5.6 Research and development (HL only)

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The importance of research and development for a business
Take a moment to consider the changes you have already seen in products you use. Have you already gone through different mobile telephone models? What about how you listen to your music and the websites you browse? Have they changed to improve your satisfaction? Less obvious may be the clothes you wear or the food you each, and the changes these products have also undergone. What about the school you attend. Is technology being used more frequently or have you noticed any changes in the way your teachers are taught you and how your younger sibling is being taught? If you have one, otherwise you may not notice
Well the point here is that change is continuous, especially in business and the production of goods and how services are being rendered. We only have to look back historically at how classrooms used to be managed, what cars we now ride or drive in to see the difference. We also only need to see how some products are obsolete or transformed to understand the importance of research and development and the changes that must also have taken place in operations and management.
Research is a process of inquiry and the search for new and creative ideas to either address a problem or create and opportunity. If businesses fail to invest in research and development (R&D) the competition will overtake and outcompete them very quickly through numerous areas such as, consumer preference and costs savings.
The importance of developing goods and services that address customers’ unmet needs (of which the customers may or may not be aware)
In our marketing section we discussed the concept of market-led and product-led product development. Through R&D, business uses its core competencies or skills and talent to create products that are noted through market research to be desirable or by creating a product or service that the consumer may not have known would be useful. The development of the Sony Walkman or Apple ipod is such a concept.
Types of innovation:
Innovation is being able to bring your product to the market. Otherwise it is just an invention sitting in your garage. One of the goals of any business should be making everybody in the organization part of an innovation culture. Lets take a look at some different types of innovation commonly referred to as the 4 P’s of innovation of innovation mix.
The Sony Walkman and Apple ipod ,Microsoft X-Box are all product innovations. Ideas for new products as we mentioned can come from the market or from the business itself. Ideas for products can also come from slight or significant alterations or what the competitors produce. By applying reverse engineering (taking apart the competitors products and understanding its construct), a business can duplicate or improve upon products, unless of course the laws governing intellectual property are in place. A term that has been used by a well know economist is creative destruction. When a new product renders a previous one obsolete, this is the process of creative destruction. How many forms of creative destruction can you come up with? Start with the record player.
In providing services or manufacturing itself, the stages through which companies provide services or manufacture their products is process. Improvements are made through exhaustive and innovative studies and the outcome can be extremely beneficial. Take for example a simple process such as waiting for a dentist. How you noticed magazines, a play area for children, perhaps music in the background, or even a television?
Designing a process for all forms or business activity goes a long way in the supply management process. Computer Aided Design (CAD) and Computer Aided Manufacturing (CAM) are two process features in manufacturing that utilize an interactive computer system allow for increased synergies in manufacturing. .

This innovation involves how a product or service is placed in order for it to be perceived and used. Levi-Strauss jeans for example were originally for manual or blue collar workers, but through innovative product positioning they were rebranded as fashionable clothing.
Innovative positioning is an important marketing aspect we have looked at called product positioning.

The drive behind an idea and how that idea shapes the business or society is referred to a paradigm innovation. Henry Ford who developed the Model T car for the masses is know to have said “ If I asked people what they wanted, they would have asked for a five-legged horse”. His thinking is what created a radical shift or change behind the development of cars and their impact on society.
The same can be said of Steve Jobs, Bill Gates and other innovators whose radical ideas have had far reaching implications on civilization.

The difference between adaptive creativity (adapting something that exists) and innovative creativity (creating something new)
As in the case of reverse engineering mentioned previously, adaptive creativity is the tendency examine and adopt or improve upon existing products or services that serve as examples or benchmarks. A business will generally want to adopt the industry standard. It is focused on improving upon a process or product and can in turn result in the business becoming the benchmark or standard by which others compare themselves.
Innovative creativity is related to the other concept we mentioned called creative destruction. This is to “think outside of the box”. Companies such as 3M have a reputation for thinking outside of the box and coming up with a variety of “new” innovations.


How pace of change in an industry, organizational culture and ethical considerations may influence research and development practices and strategies in an organization
As business faces global challenges and as the pace of technological change appears to be moving closer towards the dreaded technological singularity, questions are raised on the nature and ethics of R&D.
Historically, changes that originated from an innovation paradigm created vast disruption in society. These changes were by and large positive, but were also to bring with them other complications. Take for example the automobile and the incredible mobile revolution the vehicle has brought to millions on the planet. This change was not only resisted and protested against but has also brought with it unprecedented levels of CO emissions that adversely effects our environment. On the other hand, labor has benefited tremendously and the mobility of the population cannot be understated.
Overall, the pace of change must always take into account increased human costs on ever higher and higher productivity rate demands. The goals of achieving ever-higher profitability margins at a cost to human beings and the environment is unethical if its does not consider all foreseeable externalities.
Business is compelled to compete in this age of technological change. By continuously seeking adaptive and innovative solutions a business can leverage itself through aggressive R&D and in turn with the sound adoption of ethics, it can firmly root in is manufacturing culture sustainable practice. A real cultural transformation must occur inside and outside the company for ethical considerations and R&D to be sustainable.