[MUSIC] This is the first lecture of the course. In this lecture, I will introduce myself, the course theme, and the guest lecturers. I will also present the overview of the course, including some basic terminology and concepts. This lecture covers the following issues. One, the goals of the course. Two, myself and the guest lecturers. Three, the teaching methodology that combines traditional and new teaching approaches. Four, the difference between invention and innovation. And five, the importance of innovation to the survival and success of individuals, organizations, and nations. In this course, we will introduce the basic concepts of new product development, the relevant tools and techniques, and some research findings. We will also try to map the new product development arena and to find answers to three questions. One, what to develop, this is also known as portfolio management. Portfolio management is done at the organizational level. It is a strategic issue dealing with the management of all the ideas for developing new products and services and the best way to choose the most promising ideas. Two, how to develop the new product or service? This is done at both the portfolio level and the project level. The question is how to manage the selected new product development projects so that the probability of success is the highest, and the risks are the lowest. The third one is when to initiate new product or service development projects and how to schedule each project. Timing is a very important factor in innovation. The timing of introducing a new product to a new or existing market impacts its probability of success in the market and the expected income from of it. A major part of the course is learning from case studies. We will learn from new product development success stories and new product development failures. We will also learn how to select and implement the right tools and techniques in simulated environment developed at the Technion, called the Project Team Builder, or PTB. Let me introduce myself. I am a graduate of the Technion in Electrical Engineering. After graduation, I worked on the development of radar systems while pursuing a MBA degree at Tel Aviv University. I got my PhD at the University of Washington in Industrial Engineering and Management. I worked as faculty at the Industrial Engineering Department of Tel Aviv University. I later moved to the Technion Israel Institute of Technology, where I now head the Project Management Research Center. Throughout the course, we will discuss the application of methodologies, tools, and techniques for new product development with experts in the area. Our guests are experts in, one, research into the basic of science. Two, the invention of new technologies based on development in basic science. Three, the development of new products based on new and existing technologies. Our guests have agreed to share their experience and knowledge with us and help us understand how the theory on new product development is implemented in practice. These guests will help us understand how new product development is done in real life. Starting from the basic scientific research and application of this research results in developing new technologies, as well as the use of such technologies in new product development. We will start with the basics. Presenting the terminology used in this area and some success factors that new product development project managers should be familiar with. We will try to draw a conceptual map of organizations that perform new product development projects and discuss the application of basic tools and techniques commonly used by successful organizations. As part of the course assignment, each student will learn about both successful and failed new product development projects that he or she selects. The student will simulate the project and will write the report on lessons learned from this research. The course is based on the book co-authored with Professor Rosenwein from Columbia University. The course videos summarize the main points of the book. Students are expected to contribute an important part of the course, as each of you will select and study new product development projects using the Project Team Builder, PTB, simulator. We will learn how to use the Project Team Builder simulator and how to access the tutorial and manual that is built into the software. New product development is a business process. It starts with the idea and ends with the production, sale, and delivery of a product or a service. The new product development process is a set of activities usually performed by a multidisciplinary team. As different aspects, like marketing, engineering and logistics, must be integrated to succeed in developing a new product or service and bringing it to the market. The focus of the course is the new product development process. And we include in the course the development of new services and new processes as well. Examples like the development of a new insurance policy, a new type of loan at the bank, or a new service at the hospital are common. The course deals with the business process and not with the design of products. It's not a course in engineering design. It's a course in management. This is the business process that encompasses the course of events from the early stages of the product's inception with a lot of fuzzy ideas and fuzzy thinking to the final launching stage of the new product. To succeed in new product development area, we focus on three issues. First, we want to do the right thing. We want to develop the right products, processes, and services. Second, we want to do it right. Third, we want to do it at the right time. The first of these issues is known as portfolio management, and it is done at the organizational level. There might be many ideas for new initiatives in the organization. But there are limited resources, therefore the question is which of these ideas should be selected and executed, and when it should be done? Once an idea is selected for implementation, the next question is how to do it right. How to plan, monitor, and control the project in such a way that it will finish on time, within budget, and provide the required value to the customers. The timing of the introduction of a new product to the market is the third issue. Introducing the product too early may hurt the demand for the organization's other products, or the market may not be ready for it. Delays in the introduction of a new product may bring it to a market where competitive products are already dominating. The main problem with new product development projects, managers, and their teams face is the non-repetitive nature of these projects. One, do not develop the same product, process, or service twice. The non-repetitive nature of these projects lead to the knowledge gaps and uncertainties. When we do something again and again in a repetitive environment, we have the opportunity to collect information and to use the information later to support our decisions and to improve our plans. However, in new product development projects, we develop a new product or service only once, and therefore we have little information accumulated to support our decisions. Most of our plans are based on estimates. As a result, the level of uncertainty and the risks involved are high, and the issue of risk management during new product development is essential. There is a related issue. When we are in a repetitive environment, we do the same thing again and again. We are consequently learning by repetition, as we are repeating what was successful and avoiding what failed. We are getting better because we are on a learning curve. In new product development, we are not on a learning curve, we do it once. If we fail, the consequences are usually higher cost, longer time, and poor value to the customers, therefore we have to develop special tools and techniques to manage new product development projects. In order to balance between the value we want to provide, the risk we want to take, and the available time, money, and resources, in the presence of uncertainty due to the non-repetitive environment. As discussed earlier, the main questions are, first, what to develop. There may be many ideas, alternatives, and opportunities, but most organizations do not have the time, the resources, or the money to do them all. Two, when should we do it, or when should we introduce a new product or a new service to the market? And three, once we decide what to do and when to do it, we have the question of how to do it. We will try to define what exactly are innovation and invention, and what are the differences between these two terms? Invention, according to the Oxford Dictionary, is to create or devise a new product, a new service, or a new process. It has to do with the design or the translation of the needs and expectations of customers into a blueprint of a product or a service that satisfies those needs and expectations. Innovation, according to Oxford Dictionary, is the introduction of a new product, service, or process into the market. In other words, invention is an engineering design process. Innovation is a business process. Here is an example of a good invention that did not lead to innovation. In 1979, Steve Jobs visited Xerox. He found that at that time Xerox had developed an e-mail system and a mouse for computers. Xerox had been using these internally for its own purposes. Steve Jobs did not invent the mouse and did not invent e-mail. However, he was very good at innovation. He was able to take these two inventions, integrate them with some other hardware and software that he had developed at Apple. And to introduce a new product to the market, Steve Jobs created new market, the market for PCs. He said later that if Xerox had the ability to introduce those ideas into the market, they could have done much better than IBM, Microsoft, and Xerox combined. Innovation is not a single action, but a total process of interrelated subprocesses. It is not just the conception of a new idea, nor the invention of a new device, nor the development of a new market. The innovation process is all of these things acting in an integrated fashion. Innovation is not only the conception and invention of the new product, service, or process. It's also the exploitation of the conception and the invention. It's a business process that starts with ideas, selection of these ideas, and the development of these ideas first into blueprints. Then into new products and introducing these new products or services into the market at the right time. The insight is that invention alone is not the entire story. It's not enough, and it will not contribute much to the organization. If all we have is a good engineering design process that is not based on good understanding of what the customers really need. What the competition is, what the economy is like, and how to bring the new product to the market, the organization will not make a profit from it. There is a need for an integrated process that begins with customers' needs and expectations, understanding of the market, understanding the competition, understanding the resources availability. And then integrating it all to develop a product, service, or process that we can introduce to the market successfully, capturing a significant size of the market. Success in new product development is not just technological success. It is the combination of technological and business issues. Innovation is important because it is a major driving force of economic growth at the national level. Robert Solow, the 1987 Nobel Prize winner in economic sciences, estimated that about four-fifths of the growth in the US' output per worker was attributable to technical progress. He showed us that the GDP per capita is heavily influenced by technological innovation. The light blue line represents the GDP per capita in developing economies. The yellow line represents the GDP per capita in economies in transition. And the two lines are fairly close to each other. The pink line represents the GDP per capita in developed economies. It is far above the first two lines, and the gap is getting bigger over time. In the developed economy, the GDP per capita is growing much faster than the world average, as well as faster than the economies in transition and developing countries. This is not because developed economies have more capital and labor. When comparing the gap in GDP increase due to capital and labor, there is relatively small difference. Most of the gap is the result of the residual growth via technological innovation. Technological innovation is the major drive beyond the tremendous roles in the GDP per capita in developed economies. The question is why are developed economies doing so much better in innovation? Is it the environment, is it the culture, is it the tools and techniques? Or maybe it's a combination of all of these. Throughout the course, we will try to answer these questions. [MUSIC]
