Page 313 - (DK) The Business Book

DELIVERING THE GOODS 311

See also: Gaining an edge 32–39 ■ Kaizen 302–09 ■ Quality sells 318–23 ■ Planned obsolescence 324–25 ■
Time-based management 326–27

market, as it did for the cereal It could be argued that managers
manufacturer Kellogg’s. Market who do not invest in R&D are
research showed that there was setting up businesses to fail.
a desire in the UK for a sweeter Companies such as BMW
breakfast cereal made from nuts, devote a sizable percentage of their
which people perceived to be Innovate or die. turnover to R&D for motives that
healthy. To meet this need, Damon Darlin extend beyond self-preservation.
Kellogg’s instructed its R&D Business editor, The New York Times Those that launch a new product
department to design a new (1956– ) first can charge premium prices
breakfast cereal; the result was and will benefit from monopoly profit
Kellogg’s Crunchy Nut, which until the competition arrives. In
has become the second most addition, consumers’ brand loyalties
popular cereal in the UK. are usually established early on.
There have been some cases Companies that underinvest in R&D,
in which market research pointed fine to imitate rather than innovate,
companies in the wrong direction. work and ignore these findings. may have problems establishing a
A prime example can be seen in The Walkman went on to be one of strong customer base.
the creation of Sony’s Walkman. Sony’s most successful products. There is more to effective R&D
This portable audio cassette player than spending money on technical
was invented in 1978 by Nobutoshi More products, more often breakthroughs. According to Akio
Kihara, an audio engineer working Intense competition resulting from Morita, converting these advances
for Sony. According to market globalization, alongside rapid into products that provide value and
research, the Soundabout (the technological advances, has benefits for consumers is more
name for the prototype Walkman) shortened the selling lives of many important than the breakthrough
would never sell because focus products. To stay in business in itself. Therefore, it makes sense
groups declared that listening to this tough trading environment, for R&D to be done by a multi-
music was a social rather than a companies need to launch new disciplinary team that includes
solitary activity. However, Akio products more regularly; those that a representative from marketing,
Morita, Sony’s co-founder, told his are complacent and fail to innovate who understands the way the
R&D department to continue its will be overtaken by their rivals. consumer’s mind works. ■

The global positioning system

Global positioning system (GPS) GPS is an excellent example of a
technology was developed by the revolutionary, technology-driven
US government during the 1960s innovation. However, in practice,
and 1970s to enable the US Navy most new product innovations
and Air Force to get an accurate are based on tweaking existing
geographical fix on submarines products to make them better.
and aircraft. Companies such as TomTom,
In 1983, US President Reagan who make GPSs, use R&D to
decided to give businesses achieve evolutionary, rather
access to GPS so that they could than revolutionary, product
use it for commercial purposes. development. The goal is to
Satellites orbiting the Earth are A number of companies saw the launch new products every
able to provide data on time and opportunities in this and began year that are cheaper and better
location to a variety of GPS receivers designing GPS satellite navigation designed, and that have new
based on or near the planet. systems for motorists. updated features.