School of Business Yonsei University. Product Innovation. Sung Joo Bae. Assistant Professor Operations and Technology Management

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1 School of Business Yonsei University Product Innovation Sung Joo Bae Assistant Professor Operations and Technology Management

2 Design Use Environment User Form Function Concept - philosophical - ethical - emotional

3 Boston System FIRMS IN OTHER INDUSTRIES SUPPLIERS UNIVERSITIES FIRMS RESEARCH LABS FINANACE AND VENTURE CAPITAL ASSOCIATION DESIGN SERVICES - mechanical, engineering analysis - SW programming - product and mkting strategy - rapid prototyping

4 Attributes of Five Development Projects Annual production volume (units/year) Stanley Tools Jobmaster Screwdriver Rollerblade Inline Skate HP Deskjet Printer Volkswagen New Beetle Automobile Boeing 777 Airplane 100, ,000 4 million 100, Sales lifetime (years) Price (US$/unit) , M Part numbers (parts) , ,000 Development time (years) Internal development team (peak size) External development team (peak size) Development cost (US$) Production investment , , , ,000 50M 400M 3B 150,000 1M 25M 500M 3B (Source: Ulrich & Eppinger)

5 New Product Development Process Design Activities: Planning Concept Development System-level Design Detail Design Testing & Refinement Production Ramp-up Consider product platform and architecture Assess new technologies Investigate feasibility of product concepts Develop industrial design concepts Build and test experimental prototypes Generate alternative product architectures Define major subsystems and interfaces Refine industrial design Define part geometry Choose materials Assign tolerances Complete industrial control documentatio n Reliability testing Life testing Performance testing Obtain regulatory approvals Implement design Evaluate early production output

6 Alessi & Lombardy Design Discourse Free-floating community of architects, suppliers, photographers, critics, curators, publishers, and craftsmen Initially utilitarian (Form follows function) Importance of form increased Combination of local and global Change of product meaning Change in design (imac: office product home appliance) Other examples? Absorb Interpret Address Links of the components of the design system (schools, studios, mfr., etc.) made Lombardy special

7 Actors in Lombardy System Global Discourse SHOWROOMS PUBLISHING FIRMS IN OTHER INDUSTRIES UNIVERSITIES SUPPLIERS USERS Local Discourse 談論 FIRMS RESEARCH LABS EVENTS+ART DESIGNERS EXHIBITIONS DESIGN SERVICES

8 SHOWROOMS EVENTS+ART EXHIBITIONS PUBLISHING Actors in Lombardy System FIRMS IN OTHER INDUSTRIES actor characteristics UNIVERSITIES SUPPLIERS USERS Mfrs. Italy is the largest world exporter(16%) Lombardy accounts for 23% of Italian furniture manufacturer (High-end) RESEARCH LABS FIRMS DESIGNERS Design Firms +700 design firms (60% of Italian total) Mainly small studios with less than 4 employees DESIGN SERVICES Users Italians spend 10% of their non-food budget on furniture Local users are immersed in the design discourse OEM in other industry Most advanced industrial setting Suppliers Geographically concentrated and highly specialized Universities & Research Labs Milan is the center for architecture and design education Politecnico di Milano and other universities in the region Fairs, exhibitions and Publishers The most important international furniture fair: the Salone del Mobile Triennale di Milano since 1920 / Experimentation at the show rooms 454 design related publishers, 16 design magazines

9 Bang & Olufsen s Design Oriented Product Development Process

10 Bang & Olufsen Product Characteristics Design philosophy/process Details Mode/Speed of innovation Product strategy Customers Manufacturing process

11 Bang & Olufsen Product Characteristics Design philosophy/process Mode/Speed of innovation Product strategy Customers Manufacturing process Details Home electronics + luxury category product characteristics External design first internal delivery Importance of substance Designers have near-absolute control over product 1 year ~ 3-5 years Iterate until you get what you like R&D partnership Special products Fanatical acclaim Fabulous profit margin Loyal, repetitive Small number of exclusive customers Distribution channel specifically designed Small autonomous production groups

12 Bang & Olufsen 75% from Designers Designer-driven No market researchy IDEAS Concept With Substance Thesis Thesis Synthesis Antithesis Antithesis 25% fill holes in catalog 2 or 3 ideas, model iterations More models, increasingly detailed & complete

13 Bang & Olufsen 75% from Designers Designer-driven No market research IDEAS Concept With Substance Thesis Thesis Synthesis Antithesis Antithesis 25% fill holes in catalog 2 or 3 ideas, model iterations More models, increasingly detailed & complete Thesis Anti-thesis Synthesis

14 Bang & Olufsen 75% from Designers Designer-driven No market research IDEAS Concept With Substance Thesis Thesis Synthesis Antithesis Antithesis 25% fill holes in catalog 2 or 3 ideas, model iterations More models, increasingly detailed & complete David Lewis Form Design Thesis Anti-thesis Engineering Function Christopher Sorensen Synthesis Product Torben Ballegard Soresen

15 Design-oriented product development at B&O Pros Much more design-focused product development approach Priorities given to the aesthetic appeal Cons Difficult to cope with the digital change (e.g. ipod and related services) Functional sacrifices? Designers having too much inputs in the product (sometimes dominating the discourse) Christopher Sorensen s IdeaLab efforts failed

16 Design User Use Environment Form Function Friction Concept

17 Design Oriented Product Development Design concept: thin and glossy in an organic design that made the TV seem to be of one piece front, back and stand VIP Center: Developed the product concept - Emotion and lifestyle - Room decoration - Picture & Sound etc. (functional) Engineering Challenges 1. Slimmer, Glossy throughout 2. Speaker holes 3. High glossy finish Solution: Reducing the size of printed circuit board Integrated frame (speaker holes into the frame) New injection molding technique

18 Samsung s Recent Success Source: HBS case on SEC

19 How did Samsung work? Internal (Domestic) Market-base Risk-taking Late-comer Strategy Large investment + Timely decision Brand-image revamping Sponsoring Olympics + Large ad-campaign Focus on Execution (Quality manufacturing) Long experience of OEM manufacturing Price, quality, customer satisfaction Radical organizational changes + Reorientation The role of leadership Investment in R&D Overseas Design and R&D Centers Design Oriented Product Development Separate entity: Samsung Corporate Design Center & Value Innovation Program (VIP) Center More freedom + Strong culture Strong internal education system (SADI)

20 Integration of form and function in the organization User Concept Use Environment Form Function Friction Integration is like a seeding process - Seed it and let it grow - Rather than design and implement the perfect system Seed What? - Principles - Consensus (people) - Leadership - Incentive system (rewards)

21 Actors in Lombardy System Global Discourse SHOWROOMS PUBLISHING FIRMS IN OTHER INDUSTRIES UNIVERSITIES SUPPLIERS USERS Local Discourse 談論 FIRMS RESEARCH LABS EVENTS+ART DESIGNERS EXHIBITIONS DESIGN SERVICES

22 Alessi & Lombardy Design Discourse Free-floating community of architects, suppliers, photographers, critics, curators, publishers, and craftsmen Initially utilitarian (Form follows function) Importance of form increased Combination of local and global Change of product meaning Change in design (imac: office product home appliance) Other examples? Absorb Interpret Address Links of the components of the design system (schools, studios, mfr., etc.) made Lombardy special

23 SHOWROOMS EVENTS+ART EXHIBITIONS PUBLISHING Actors in Lombardy System FIRMS IN OTHER INDUSTRIES actor characteristics UNIVERSITIES SUPPLIERS USERS Mfrs. Italy is the largest world exporter(16%) Lombardy accounts for 23% of Italian furniture manufacturer (High-end) RESEARCH LABS FIRMS DESIGNERS Design Firms +700 design firms (60% of Italian total) Mainly small studios with less than 4 employees DESIGN SERVICES Users Italians spend 10% of their non-food budget on furniture Local users are immersed in the design discourse OEM in other industry Most advanced industrial setting Suppliers Geographically concentrated and highly specialized Universities & Research Labs Milan is the center for architecture and design education Politecnico di Milano and other universities in the region Fairs, exhibitions and Publishers The most important international furniture fair: the Salone del Mobile Triennale di Milano since 1920 / Experimentation at the show rooms 454 design related publishers, 16 design magazines