
downstream, and its feedback
・ prompt cycle of solving production problem
・ prompt cycle of solving development problem
・ activity in upstream process being induced by demand・ activity in upstream being motivated by product's releasein downstream (pull system)
date (request by downstream)organizational capability
・ capability to simultaneously improve design
・ capability to simultaneously improve
quality/development productivity/development period
quality/productivity/delivery
・ capability to design easy-to-make product・ "capability to build quality in product" to produce
salable product without inspection/rework
・ flexibility to product design, development schedule, and・ flexibility to production volume/product mix/model change
other objective change
・ productivity increase by broad job assignment to worker
・ productivity increase by broad job assignment to worker(multi-skilled)・ engineer's capability and mental set being inclined for
・ worker's capability and mental set being inclined for
frequent reformation of product/processcontinuous improvement and prompt problem solving
・ reduction in development period to forcefully produce
・ inventory reduction to forcefully produce information
information flow between up/down streams for problem
solving
flow for problem solving and improvement

Beyond Dichotomy of Production and R&D"Emphasis on efficiency in production, flexibility in R&D" ??
"Importance on a group discipline in production, an individual creativity in R&D" ??
"Suitability of a mechanical organization for production, an organic organization for
R&D" ??
・・・No.
R&D and production function are, rather than being bipolar, the same spectrum.
Product development = single-item production of information stock
Production system of JIT-TQ Model = improvement (continuous process
innovation) being built inPlenty of similarities can be observed between these two (s).

Manufacturing

R&D

basic study

product
development

new paradigm former paradigm(continuous(Taylor doctrine)
improvement)

process/activity

uniquerepetitive

structure ofoperation

extraordinary

ordinaryorganization

organic

mechanicalmanagement

gentlehard

emphasizedvalue

creative

efficient

time

long

short

Reference: Fujimoto/Clark "Product Development Performance" Diamond Co.

３．Organization of Product Development
Development Organization as Joint Problem-Solving PatternContemporary new product development is a collaboration work by pluralpersons ・・・joint problem solving
Product development activity in contemporary companies is mainly "routine
activity" of high repetitivenessProduct development organization contributes itself to a developmental
performance through the application of the joint problem-solving routine(1) specialization and integration of developmental organizations on an
individual project level(2) integration among plural projects(3) formation and management of a research center group on a company-widelevel in diversified companies

Dividing Departments in Development Organization: Typical Example of Automobile‡

Takahiro Fujimoto 'Product Development Organization and Quality of Design of Car' 1987
Reference: 'Histochemistry' Vol.22 No.1

Specialization and Integration
Basic axis of organization design ・・・"specialization by department""coordination among departments"(1) Specialization ：by developmental stage (by function)by product group
design department being possibly separated by parts(2) Integration ： ・・・cross-departmental organization forinter-departmental adjustment
preadjustment based on regulation/plan, etc
vertical adjustment (hierarchy)
liaison for inter-departmental adjustment (liaison)task force (temporary team for inter-departmental adjustment)
project team (organization for inter-departmental adjustment through project)product manager (role of promoting/adjusting project)matrix organization

Are a product type and a project-leader type linked?

complicatedcomplexityof product's
internalstructure

simplecomponent
self-initiating type of product(machine tool, etc.)

complicated product(automobile, etc.)

Is an engineer a leader?

Is a multi-skilled productmanager a leader?

simple product(food, detergent, etc.)

interfaceself-initiating type of productIs a product manager of sales
department a leader?

(home electric appliance, wrist
watch, etc.)
Is an industrial designer a leader?
complicatedsimplecomplexity of user interface
Reference: Clark, Fujimoto, Product Development Performance, 1991

Characteristics of Japanese Product Development Organization
In 1980s, Japanese manufacturing companies, compared to Euro-American ones,
tended to belower in the level of by-department specialization, andmore advanced in the level of cross-departmental organization.
Later, the Japanese-style product development organization characterized by suchwide job range and a relatively strong project manager was dispersed to EuroAmerican companies, mainly in the automobile industry.
In the product category of "lapping architecture", the product development
pattern having the integrated organizational capability of the Japanese style was
the world standard.
Distinction of "lapping architecture" vs. "modular architecture"
An cooperative adjustment among departments is more important is more
important in "lapping (integral) architecture".

Design of Multi-Project Organization (Nobeoka)
It is necessary to proficiently organize and operate a bundle of plural productdevelopment projects
・・・"multi-project organization"

Company-Wide Research and Development
Organization in Diversified Company
Centralized R&D department on company-wide basis (centralization type), or
Decentralized development organization for each business sector(decentralization type)
Centralized in headquarters ・・・concentration of company-wide R&D
capability, promotion of R&D on the cross-business-sector basis avoidance of
duplicating investment to R&D among departments
Decentralize by business sector ・・・flexible/prompt response to each sector'srequest, development structure capable to make small adjustments

The choice is delicate.

Permanent Organization for Development "Does your company have the following organizations?"
item

number of companies(1) planning department

67.08(2) development department in headquarters (mainly in searching new business)

51.55(3) development department in headquarters (mainly in planning/management of technology research)

62.73(4 ) sales department in charge of development

18.01(5) department concentrated in specially fostering fresh-from-oven new business

21.74(6) technology research center under direct supervision of headquarters

42.24(7) development department of business division (mainly in searching new business)

40.99(8) development department of business division (mainly in design)

48.45(9) research center of business division(10) special committee to technologically evaluate new product22.36(11) special committee to economically evaluate new product

18.63

34.16

[Related question] "Which one on the following is the domestic organization of your company?"(12a) type of by-product business division(12b) type of by-region business division

67.93(12c) type of main product by function/minor product by business division

3.77(12d) organization by function

20.75

7.55

Toyohiro Kawano 'Investigation of actual conditions of new product development (2001.11)'†

Specialization of Basic Research
Organization and Development Organization
How to maintain the split of work between a basic research center and an
application/development center?
How to smoothly transfer the accomplishment of a basic research center to an
application/development center?

In Japanese manufacturing companies after the war ・・・
in 1960s, "boom in central research centers"in 1980s, "boom in basic research centers"
Tendency for a basic research center to transform to a facility for an appliedresearch and development"Drift" phenomenon of a basic research centerTransfer from research to development ・ ・ ・a researcher himself moving to thedown stream

Boom in Central Research Centers and Boom in Basic Research Centers
Trend in Building Corporate Research Centers‡'Agency of Industrial Science and Technology investigation' NIPPON JITSUGYO PUBLISHING 1987..3
Referentce: Such an organization makes the best use of the engineer.

Case of Building Research Centers of Recent Date

Kazuaki Maruge 'Basic Research, what is the problem now?‘
Reference: 'Technology and Economics' Japan Techno-Economics Society‡

What is an optimum distance
between basic research and development?
If too close ・・・
A long term research will be crashed bya logic in favor of "competition of tomorrow".
If too far ・・・
An achievement of research won't bereflected on development

４．Performance of Product Development(1) Total product strength
design quality
manufacturing quality
product cost(2) Development productivity/Development cost：volume of resource investment in development sector(3) Development period (lead-time)：from onset of development to either product releaseor onset of productionCompetitive Environment and Required Organizational
Capability in Product Development
required organizational capability
in product developmentcompetitive environment
intensifying international

realization of top-class development capability oncompetition at product level
uncertainty/instability

international basis (regarding to following 3 points)

projection accuracy/prompt
responseof competitive environment
drastic diversificationof consumer needs

model change
model diversification

sophistication/complexity of
consumer needs (consistency)

１．quick development speed(short development speed)
２．high development efficiency(less man-hours for development )３．high total product strength(high level ofconsistency in product and development system)

Ｃ Ｆｕｊｉｍｏｔｏ，Ｔｈｅ Ｕｎｉｖｅｒｓｉｔｙ ｏｆ Ｔｏｋｙｏ

"Hitting Average" and Performance of Product Development
There cannot be a 100% success in a new product development
There are always hits or misses in product development activities that are thecreative process of design information
New product development
for automobiles ・・・"hit" being less than half
and for pharmaceuticals ・・・one in several thousands
Analogy of baseballproduct strength ＝direct impact on a hitting average of a new productdevelopment period and development productivity＝basic stamina of product development
development period ・・・swing speed
development productivity ・・・to earn an at-bat frequency