A product development process for a photovoltaic water pump system in a small to medium enterprise by Lyon van der Merwe Thesis submitted in partial fulfilment of the requirements for the degree of DOCTOR INGENERIAE in ENGINEERING MANAGEMENT in the FACULTY OF ENGINEERING at the RAND AFRIKAANS UNIVERSITY

Supervisor: Professor J.D. van Wyk Co-Supervisor: Professor L. Pretorius July 2002

Abstract The effective management of technology and new product development in a high technology small to medium enterprise associated with a large corporation with specific reference to the development of solar photovoltaic water pumps is investigated in this study. Innovative product and the development thereof have already become this century's battleground. The availability of information to all and the ease of communication have contributed to changing the battleground. Small organizations and companies can now also participate in high technology environments, different from the past. Technology management and new product development are subjects that are thoroughly studied, discussed and understood in larger corporations (LCs) and multinational enterprises (MNEs). It would appear that the same cannot always be said when it comes to small to medium high technology enterprises. The following research questions can be asked: • How does the current body of knowledge (regarding technology and new product development) influence and impact on technology and new product development in a small to medium enterprise? • How does the interface and interaction between various small to medium enterprises (SMEs) and SMEs and other large corporations impact on new product development in a small to medium enterprise? • How does a small to medium enterprise cope with relatively limited resources when attempting to develop a new product? • How does the informal nature of a small to medium enterprise impact on new product development? • Does a small to medium enterprise use a structured process to manage new product development? As SMEs become more prominent role players in technology intensive industries, answers to the above questions will strengthen the SME in the relevant areas and enhance the role that SMEs will play in the future. To answer the research questions the study comprises: • an applicable literature survey in the areas of technology management and new product development, • an investigation into the business environment and interaction a typical SME encounters during new product innovation including resource management, • the development of an alternative model for the new product development (NPD) process in an SME, • an industry acceptability survey of the proposed alternative model and • a case study (photovoltaic water pump system) of the development of a new product, mapped onto the developed alternative NPD process.

A study of the literature and own experience have shown: • a lack of addressing the above questions and the impact thereof and • a lack of practical and appropriate guidelines to implement technology management and ensure repetitive successful innovative new product development (NPD) in small to medium high technology enterprises. The author suggests a reduced complexity NPD process model, which takes cognisance of intangibles such as the chaotic interaction between various stages and tasks within the NPD process, informal decision making and natural information feedback mechanisms and illustrate why an SME that observes a given structural discipline displays an inherent advantage over large corporations and multinational enterprises. The model is exposed to a limited scope industry survey and applied to a case study (development of a photovoltaic water pump powered by sunlight). The acceptability survey, although limited, suggests that industry supports the hypotheses on which the development of the proposed alternative new product development process is based. The proposed management process was mapped onto the case study to ascertain whether it is practical. The application of the proposed management process to the case study resulted in further insight into possible alternative methods of reporting on new product development work. A complete photovoltaic water pump system as a new product emanated from the case study with significant marketability.

Samevatting Hierdie werkstuk ondersoek effektiewe tegnologieen nuwe produkontwikkeling bestuurstegnieke in 'n klein tot medium hoë tegnologie onderneming. Die ontwikkeling van 'n fotovoltaïse water pomp stelsel word as voorbeeld gebruik. Innoverende nuwe produkte en die ontwikkeling daarvan het reeds die nuwe kompetisieveld in die hoë tegnologie industriële arena geword. Inligting is vandag vir almal geredelik beskikbaar. Die gerief wat moderne kommunikasiemiddele teweeg bring dra sterk by tot die veranderinge op die gebied van hoë tegnologie produkte en die ontwikkeling daarvan. Klein organisasies kan nou ook meer geredelik deelneem aan die hoë tegnologie markte, anders as in die verlede. Tegnologiebestuur en nuwe produkontwikkeling is onderwerpe wat oor die jare heen deeglik, met betrekking tot groot organisasies en multinasionale korporasies, bestudeer is. Dieselfde is nie noodwendig waar, wanneer klein tot medium hoë tegnologie ondernemings ter sprake is nie. Die volgende vrae kan gevra word: • Hoe word tegnologie- en nuwe produkontwikkeling in klein tot medium ondernemings deur die huidige stand van kennis oor die onderwerp beïnvloed? • Hoe word tegnologie en nuwe produkontwikkeling in klein tot medium ondernemings deur die interaksie en wisselwerking tussen mekaar en tussen klein tot medium ondernemings en groter maatskappye beïnvloed? • Hoe hanteer 'n klein tot medium onderneming die (relatief) beperkte hulpbronne tot sy beskikking wanneer tegnologie en nuwe produkontwikkeling oorweeg word? • Hoe word die tegnologie- en nuwe produkontwikkelingsproses geraak deur die informele aard van vele klein tot medium ondernemings? • Maak 'n klein to medium onderneming gebruik van 'n gestruktureerde proses as dit kom by tegnologie- en nuwe produkontwikkeling? Indien wel, wat is die formaat daarvan? Omdat klein tot medium ondernemings al meer tot die hoë tegnologie arena toetree, kan diesulkes net baat vind by antwoorde op bogenoemde vrae. Dit sal bydra tot die rolverstewiging van klein tot medium ondernemings in die toekoms. Hierdie navorsingstuk beoog om die gestelde vrae te beantwoord deur: • 'n gepaste literatuurstudie op die gebied van tegnologie- en nuwe produkontwikkelingsbestuur te maak, • die besigheidsomgewing van, en die klein tot medium onderneming se interaksie met ander partye daarbinne te ondersoek (insluitende hulpbronne bestuur), • 'n alternatiewe model vir die nuwe produkontwikkelingsproses binne 'n klein tot medium onderneming te ontwikkel,

• •

die voorgestelde model, met gebruikmaking van 'n vraelys en geselekteerde steekproef, te onderwerp aan industrie-opinie en 'n gevalle-studie uit te voer waartydens die voorgestelde alternatiewe proses gebruik word met die ontwikkeling van 'n fotovoltaïse waterpomp.

'n Literatuurstudie en eie ondervinding dui daarop dat: • klein to medium ondernemings negatief beïnvloed word deur 'n gebrek aan antwoorde op bogenoemde vrae en • onvoldoende praktiese en geskikte riglyne bestaan waardeur klein to medium ondernemings herhaaldelik suksesvolle tegnologie- en nuwe produkontwikkelingprojekte kan aanpak. Die outeur stel 'n alternatiewe produkontwikkelingsproses voor, wat die interaksie tussen verskillende stadia en take in ag neem. Die voorgestelde proses hanteer ook informele besluitneming en die natuurlike terugvoermeganismes wat binne 'n klein tot medium onderneming bestaan. Die inherente voordele wat 'n klein tot medium onderneming het bo 'n groter organisasie, as eersgenoemde 'n mate van bestuursdissipline toepas, word uitgelig. Vervolgens is die voorgestelde model onderwerp aan industrie-opinie. Die steekproefresultate dui daarop dat industrie die hipoteses waarvolgens die voorgestelde proses ontwikkel is, ondersteun. Tydens die aanwending van die voorgestelde model op die fotovoltaise waterpomp gevallestudie (om die nuttigheid van die proses te beproef), het metodes van verslaggewing wat die tegnologie en nuwe produkontwikkelingstaak kan vergemaklik, aan die lig gekom. 'n Volledige fotovoltaïse waterpompstelsel het uit die gevallestudie die lig gesien. Die produk het aanloklike bemarkbare eienskappe en kan moontlik instrumenteel wees in die kommersialisering van fotovoltaïse waterpompe binne die betrokke maatskappy.

Acknowledgements Through creative spirit I honour God for we are but whom we know. In gratitude to those who made me who I am.

Table of Contents ABSTRACT

.................................................................................................3

SAMEVATTING...............................................................................................5 ACKNOWLEDGEMENTS ...............................................................................7 TABLE OF CONTENTS ..................................................................................9 ABBREVIATIONS .........................................................................................15 LIST OF FIGURES ........................................................................................17 LIST OF TABLES..........................................................................................21 CHAPTER 1 1.1 1.2 1.2.1 1.2.2 1.2.3 1.3 1.4 1.5 1.6 1.7 1.8

INTRODUCTION....................................................................23

STUDY ENVIRONMENT .............................................................................................24 AREAS OF STUDY....................................................................................................24 Evolutionary process............................................................................................25 Practical or industrial art.......................................................................................26 Scientific art..........................................................................................................27 TECHNOLOGY AND BUSINESS ..................................................................................27 LIMITED RESOURCES IN AN SME .............................................................................28 PRACTICAL APPLICATION.........................................................................................28 RESEARCH SCOPE ..................................................................................................28 RESEARCH METHODOLOGY .....................................................................................29 FORMAT OF THE THESIS ..........................................................................................29

PART A – AN ALTERNATIVE NEW PRODUCT DEVELOPMENT PROCESS .........................................33 CHAPTER 2 TECHNOLOGY MANAGEMENT AND NEW PRODUCT DEVELOPMENT – REVIEW OF THE STATE OF THE ART .......35 2.1 2.2 2.3 2.4 2.4.1 2.4.2 2.4.3 2.4.4 2.4.5 2.5 2.5.1 2.5.2 2.5.3 2.5.4 2.7 2.8

PHILOSOPHY, POLICY, STRATEGY AND INSTITUTIONAL ISSUES ...................................35 INNOVATION ...........................................................................................................41 RESEARCH AND DEVELOPMENT ...............................................................................48 TECHNOLOGY .........................................................................................................52 Technology forecasting ........................................................................................53 Technology management.....................................................................................53 Strategic planning of technology development ....................................................55 Technology innovation and acquisition ................................................................56 Other influences on technology development......................................................57 NEW PRODUCT DEVELOPMENT ................................................................................59 New product development process......................................................................59 Management of the new product development process ......................................61 New product development success factors .........................................................65 New product development, external input and cooperation.................................67 SUMMARY ..............................................................................................................68 CONCLUSIONS........................................................................................................75

CHAPTER 3 CHARACTERISTICS OF A HIGH TECHNOLOGY SMALL TO MEDIUM ENTERPRISE AND ITS OPERATING ENVIRONMENT............................................................................77

3.1 3.2 3.3 3.3.1 3.3.2 3.3.3 3.3.4 3.3.5 3.4

CHARACTERISTICS OF AN SME – MODERN TRENDS..................................................77 SME SITUATION RELEVANT TO THE CURRENT STUDY ................................................79 CORE BUSINESS AND ITS IMPACT AS A RESULT OF COOPERATION ..............................81 Definitions.............................................................................................................81 Some reasons for cooperation between organizations........................................83 Relevance of the development process...............................................................84 Dynamic model of cooperation.............................................................................84 Towards a solution ...............................................................................................88 CONCLUSIONS........................................................................................................89

CHAPTER 4 AN ALTERNATIVE NEW PRODUCT DEVELOPMENT PROCESS FOR A HIGH TECHNOLOGY SMALL TO MEDIUM ENTERPRISES .............................................................91 4.1 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6 4.1.7 4.2 4.3 4.3.1 4.3.2 4.4

THE TRADITIONAL PRODUCT DEVELOPMENT PROCESS ..............................................91 New product strategy ...........................................................................................93 Idea generation ....................................................................................................94 Screening .............................................................................................................94 Business analysis.................................................................................................94 Development ........................................................................................................94 Testing..................................................................................................................94 Commercialisation................................................................................................95 CHARACTERISTICS OF A HIGH TECHNOLOGY SMALL TO MEDIUM ENTERPRISE ..............95 SPECIFIC ISSUES INVOLVED IN NEW PRODUCT DEVELOPMENT IN A SMALL AND MEDIUM ENTERPRISE ..............................................................................................96 Small to medium enterprise limitations ................................................................96 Unique SME assets that support new product development ...............................99 THE DEVELOPMENT OF THE PROPOSED ALTERNATIVE NEW PRODUCT DEVELOPMENT PROCESS FOR A HIGH TECHNOLOGY SMALL AND MEDIUM ENTERPRISE .........................................................................................................101

4.4.1 4.4.2 4.4.3 4.5 4.5.1 4.5.2 4.5.3 4.6

Phase 1 – Making the traditional process more effective ..................................101 Phase 2 – Identification of task interdependence ..............................................106 Phase 3 – interaction between the various elements ........................................109 FUNCTIONAL PROCESS .........................................................................................110 Project management process ............................................................................110 Work breakdown structure .................................................................................113 Case study – Photovoltaic powered water pump...............................................114 CONCLUSION........................................................................................................114

CHAPTER 5 PROPOSED NEW PRODUCT DEVELOPMENT MODEL - ACCEPTABILITY SURVEY .....................................................117 5.1 5.2 5.3 5.3.1 5.3.2 5.3.3 5.3.4 5.3.5 5.3.6 5.3.7 5.4 5.5 5.6 5.7

SUMMARY OF THE RESEARCH HYPOTHESES AND THE RESULTANT PROPOSED NEW PRODUCT DEVELOPMENT PROCESS TO BE VALIDATED. ....................................117 RESEARCH GOAL ..................................................................................................119 RESEARCH DESIGN ...............................................................................................119 The nature of the study ......................................................................................119 Data collection....................................................................................................122 The power of the researcher to produce effects in the variables under study...................................................................................................................122 Purpose of the study ..........................................................................................122 The nature of the time dimension ......................................................................122 Topical scope of the study .................................................................................122 The research environment and target population ..............................................123 SAMPLING METHOD...............................................................................................123 SURVEY QUESTIONNAIRE DESIGN ..........................................................................123 RESULTS..............................................................................................................123 CONCLUSIONS......................................................................................................125

PART B - CASE STUDY ................................................................129

CHAPTER 6 PLAN: SCAN ENVIRONMENT, DETERMINE BOUNDARIES AND COMPILE A STRATEGIC PLAN ..............131 6.1 6.1.1 6.1.2 6.2 6.2.1 6.2.2 6.3 6.3.1 6.3.2 6.4.

SCAN THE PROPOSED PRODUCT ENVIRONMENT ......................................................131 External environment .........................................................................................131 Internal environment ..........................................................................................138 DETERMINE THE OPERATIONAL BOUNDARIES ..........................................................140 Technical boundaries – viability of solar powered water pumps........................140 Company boundaries .........................................................................................146 COMPILE A STRATEGIC PLAN .................................................................................148 Include the new product in the company strategy .............................................148 Compile a new product strategy ........................................................................150 SUMMARY ............................................................................................................152

CHAPTER 7 CONCEPTUALIZE: GENERATE INNOVATIVE IDEAS, SCREEN NEW IDEAS AND COMPILE BUSINESS ANALYSIS ..................................................................................155 7.1 7.1.1 7.1.2 7.1.3 7.1.4 7.2 7.2.1 7.2.2 7.3 7.3.1 7.3.2 7.3.3 7.4.

GENERATE INNOVATIVE NEW PRODUCT IDEAS ........................................................155 State of the art evaluation ..................................................................................155 Different options for PV pump systems..............................................................159 Problems with PV water pumps. ........................................................................159 Ideation and concept engineering......................................................................161 EVALUATE/SCREEN NEW PRODUCT IDEA/S..............................................................166 Evaluate technical performance.........................................................................167 Evaluate/screen the marketability of the proposed idea/s .................................173 BUSINESS ANALYSIS .............................................................................................174 Growth potential .................................................................................................174 Margin potential..................................................................................................175 Profitability..........................................................................................................175 SUMMARY ............................................................................................................176

CHAPTER 8 DEVELOP: BREADBOARD DESIGNS, MAKE ENGINEERING PROTOTYPES AND MAKE PRODUCTION PROTOTYPES"..........................................................................179 8.1 8.1.1 8.1.2 8.2 8.2.1 8.2.2 8.3 8.3.1 8.3.2 8.3.3 8.4

BREADBOARD DESIGNS .........................................................................................179 Preliminary design and breadboard ...................................................................179 Mechanical packaging........................................................................................200 ENGINEERING PROTOTYPES ..................................................................................200 Performance prototypes.....................................................................................200 Market mock-ups................................................................................................201 PRODUCTION PROTOTYPES ...................................................................................201 Production preparation.......................................................................................201 Production samples............................................................................................202 Field trial prototypes...........................................................................................202 SUMMARY ............................................................................................................203

CHAPTER 9 IMPLEMENT: GENERATE PBOM, SET UP PRODUCTION AND COMMERCIALIZE ....................................207 9.1 9.1.1 9.1.2 9.2 9.2.1 9.2.2 9.3 9.3.1 9.3.2 9.4.

GENERATE PRELIMINARY BILL OF MATERIALS..........................................................207 Finalize all components in the design, supplier, lead times and cost ................208 Prepare concept merchandizing material as part of the preliminary bill of material...............................................................................................................208 SET UP PRODUCTION ............................................................................................209 Production file ....................................................................................................209 Fixtures and fittings ............................................................................................209 COMMERCIALIZE THE NEW PRODUCT .....................................................................209 Ramp up to full production and marketing .........................................................210 Field service and support ...................................................................................210 SUMMARY ............................................................................................................211

PART

C – CONCLUSIONS AND RECOMMENDATIONS ..................................................215

CHAPTER 10 CONCLUSIONS AND RECOMMENDATIONS....................217 10.1. 10.2. 10.3. 10.4. 10.5.

LITERATURE SURVEY ............................................................................................217 EVOLUTION OF THE PROPOSED ALTERNATIVE NEW PRODUCT DEVELOPMENT PROCESS .............................................................................................................220 THE INDUSTRY ACCEPTABILITY SURVEY - CONCLUSIONS .........................................222 THE PROPOSED NEW PRODUCT DEVELOPMENT PROCESS REPORTING STRUCTURE..........................................................................................................223 RECOMMENDATIONS .............................................................................................225

REFERENCES ....................................................................................227 APPENDICES ......................................................................................235 APPENDIX A DC-DC SOLAR MODULE CONVERTER BLOCK DIAGRAMME .............................................................................237 APPENDIX B DC-AC POWER CONVERTER BLOCK-DIAGRAMMES....239 APPENDIX C MOTOR FLUX CONTROL...................................................241 LIST OF SYMBOLS ......................................................................................................................248 REFERENCES ...........................................................................................................................249

APPENDIX D 1.1KW THREE PHASE MOTOR PERFORMANCE CHARACTERISTICS..................................................................251 APPENDIX E MAXIMUM POWER POINT TRACKING – IMPLEMENTATION STRATEGIES ............................................253 APPENDIX F UNIVERSAL CONVERTER FOR DC PV WATER PUMPING SYSTEMS .................................................................257 APPENDIX G BUSINESS MANAGEMENT MODELS FOR HIGH TECHNOLOGY SMALL TO MEDIUM ENTERPRISES..............263 APPENDIX H MECHANICAL DRAWINGS AND PHOTOGRAPHS OF THE ENCLOSURES ...................................................................273 APPENDIX I

LIST OF RESPONDENTS ...................................................277

APPENDIX J BROCHURE ........................................................................279 APPENDIX K INSTALLATION MANUAL ..................................................281 APPENDIX L SYSTEM DESIGN PROGRAMME.......................................285 APPENDIX M QUESTIONNAIRE ...............................................................287 APPENDIX N ACCEPTABILITY SURVEY RESULTS ...............................297

N.1

DESCRIPTIVE CHARACTERISTICS OF THE SAMPLE SURVEYED ................................................................................297

N.2

REPORTED LIKERT SCALE FREQUENCIES ..........................299

N.3

CROSS-TABULATED RESULTS...............................................303

REFERENCES ...........................................................................................................................309

APPENDIX O STAGE PRIORITIZED REPORT ON THE DEVELOPMENT OF A PHOTOVOLTAIC WATER PUMP. .......311 APPENDIX P TASK PRIORITIZED REPORT ON THE DEVELOPMENT OF A PHOTOVOLTAIC WATER PUMP ........319

Abbreviations Abbreviation 3ph AC, ac Adc BDC BDCM BOS CB CBI CBO CoS CSIR DC,dc DFM DME DWAF EDG EDRC ESKOM HV IDES IGBT IM IP IT kWh kWp LC LCs MNE MNEs MOSFET NGO NIH NPD O&M OEM ORG § PBOM PC Pin Pout PSU

Explanation Three phase Alternating current Amps DC Brushless DC Brushless DC motor Balance of systems Core business Core business intersection Community based organization Cost of sale Scientific and Industrial Research Council Direct Current Designing for manufacturability Department of Minerals and Energy Department of water affairs and forestry Energy Development Group Energy Development and Research Centre Electricity supply authority High voltage Integrated design and engineering support Insulated gate bipolar transistor Induction motor Intellectual property Information Technology kilowatthour kilowatt peak Large corporation Large corporations Multinational enterprise Multinational enterprises Metal oxide silicon gate field effect transistor Non government organization Not invented here New product development Operation and maintenance Original equipment manufacturer Organization paragraph Preliminary bill of materials Power converter Input power Output power Power supply unit

Abbreviation PV PVPGS PWM R&D RTU SBU SLI SMC SME/s SMEi SRM STC TD UCT VCO V/F Vdc VE VVVF WBS

Explanation Photovoltaic Photovoltaic power generation systems Pulse width modulation Research and Development Rural Technology Unit Strategic business unit Automotive battery usually with specific gravity of 1.260 (start, lights, ignition) Solar module converter Small to medium enterprise/s Strategic business unit operated as an SME (SME internal) Switched reluctance motor Standard test conditions Technology development University of Cape Town Voltage controlled oscillator Voltage to frequency ratio Volts DC Virtual enterprise Variable voltage variable frequency Work breakdown structure

List of figures Figure 1.1 Components of technology [Own source] .....................................23 Figure 1.2 Evolutionary development of new technology [Own source].........26 Figure 1.3 Thesis format [Own source] ..........................................................30 Figure 2.1 Awareness environment [Own source based on 6].......................36 Figure 2.2 Transilience map according to Abernathy [21]..............................43 Figure 2.3 Median values of relative sales growth with respect to aggressiveness of R&D and marketing strategies [35] .............50 Figure 2.4 Relationship between performance and newness of technology [36] .........................................................................50 Figure 3.1 The evolution of a virtual enterprise [Own source]........................78 Figure 3.2 SME situation relevant to the present study [Own source]............80 Figure 3.3 Graphic definitions of an organization and its relevant components [Own source] ........................................................82 Figure 3.4 The relative size of organizations [Own source] ...........................83 Figure 3.5 Cooperation between two organizations [Own source] .................85 Figure 3.6 Cooperation between organizations of different size [Own source] ......................................................................................86 Figure 3.7 Subsidiary SME cooperation with other SMEs [Own source]........89 Figure 4.1 Key steps in the generic NPD process. [Own source]...................92 Figure 4.2 Proposed new product development process for a small to medium enterprise – phase 1 [Own source] ...........................105 Figure 4.3 The interaction between the various stages of a conventional new product development process showing some of the relevant aspect [Adapted from 87] ..........................................106 Figure 4.4 Proposed new product development process for small to medium enterprises – phase 2 [Own source]..........................108 Figure 4.5 Proposed New Product Development Process for SMEs – phase 3 [Own source] .............................................................111 Figure 4.6 Project Management Process mapped onto the proposed new product development process [Own source]...........................112 Figure 4.7 New Product Development Process Work Breakdown Structure (level2) [Own source] ..............................................114 Figure 4.8 Proposed new product development process (level 3) [Own source] ....................................................................................115 Figure 5.1 The evolution of the proposed new product development process through application of the stated hypotheses - part 1 [Own source]........................................................................120 Figure 5.2 The evolution of the proposed new product development process through application of the stated hypotheses - part 2 [Own source]........................................................................121 Figure 5.3 Industry opinion of the hypotheses used to develop the proposes new product development process – respondent frequency ................................................................................124 Figure 5.4 Industry opinion of the hypotheses used to develop the proposes new product development process - % contribution .............................................................................125

Figure 6.1 Roadmap to indicate the structure of this chapter [See Figure 4.6]..........................................................................................131 Figure 6.2 Volume-head for different array sizes [Own source] ...................141 Figure 6.3 Pump type versus pumping regime [118]....................................142 Figure 6.4 Community sizes for which PV water pumps are viable. (Adapted from [105])...............................................................145 Figure 6.5 Company strategic roadmap [Own source].................................149 Figure 7.1 Roadmap to indicate the structure of this chapter [See Figure 4.6]..........................................................................................155 Figure 7.2 Typical PV water pumping system [98] .......................................156 Figure 7.3 Minimum requirements for borehole pump installation [Courtesy John Tonkin Franklin Electric South Africa 2001] ...158 Figure 7.4 Block diagram of different options for PV pumping systems [122]........................................................................................159 Figure 7.5 Development of a range of PV water pump systems – thought process [Own source] .............................................................166 Figure 7.6 Proposed new PV water pumping system [Own source] ............167 Figure 7.7 Different aspects of the proposed PV water pumping system [Own source]...........................................................................169 Figure 8.1 Roadmap to indicate the structure of this chapter [Figure 4.6]....179 Figure 8.2 Identification of design requirements [Own source] ....................180 Figure 8.3 Block diagramme of the proposed Solar Module Converter (SMC) [Own source] ...............................................................181 Figure 8.4 Typical solar module characteristic when temperature and solar insolation are taken into consideration [139]. .................184 Figure 8.5 Block diagramme of the proposed DC-AC power converter [Own source]...........................................................................186 Figure 8.6 DC-DC converter efficiency versus output voltage. [Own source] ....................................................................................192 Figure 8.7 DC-DC converter efficiency versus input power [Own source] ...192 Figure 8.8 DC-AC converter efficiency versus input voltage [Own source]..193 Figure 8.9 DC-AC converter efficiency versus input power [Own source]....194 Figure 8.10 Over-current protection and start circuit [Own source]..............195 Figure 8.11 Graphs of the actual current and the trip current, illustrating the starting process [Own source]. .........................................196 Figure 8.12 DC link parameters over a typical day. [Own source] ...............197 Figure 8.13 Experimental prototypes used for evaluation purposes. [Own source] ....................................................................................198 Figure 8.14 Experimental set-up - electrical measurements ........................199 Figure 8.15 Field trial installation. (a) The field trial installation is done by the people involved in the actual product development and marketing. (b) The DC-DC converters are being installed. (c) This photograph shows the installed DC-AC converter mounted on the solar array structure mounting pole. (d) The end result.........................................................................203 Figure 9.1 Roadmap to indicate the structure of this chapter [See Figure 4.6]..........................................................................................207 Figure 9.2 Photographs of the final printed circuit boards of the a) Power Converter input circuit, b) Power Converter main printed

circuit board, c) Solar Module Converter printed circuit board.......................................................................................211 Figure 10.1 Project Management Process mapped onto the proposed new product development process [Own source] ...................222 Figure C.1 Block-diagrammatic representation of equation C-25. [Own source] ....................................................................................244 Figure C.2 Graphic representation of equation C-25. [Own source] ............245 Figure C.3 Diagrammatic representation of an induction motor system driving a speed dependent centrifugal pump. [Own source] ...246 Figure C.4 Optimal frequency/voltage relationship for a speed dependent load (centrifugal pump). [Own source] ....................................248 Figure H.1 Drawings for the DC-DC converter enclosure ............................273 Figure H.2 Drawings for the DC-AC converter enclosure ............................274 Figure H.3 Photograph of the DC-DC converter enclosure..........................275 Figure H.4 Photograph of the DC-AC converter enclosure ..........................275 Figure N.1 Age group...................................................................................297 Figure N.2 Number of years experience ......................................................297 Figure N.3 Nature of the business ...............................................................297 Figure N.4 Niche market operation ..............................................................298 Figure N.5 Company origination ..................................................................298 Figure N.6 Number of employees ................................................................298 Figure N.7 Business activity.........................................................................298 Figure N.8 Frequencies of section A responses ..........................................299 Figure N.9 Frequencies of section B responses ..........................................301 Figure N.10 Frequencies of section C responses ........................................302 Figure N.11 Frequencies for section D responses .......................................303 Figure N.12 Cross-tabulation A1XA2 ...........................................................304 Figure N.13 Cross-tabulation A1XA7 ...........................................................304 Figure N.14 Cross-tabulation A2XA7 ...........................................................304 Figure N.15 Cross-tabulation A7XA3 ...........................................................305 Figure N.16 Cross-tabulation A7XA4 ...........................................................305 Figure N.17 Cross-tabulation A7XA5 ...........................................................306 Figure N.18 Cross-tabulation A7XA6 ...........................................................306 Figure N.19 Cross-tabulation A5XA8 ...........................................................307 Figure N.20 Cross-tabulation A6XA9 ...........................................................307 Figure N.21 Cross-tabulation B2XC2...........................................................308 Figure N.22 Cross-tabulation B6XC2...........................................................308 Figure N.23 Cross-tabulation B3XB4 ...........................................................308 Figure N.24 Cross-tabulation B1XA7 ...........................................................309 Figure N.25 Cross-tabulation D4XD5...........................................................309

List of tables Table 2-1 Traditional strategies used by technology firms to promote growth [25] ................................................................................46 Table 2-2 External sources of input, results and cost [77] .............................67 Table 6-1 Economically viable operating regime for PV water pumps .........143 Table 6-2 Human water needs and typical consumption in litres/day [98] ...144 Table 6-3 Estimated number of unserviced communities (less than 25 litres per person per day) with population under 1000 [105] ...145 Table 6-4 Company strategy influence on the new product development plan [Own source]...................................................................150 Table 6-5 The elements of a product strategy [140].....................................151 Table 6-6 Summary of the planning stage [Own source] .............................152 Table 7-1 Comparison between Conventional Products and the Proposed Power conditioning System ....................................172 Table 7-2 Profitability calculations and break-even estimate [Own source] ....................................................................................175 Table 7-3 Summary of the conceptualization stage [Own source] ...............176 Table 8-1 Comparison between advantages and disadvantages of various maximum power point tracking methods [139] ...........183 Table 8-2 DC-DC converter design aspects ................................................187 Table 8-3 DC-AC converter design aspects.................................................189 Table 8-4 List of instruments used. ..............................................................194 Table 8-5 Summary of the development stage [Own source] ......................203 Table 9-1 Summary of the implementation stage [Own source]...................211 Table 10-1 The dualistic nature of the alternative new product development process [own source]. .......................................225 Table M-1 Terminology ................................................................................288 Table M-2 Survey questionnaire ..................................................................290

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Chapter 1

Chapter 1 Introduction Technology is the scientific study of practical or industrial art [1]. This would infer that scientific art and practical or industrial art exist separate from each other as shown in Figure 1.1. Scientific art is regarded as that body of knowledge pertaining to the exact analysis and synthesis of systems. Practical or industrial art is the body of knowledge concerning itself with the boundaries and constraints as well as the infrastructure required when implementing synthesized systems. The author suggests that technology can be viewed as the intersection between scientific art and practical or industrial art (Figure 1.1). Technology eventually finds its way into useful products that the manufacturer can sell. For the purposes of this study (products are the actual focus) technology is viewed as one of the building blocks of a new product. It is the development (to change, increase, work out the detail [1]) of new product in SMEs that is investigated in this study. More specifically the management (control, discipline, training, administration, organization [1] of new product development is addressed in this study.

Scientific art

Technology

Practical or industrial art

Figure 1.1 Components of technology [Own source]

Technology and new product management and innovation in small and medium enterprises (SMEs) are subjects that are studied, discussed and understood; much more so in larger corporations and multinational enterprises (MNEs). Evidence exists [2] that indicate an imbalance between available resources and the success rate when considering new and innovative product development. It is informally accepted that “…even the largest manufacturers must learn to replicate the entrepreneurial drive and innovativeness that characterise small high growth firms” [2]. If the statement has any validity, how does technology management and innovative product development differ in SMEs compared to large organizations, apart from entrepreneurial drive and innovativeness? Many questions can be asked based on the above statements, some more valid and some more important than other.

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Chapter 1

The following research questions can be asked: • How does the current body of knowledge (regarding technology and new product development) influence and impact on technology and new product development in a small to medium enterprise? • How does the interface and interaction between various SMEs and SMEs and other large corporations impact on new product development in a small to medium enterprise? • How does a small to medium enterprise cope with relatively limited resources when attempting to develop new product? • How does the informal nature of a small to medium enterprise impact on new product development? • Does a small to medium enterprise use a structured process to manage new product development and if so, what format does it have? As SMEs become more prominent role players in technology intensive industries, answers to the above questions will strengthen the SME in the relevant areas and enhance the role that SMEs will play in the future. This study aims to answer some of the above research questions related to the management of innovative technology and new product development. Both technical management (practical industrial art) and engineering disciplines (scientific art) are involved. To answer the research questions posed it is necessary to span both disciplines, as answers to the questions are likely to contain input from both [3]. 1.1

Study environment

The study is undertaken in an SME that forms part of an international corporation involved in the water pumping industry. The SME is operated as an independent company and relies on its own resources for new product development in the local market. Local development partners are used. Invariably such partners are either consultants or other SMEs. In some cases suppliers are also used to support new product development. For the purposes of this study, the development of a new solar photovoltaic powered water pump was used as an example. Solar power water pumping systems are widely recognized as a contributory solution to the supply of potable water in rural areas. The relevant SME is seeking innovative new products that will contribute to the product offering with respect to solar powered water pumping systems without demanding extensive change to the existing support infrastructure which services conventional grid supplied water pumping systems. 1.2

Areas of study

This study investigates both spheres (see Figure 1.1.) of technology being scientific art and practical or industrial art. Figure 1.2 is a further development of Figure 1.1 to illustrate a possible evolutionary route that can be followed

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Chapter 1

towards new technology and product management and development, considering the suggested dual nature of technology. 1.2.1 Evolutionary process The development of new technology and products can be viewed as an evolutionary process. Three stages are identified in Figure 1.2. • During the first stage the technology and product state-of-the-art (existing) situation is studied and evaluated. Existing product shortcomings in the market place are studied. Customer/user needs not addressed are identified. • During the second stage the scientific art and practical or industrial art components are separated. A target or goal is established that serves as the base specification for the envisaged new technology or product. Each component is developed to a level deemed necessary to support the envisaged new technology or product. The scientific art component is left to the engineering expertise, which attends to issues such as materials science, component and sub-system selection, innovative application of scientific knowledge and the synthesis of a practical solution to a customer requirement (functional product). At the same time the practical or industrial art component is left to the business expertise (including administration, operations and marketing) to find innovative solutions that will make the functional product a marketable product addressing issues such as pricing, production, distribution and field service. • The third stage is a joining of the increased scientific and practical or industrial art that leads to the establishment of the new technology. The previously envisaged technology is used as a gauge to establish how close to the base specification the final product is. Stage 2 suggests an actual separation of the scientific and industrial components of new product development. In most cases this is actually not feasible as one component directly influences the other all the time. The present study is undertaken on the basis of forcing the separation to gain specific insight into the management of new product development. In Part A the practical or industrial art is studied from a business management perspective (with the focus on new product development). Part A investigates the literature, studies the SME situation (both as an industry participant and having specific attributes) and concludes with a proposed alternative new product development model. While Part A is in progress a typical innovative new product is developed in a high technology SME, focusing on and recording the scientific art development process unbiased by the results in Part A. In Part B the findings in Part A is applied to the mentioned typical development in the form of a case study.

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Scientific art

Chapter 1

Practical or industrial art

Stage 1 Existing technology

Scientific art

Envisaged new technology

Practical or industrial art

Stage 2

Scientific art

New technology established in commercial environment

Practical or industrial art

Stage 3

Figure 1.2 Evolutionary development of new technology [Own source]

1.2.2 Practical or industrial art To establish new technology and products a clear understanding of the industrial environment is necessary. In the case of this study the environment is the commercial situation that a typical high technology SME encounters on a daily basis. Elements of this environment include own resources, linkages and cooperation with other role players such as partners, customers and suppliers, market constraints and limitations and competitors. Practical or industrial art can be viewed as the business component of technology or new product development. Management processes and aspects for technology and new product development are reviewed in Part A. Chapter 2 is a literature survey on the subject of technology and new product management. Characteristics of a high technology small to medium enterprise (SME) and its operating environment are discussed in Chapter 3 to foster a better understanding of the SME

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Chapter 1

positioning in the market place. An alternative approach to the product development process in an SME is developed in Chapter 4. 1.2.3 Scientific art The study of scientific art considers the analysis and synthesis of a system (technology or product) while adhering to goals and demands based on technical and scientific considerations. Scientific art can influence technology development significantly. [4]. During the process of developing scientific art influences outside of the scientific sphere (influences usually generated in the industrial or business environment) are ignored. This reduces or eliminates distractions that may influence or distract from the understanding of the scientific results. Part B is a case study of a development, pursuing scientific art. Such a development would consider the analysis and synthesis of a system (or product) excluding certain practical or industrial aspects of the commercial environment. The subject matter is solar water pumps and the development of a new product. Opportunities for new product and technology innovation are noted. 1.3

Technology and business

Practical or industrial (business) issues greatly influence successful technology development. These issues must be considered and addressed during the early stages of the development. While separation of the scientific and practical or industrial aspects of technology development seems logical (larger corporations and MNEs are divided into functional departments supporting this separation) it is often not obvious in SMEs. To achieve sound product development practical or industrial development work (industrialization) is required that builds on the initial scientific art, expanding on the previously ignored externalities. Such externalities may include commercial aspects, environmental aspects, manufacturing aspects, drivers and motivational aspects (to do the development) and competitor situations. While large corporations might have the resources to address tiered development of such a nature, small and medium enterprises (SME) often cannot. In an SME a deduced or imposed set of external considerations influencing technology research and investigation is often simplified to reduce the influence sphere to obtain specific results. The end result is hoped to be incisive scientific understanding of technology that could form the basis for sound product development.

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1.4

Chapter 1

Limited resources in an SME

A controlled research and development environment is conducive to exceptional scientific results due to the fact that the individual or team can remain focused on the scientific task at hand. While possible in large corporations, it is often a luxury that an SME cannot afford as it would require additional facilities or floor space contributing to fixed overhead cost not productive on a continuous basis. In addition, specialized individuals or teams focused on achieving purely scientific results are expensive and difficult to afford especially in the SME environment. A single individual or small team with multiple responsibilities in an SME is likely to take responsibility for all levels of decision making during product development. This situation raises questions regarding technological development and product innovation initiation, responsible technology development management and converting available technology into saleable innovative products and product ranges. 1.5

Practical application

The study provides as an output a clearly defined process or procedure in the form of a model that will support effective new product development in an SME if applied. The term model is used in this study to indicate the representation of a business process and is explicative by nature in this study to assist in the understanding of the concepts encountered in the proposed NPD process 1.6

Research scope

This study addresses the management of technology (evolution, growth and maintenance of technology) and innovative new product development in a small to medium enterprise (SME) with reference to specific questions asked. The questions can be prioritised and categorized in such a way that a systematic research process is defined. The literature survey will attempt to answer the following questions: • Can a high technology based SME, predictably develop an innovative new product? • How do philosophy, policy, strategy and institutional issues influence technology management in general? • What role does innovation play? • How is Research and Development influenced and how does it impact on technology management?

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Chapter 1

The implications of an SME's characteristics on technology management will be considered and the following questions addressed: • What are the influences and impact on the subject matter when considering the characteristics of an SME such as agility and relatively limited resources? • How is technology management carried out in an SME and what is its composition ? 1.7

Research methodology

The author intends to address the above questions in this study and to provide answers and support for those answers through a literature survey, a management model/concept development and the application of such a model in a typical case study. The feasibility of the model will be demonstrated by the case study. The study will investigate the current status of product development in general. The characteristics of an SME will be considered and the operating environment of an SME investigated. Mapping the current body of new product development knowledge onto SME characteristics will follow which will lead to a new management model for product development in a high technology SME. It is important to consider all elements (this is done concurrently to understand interaction between the different elements) of new product development in an SME to answer the posed questions. The results of the study (proposed model) will lead to a better understanding of and a process or procedure for product development in an SME in relation to its operating environment using the subject of photovoltaic water pumps as an example. 1.8

Format of the thesis

The format of the thesis follows a natural progression of research starting with a literature survey of technology management issues, leading to the development of an applicable model of the NPD process applicable in a successful high technology SME in Part A. The model is then applied in Part B to a specific case study to evaluate its applicability. Chapter 1 explains the research question, provides the reader with background information to the study, gives some insight into the study environment and explains the nature of the research. The rest of the thesis is divided into three parts. The format is illustrated in Figure 1.3.

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1 Introduction

Part A - An Alternative new product development model 2 Technology management and product innovation review of the state of the art. 3 Characteristics of a high technology small to medium enterprise and its operating environment 4 An alternative new product development process for a high technology small to medium enterprises 5 Proposed new product development model acceptability survey

Phase B - Case Study 6 PLAN: Scan environment, determine boundaries and compile a strategic plan 7 CONCEPTUALIZE: Generate innovative ideas, screen new ideas and compile business analysis 8 DEVELOP: Breadboard designs, make engineering prototypes and make production prototypes 9 IMPLEMENT: Generate PBOM, set up production and commercialize

Part C - Conclusions and recommendations 10 Conclusions and recommendations

Figure 1.3 Thesis format [Own source]

Chapter 1

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Chapter 1

Part A - Development of a proposed new product development model for small to medium enterprises. Chapter 2 reviews new technology management and product innovation stateof-the-art in general and in an SME operating environment. The chapter is based on a literature survey. Conclusions are drawn that form the basis for the development of an alternative new product development process in Chapter 4. Accepted product development practice is used as a starting point that leads to the development of a more appropriate process for an SME (following a set of stated hypotheses) that will be used for the rest of the work. Chapter 3 supports the development of the process by evaluating the interaction of an SME with its operating environment. Chapter 5 reports on the development of a research instrument to evaluate the general acceptance of the proposed NPD model. The research findings are also provided and discussed. Part B - Case study The case study in part B consists of four chapters, each being devoted to the main phases of the proposed alternative new product development process. Chapter 6 deals with the planning phase, surveying the current situation pertaining to solar water pumping. In Chapter 7 the conceptualisation of a new product is dealt with, using the solar powered water pump as an example. Chapter 8 addresses the area of design and development (normally the main phase of new product development and often regarded as the only new product development activity. Chapter 9 is a representation of the implementation phase, as it was executed during the case study. Phase C – Conclusions and recommendations Chapter 10 presents the conclusions made based on the complete study. The findings and implications of the acceptability survey are presented. Experience gained from the case study, with reference to the proposed new product development process is summarized and discussed. Chapter 10 also makes recommendations regarding the applicability of the research findings and indicates areas of possible further research value.

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Part A – An alternative new product development process

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Chapter 2

Chapter 2 Technology management and new product development – review of the state of the art A large collection of information is available from the literature, the Internet and books on the subject of technology management and new product development [3,9,21,24,27,36,42,48,74,94]. The literature search focused on technology management and new product development. Articles with specific reference to SMEs were noted. Pertaining to the subject matter five literature streams were defined. For each article on SMEs, approximately nine were found, related to technology management and new product development in large organizations. The five literature streams prioritised according to the logical evolutionary process of new product development in general are: • philosophy, policy, strategy and institutional issues, • innovation, • Research and Development, • technology and • new product development. 2.1

Philosophy, policy, strategy and institutional issues

A stream of literature was identified that investigated and researched the fundamental nature of technology and innovation. Bosman [6] proposes a unified environment containing all the elements of philosophy, art, culture, technology, knowledge, and wisdom, etc. Movement in this environment results in new technology and products. A static situation cannot contribute to newness. The environment is shown in Figure 2.1. It is interesting to note where market needs enter this environment and where new products exit. The short circuit route (that can be viewed as the fast track for new product development) is also indicated. An SME should be aware of the rich content and impact of the knowledge environment that can be lost. The interconnectedness of the awareness environment is shown in Figure 2.1. It shows the many routes that arrive at any given point, departing from any other. Each route chosen will result in a more or lesser outcome and will take more or less time. This offers some insight to the fact that SMEs are more agile than large enterprises, which are more evolved in the awareness environment. An SME however cannot be involved singularly with complicated development, as much iteration through the awareness environment is necessary to arrive at complex high tech developments. SMEs should focus on niche markets and concentrate resources to reduce iteration time in the knowledge environment.

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Chapter 2

ART CULTURE

Market needs Competitors Boundaries Technology innovation

IDEOLOGY

WISDOM

GOAL

VISION

Entry INSIGHT

KNOWLEDGE

Short circuit

INFORMATION

DATA

TECHNOLOGY

STRATEGY

POLICY

PROCEDURE

WORK

SKILLS

Exit

Products Service Solutions

SCIENCE

VALUE GM BOSMAN 011 266 5102

Figure 2.1 Awareness environment [Own source based on 6]

The productivity revolution is over. Knowledge is the new factor of work and successful results according to Drucker [7]. This is part of the reason why an SME championed by an entrepreneur with niche knowledge can be successful today. The foundations of knowledge today are common to all, large or small. Availability through modern information technology (IT) is virtually the same to all. The difference is how it is applied. This does not imply that productivity is no longer important; on its own it is not enough. Three kinds of knowledge are identified: • Kiazen – continuous improvement of old products. • Existing knowledge to develop new products. • Innovation. An SME is probably most comfortable with innovation to achieve maximum advantage in the market. Reuber et al [8] investigated the entrepreneurs’ experience, expertise and the performance of technology based SMEs. It is suggested that apart from the technological know-how other forms of business skills are necessary to make an SME successful. Multiple iterations in the knowledge environment and on different layers (technology, management etc.) can achieve these skills or it can be acquired through human resource inculcation. Cooperation with other players can provide appropriate additional human resources without burdening the overhead structure of an SME. In following this route, fewer

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Chapter 2

individuals are responsible for the management of an SME. A large corporation can identify its technological assets on the one hand and can develop functional competency on the other. To integrate these two issues in a business strategy results in success. This is the challenge that a large corporation faces. The one cannot contribute to success without the other. The integration process might be easier to achieve in an SME, as fewer individuals are responsible for the overall integration, making communication and decision making easier with less turn-around time. Frohman [9] focused on ways in which technological decision-making is being approached by top management in managing the company’s technological assets. Five links between business and technology strategy are formulated: • Leap of faith – top management allows a certain amount of money for R&D spending without understanding, with the result that during bad times this blind faith is easily lost. • Lack of faith – top management controls money allocated to R&D closely leading to short-term focus. • Technology driven – top management consist of scientists and engineers determining the company’s development path through technological breakthroughs resulting in failure when technology fails. • Customer driven – this strategy is responsive to market needs resulting in milking the cow now without developing longer term technological assets. • Strategic management – entails development of a business strategy that reflects important technological assets (and assets to be developed) and opportunities of the organization resulting in a strategic balance. Frohman concluded, “For success in the market place, a company’s technical assets and functional competencies must be fitted into the business strategy.” Kurokawa [10] investigated factors that affect decisions whether technology is developed in-house or acquired from external sources. Two goals are aimed for when acquiring external technology: • shorten development time (dominant) and • maximize long-term profits. Acquired R&D can be used once while acquired knowledge can be reused. The advantages of external technology in contrast to in-house R&D are reduced cost and shortened development periods. Cost and benefit estimates of R&D however, remain difficult. Collaborative R&D can reduce each partner’s manpower costs and equipment cost and can reduce individual risk. Cost, revenue and timing of product introduction determines the return on investment. Four hypotheses were made and tested: • The greater the number of expected rivals, the greater is the likelihood of external acquisition of R&D. • Less legal and physical protection does not lead to greater likelihood of external R&D acquisition. • New technology with a short life does not lead to greater likelihood of external R&D acquisition.

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•

Chapter 2

The less related the new technology is to the core technology of the SME, the greater is the likelihood of external R&D acquisition.

The author concludes that technology strategies involving alliances prefer short-term strategy (shortened development time and short-term profits) to long-term strategy (maximize profits over the life of the innovation). The reasons for this phenomenon are wide spread but primarily tries to protect the broad interests and unique market offering of a large organization while at the same time obtaining the advantages of cooperation. An SME is what its core technology is and can protect it through hands-on involvement, even where alliances are formed. This would suggest that an SME could form cooperative alliances involving core technology with less risk of losing it. More substantial cooperative alliances can therefore be formed with other SMEs (involving their core technologies) with possible better results than would be the case of a large organization involved in a cooperative effort serving fringe activities. Niche markets and R&D that can contribute to longer-term knowledge related to core technology, results in in-house R&D in large organizations. By default successful SMEs are more likely to form alliances with other SMEs where core technologies are involved and where greater market competition is expected. As more niche markets become involved, the large organization has to grow its in-house R&D effort. Cooperating SMEs can realign their relationships to support new niche market development. Harvey [11] explored the relationship between productivity problems and technology adoption in small manufacturing firms. SMEs that adopt new manufacturing technologies exhibit different productivity profiles from other firms. SMEs can adapt faster to new technologies, also regarding manufacturing. They appear to have fewer problems and are better managed. A decision to adopt new manufacturing technologies in an SME can lead to collaboration with another SME requiring new manufacturing technology for newly developed technology without incurring the expense of acquiring this new technology. A large company will find it more difficult to either convert or make redundant existing manufacturing technology. Porter [12] identified five forces (in general) that shape strategy formation. These forces have to be understood to establish a strategic agenda that will focus beyond product, national boundaries and competitor ranks in defining a profitable business. The five forces identified are: • the threat of entry of new players, • powerful suppliers, • powerful buyers, • substitute products and • jockeying for position amongst active players.

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Chapter 2

External forces shape strategy formation in any organization [12]. SMEs have to contend with low barriers of entry (initial investment for entry into the market that an SME serves is low due to smaller business turnover and investment) and should stake out a position that is less vulnerable to attack. Powerful suppliers and buyers are shared amongst SMEs (more so than in the case of a large corporation). Direction change of such suppliers and buyers has to be guarded against. This can be achieved through solidifying relationships with customers and suppliers, differentiating product substantively or psychologically through marketing, integrating forward or backward and establishing niche technological leadership. Substitutes often come into play rapidly. SMEs are better equipped than large corporations to handle substitute entry through its agility but less capable of preventing its entry. Jockeying for position amongst SMEs is less costly and easier to achieve if operating in a niche. Jockeying for position against large companies often prove detrimental to an SME except where a niche can be found and established in a shorter time than possible for the large corporation. Traynor et al [13] investigated the efficacy of strategic and promotional factors on the sales growth of high technology firms. The study investigated high technology executives’ perceptions of which strategic factors and promotional methods are most effective. The strategic factors in order of perceived importance are: • product image, • state-of-the-art technology, • personal selling, • strong service orientation, • price competitiveness, • completeness of product line, • reputation of distributors, • market research, • advertising and • intellectual property protection. Expenditure on strategic and promotional factors by sales for high growth firms was analysed to ascertain whether perceptions and actions correlated. In order of turnover percentage the ranking was found to be: • R&D, • customer service and technical support, • sales and sales management support, • advertising expense, • trade show expense and • sales promotional expense. Traynor [13] found that high technology companies (showing growth) regard strategic technical issues and customer service and support as more important than sales and promotional issues in business. A strategic plan should include all aspects of business. An SME with limited resources is forced to prioritise the elements of its business. Forming alliances with other SMEs that focus on sales and promotion can be advantageous to the high

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Chapter 2

technology SME. If such cooperation is envisaged it should form part of the strategic plan. Lefebvre et al [14] investigated the relationship between intangible assets and manufacturing advancement in SMEs. Results indicated that the strongest determinants are : • the technical skills of blue collar workers, • the influence of customers, • the influence of vendors and • strategic motivations. A considerable portion of an SME’s strengths is vested in its intangible assets according to Lefebvre [14]. SMEs aiming for success should take cognisance of the fact that not only tangible considerations influence success. Tangible considerations may be important especially in the initial phases of growth but should be complimented with recognition of intangibles in later stages. Lefebvre focused on advanced manufacturing technology but it should be regarded as equally important for technology and new product development especially if taken into consideration that manufacturing and manufacturing limitations influence the practical or industrial art of management and development. Institutional involvement in SMEs and SME development is also mentioned in the literature. The main aim of institutional involvement is to support potential successful SME identification, formation and growth. Kassicieh et al [15] used attitudinal, situational and personal characteristics variables to predict future entrepreneurs from national laboratory inventors. According to the authors three schools of thought exist: • traits or personal characteristics determine who becomes an entrepreneur • the environment or situation where an individual works has a major effect on the entrepreneurial act, and • attitudes of individuals with respect to the act of entrepreneurship are most effective in differentiating entrepreneurs from non-entrepreneurs. This study combines all three schools of thought. Variables identified that showed statistically significant differences between would be entrepreneurs and inventors are: • application to secure intellectual property by the potential entrepreneurs • previous attempts at spin-offs from basic research by entrepreneurial candidate • inventors who provided consulting service prior to becoming independent, • involvement in other business activities, and • having relatives or other role models who are entrepreneurs. Institutional involvement in SMEs and SME development provides significant input to the understanding of the nature of successful SMEs. Kassicieh’s [15] study is indicative of the importance of the personal and environmental factors characterizing the entrepreneur starting and operating in a high technology

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Chapter 2

SME. In larger enterprises, dependent on the input from many employees, the abilities of a single individual is not that important compared to the effect and influence of the individual in an SME. Roberts [16] investigated policies and structures for spinning off new companies from R&D organizations. Various models are discussed. All models include four role players namely: • technology originator, • entrepreneur, • R&D organization and • venture investor. In Roberts’ proposed models [16] for spinning off new companies from R&D organizations the importance of the four role players is recognized in all models. All these role players are probably present in a successful SME development. It is conceivable that in some cases a single individual may be the carrier of all role player attributes. In such cases the speed with which decisions can be made will afford the particular SME significant advantage. Hisrich [17] studied the formation of new business through the enterprise development centre (EDC), a model for new venture creation. The paper discusses the formation requirements for an EDC. It is interesting to note that four attributes are identified. Different areas have different cultures and norms that have to be taken into consideration. A champion is extremely important when forming a new venture. In establishing anything radically new it is much easier to establish it in parts, achieve success and then establish other parts. Communicating new venture implications is vital to get the necessary support from the immediate environment. Smilor [18] addressed the incubator idea – starting new ventures with a variety of support systems. Entrepreneurs still have to be mindful of their own interests. Being in an incubator requires no less work and dedication. Each entrepreneur remains ultimately responsible for his/her own company. He/she must be aware of what is given up and what is gained through the association. 2.2

Innovation

Innovation is common to all enterprises’ technology development (and management) whether a large corporation or SME. Literature was surveyed to gain an understanding of innovation art in order that aspects of innovation related to the SME situation may be identified. Drucker [19] discussed various aspects of innovation from a management viewpoint. Areas of innovation include products, infrastructure, suppliers, manufacturing, subcontractors/outsourcing, customers, and users. Innovation resources can typically be found in people, knowledge, a stable environment and infrastructure.

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Chapter 2

Innovation opportunities are created by seeking the unexpected, observing incongruity, understanding needs (customer and user needs), observing change, studying demographics, observing perception change and acquiring new or more knowledge. Principles of innovation, according to Drucker, can be divided into positive actions to be pursued and negative actions to be avoided. Be purposeful and systematic, be perceptual, be focused and keep it simple, be specific and small. Allow the process to be leadership driven. Avoid being clever, diversifying or splintering (lose focus) and don’t innovate for the future – work in the present. Successful innovation comes from hard work, building on strengths, affecting the economy and society and not taking unnecessary risks. Innovation strategy is based on changing values, creating niches, applying creative imitation, applying entrepreneurial judo and going all the way - focus on target markets and products. Rouse [20] elaborates on the fact that an innovation is not an invention. Invention takes good ideas and hard work. It takes quite a few great inventions to yield one real innovation. Invention is absorbed in its features while innovations focus on the benefits that must be provided. The contrast between the perspectives of inventors and innovators provides some explanation for so many good ideas not resulting in innovations. The euphoria of creation usually prevents inventors from perceiving the prerequisites for inventions contributing to innovation. Said prerequisites include: • shifting the emphasis from technology to problem solving, • making stakeholders aware of these solutions, • delivering solutions to them and • providing service that will ensure that the solutions will be successful. According to Rouse innovators must form strategies that result in products and systems. They must also create a successful organization or enterprise for developing, marketing and delivering and servicing solutions. It follows that innovation needs a support environment and while inventions may stand alone, innovation cannot do so. Planned innovation starts by identifying the nature of the innovation line pursued. Abernathy et al [21] developed a framework, which considers various effects of innovation on competitive advantage and the relationship between innovation and industry evolution. Innovation effects are defined with respect to two major ingredients of competitive advantage: technology and market. A transilience map is proposed (transilience – capacity to influence the firm’s existing resources, skills, knowledge base, customer base). See Figure 2.2.

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Chapter 2

Architectural

Technology/production

Regular

Disrupt existing competence

Niche

Market/customer

Entrench existing competence

Disrupt exisitng linkages

Revolutionary

Entrench exisitng linkages

Figure 2.2 Transilience map according to Abernathy [21]

Architectural innovation requires vision of latent need and possibility combined with technological expertise. It combines both the scientific and practical art extremes at the same time. Caution must be exercised in balancing business risk and creativity. Market niche innovation uses existing technology. Transition and possibly short-term profit taking motivate it. It could result in the establishment of novel distribution systems. Revolutionary innovation disrupts and renders established technical and production competence obsolete, yet applies to existing markets. The impact on customers may not be immediately obvious. Regular innovation often goes unnoticed, but serves the cumulative effect of improving the desirability of an established product. Innovation evolution from regular to architectural innovation can prove difficult for various reasons. It includes risk, obscured cost estimation, lack of vision due to entrenched views, etc. Peters [22] proposes eight elements that can serve as the essence of an innovation strategy. The usual subjects (brainstorming, S-curves, innovation systems appropriate R&D spending levels etc.) are not mentioned. Violent market injection strategies are proposed. Peters suggests that subcontracting everything but the core should be considered. He advocates joining allies, attacking the market in numbers by pursuing many options. Joint development projects with lead customers and vendors should also be considered. Various other suggestions are made including the fact that measurement and reward

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Chapter 2

attitudes should be used. The author advocates the use of time as the principal performance measure. The eight important organizational strategies according to Peters are: • get lean and fast, • grant high spending authority, • grant true autonomy through forming small profit and loss centres, • a culture of “project orientation” should be instilled everywhere, • locate joint-function teams together, • get customers and vendors on the team, • don’t form committees and • destroy job descriptions. Peters also suggest that attention be paid to people strategies: • Hire or breed renegades and protect them – they irritate people. • Recognize small wins and cheer failures. • Make all information available to everyone. • Give everyone a piece of the action. • Build a continuous improvement ethos. • Commit to lifelong learning. • Fill the company with volunteers. Telling stories and talking up innovation develops leadership strategies. Do not hesitate to preach failure as part of life. Study innovation by swiping from the best and reading the right books. Peters suggests acknowledging the paradox. Success is the paradox. Seek out big failures and go beyond rational analysis. In short, redefine the relevant industry. The unconventional views heralded by Peters [22] on the subject of innovation may be questioned at first. Closer inspection reveals alarming similarities with practices in (especially) informal SME structures. Ironically, most of the reported work is based on experience within large corporations. It suggests that large organizations should strive to achieve operational characteristics for innovation already present in SMEs. An SME, in seeking guidance on the subject may be enticed to follow big brother – the large organization. This would not be the correct approach. The SME should rather rely on its own strengths to build an innovative culture. Saleh et al [23] studied the management of innovation, pertaining to strategy, structure and organizational climate. The study investigated factors that differentiate innovative and less innovative companies. Following are examples from the questionnaires used (italicised factors were significant in differentiating innovating companies from less innovating companies): • Risk Taking: Top managers in our company are inclined to make bold decisions despite the uncertainty of their outcomes.

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• • • • • • • •

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Pro-activeness: With respect to technological innovation and invention, our company generally practices proactive planning as opposed to reactive planning. Commitment: Our company’s commitment to R&D is maintained through slack periods and recessions. Flexibility: Our company adapts to changing circumstances without too much concern for past practices and principles. Synthesis: Our company promotes integration of entrepreneurial, managerial, and technical roles or skills. Collectivity: The innovations at our company are based on teamwork rather than individual activities. Openness: Our company encourages achievement-oriented entrepreneurs to work in "uncharted water” and to experiment freely. Collegiality: Our company provides an open work environment by stressing colleague-based rather than boss-subordinate relationships. Rewards: Our company gives team rewards and considers them more important than rewards for individual team members.

The management of innovation, studied by Saleh [23] suggests that the more successful innovating company promotes the integration of entrepreneurial, managerial and technical roles or skills. Teamwork, rather than individual activities should be pursued and rewarded. Support for innovation should be consistent and bold despite the uncertainty of its outcome. The following factors can be found more readily in SMEs: • Top management is often also the blue-collar worker/s. • Commitment and reward is closely tied. • The entrepreneur and manager is often the same person. • Small teams encourage teamwork rather than individual performance. Following the above reasoning, appropriate innovation management can be instilled more readily and with less forced effort in an SME than in a large organization. SMEs must recognize this inherent strength and use it. Innovation speed is important. Kessler et al [24] studied innovation speed. The work recognized that innovation speed is important but made a distinction between absolute speed and appropriate speed, which should actually be the goal. If the factors that influence innovation speed are singled out it is informative to note that three issues have a direct negative influence on innovation speed. Regulatory restrictiveness, project stream breadth and the degree of change impact negatively on innovation speed. This would suggest that an SME should seek to innovate in areas where regulations are not dominant (niche market being new and uncharted are usually not regulated). A narrow focus to reduce product stream breadth should be maintained. The SME must guard against too large a degree of change but rather follow a gradual implementation of radical innovation. The project leader's personal nature can have a positive or negative influence on innovation speed.

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Ross [25] presented a model to guide technology firms in developing innovative technology into new products. The author suggested that traditional strategies shown in Table 2-1 (incremental technological improvements) reduce technology innovation because: • successful innovation methods and procedures become institutionalised and • firms become wedded to existing technologies through past success. Table 2-1 Traditional strategies used by technology firms to promote growth [25]

Strategy Technology push Market pull Technology trend development Product line extension Peripheral technology Cost reduction

Focus Develop a product and then find a market Identify a need and then develop a product to satisfy the need product Target new products by following the existing development path Develop related products Develop complimentary products Develop products for use in the manufacturing process

Innovation is not a process that follows a linear path. The author [25] suggested that the innovation process be forced to be goal directed – not technology or product directed. The author’s suggested model [25] for innovative thinking is based on the level of impact that it will create, from least to most significant: • Process innovation targets manufacturing technology and not the product itself. • A market niche strategy focuses on dominating a specific market segment. • A market niche linkage strategy considers product variations and innovation that have appeal to other market segments, once identified. • With an industry revolution strategy a firm seeks to develop technology innovations that affect an entire industry. The firm must devote substantial resources and organizational effort in developing this type of innovation. • Industry creating innovations requires that a new product originate from within an industry. • At the top tier stands industrial revolution. Here the approach is to develop multiple innovations that create new industries, which have a profound impact on society. Large sums of capital for R&D and the development of new approaches to successfully manage such a strategy over a long development period are required. The more ambitious SME may pursue an industrial revolution strategy but should only do so if sufficient resources are available. If it tries to do so unknowingly, the SME may be doomed. Unless it aligns itself with other organizations such a strategy is unrealistic and will fail. Working with industrial partners will increase the chances of achieving success. Involving suppliers

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and customers are important. To attempt a new industry development strategy (by an SME) successfully, requires the collaboration of multiple SMEs. The involvement of a MNE (multinational enterprise) can be a great asset. A high technology manufacturing SME must not loose sight of the fact that: • customers are distributors and retailers seeking to provide their own added value to the supply chain and could make a significant contribution to any impact strategy followed and • suppliers are shared by other SMEs, creating a somewhat forced collaboration situation with other SMEs in the same industry at the process or manufacturing level which should be recognized and used to its advantage and not ignored or underestimated. The management of innovation can best be studied if the factors influencing innovation are viewed separately. Van de Ven [26] identified four central problems in the management of innovation. These include: • the human problem of managing attention because people create stereotypes to deal with complexity, • the process problem in managing new ideas to success because a new idea is often left to its own devices to be successful or fail, • the structural problem of managing part-whole relationships because dividing labour among specialists can lead to problems due to lack of communication and • the strategic problem of institutional leadership because key periods of development and transition are open gateways for considering alternative ways of doing things which can be forced on the organization leading to unwanted directions if not supported by strong institutional leadership. An analysis of the managerial activities associated with the management of innovation teams by Thamhaim [27] reveals that a large number of activities have to be addressed. The activities are resource management related. Important areas that have to be managed include human needs, communication, motivation, infrastructure support and goal setting. A study conducted by Huang et al [28] revealed important information regarding innovation management in contemporary small enterprises. The small business sector is an important driving force for innovation. It can be as innovative as larger businesses. Networking, making use of regional innovation centres, planning carefully and developing strategies appropriate for their business can enhance innovation performance in SMEs. Optimising the organizational structure (organizing innovation according to organizational lifecycle and designing appropriate reward systems for employees involved in innovation) can also lead to effective innovation management. The need for a champion or champions (technology or product champion and organizational champion) is evident in managing the problems associated with innovation [26, 27, 28]. Resource management needs are large, even in an SME. The more successful innovation is probably linked to the presence of at least two champions, sharing the same innovation goal – one to address the

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technological development and one to provide in the resource management needs. Much remains unknown about the ingredients for successful innovation in the small business sector. Based on findings from large firms, three cornerstone factors of innovation were identified [28] being process, strategy and resources. All three factors are widely acknowledged as being inadequate in SMEs. On the other hand, SMEs have significant strength in flexibility and motivation. 2.3

Research and development

Leifer [29] studied the differences between research and development. Research consists of technology expansion. Development involves the application of technology with the intent of bringing a new (or modified) product into existence. Research cannot be predicted or planned – it is best served by loose structuring. Development delivers best results if focused and directed - supported by a tight structure. Research units end up performing more independent from external factors as results depend mostly on internal factors. Development becomes increasingly dependent on external factors, as the final goal is being approached as many external influences play a role in the eventual success of the development effort. Research activities and development activities differ from each other [29]. Where SMEs attempt collaborative efforts, it may be advantageous to all parties involved if the sharing of responsibilities is done, taking the nature and infrastructure needs of research and development respectively into consideration. One partner could be research focussed while the other focuses on development. Cohen [30] concluded that intellectual ability is the lowest common denominator (not technology, financial resources, market placement, etc.) that defines a firm’s ability to handle the evolution of its competitive environment. Absorptive capacity is the ability to recognize the value of new, external information, assimilate it and apply it. Intellectual ability is developed through a company’s absorptive capacity (AC). R&D activities in a company are closely linked to AC: • R&D reflects the technical interest of the company • R&D efforts indirectly allow a company to benefit from competitors’ actions • R&D serves a purpose (developing AC) regardless of what marketable product it produces • Co-operative research ventures need more resources than management may initially think/allocate to actually benefit from such deals (sustainable benefits) – new and/or external information need to diffuse internally without which no contribution to intellectual ability is made. Supporting R&D efforts through regular spending in an SME is important [30]. Intuitively SMEs probably spend regularly on R&D through human resource

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(the champion) application especially where a technology or product champion with technical knowledge is present. Large corporations are adopting new and innovative globalised approaches to the creation and use of technology through networks of geographically dispersed R&D facilities according to Pearce [31]. Such laboratories play two vital roles: • Their presence makes it possible to assess areas of special scientific competence in the particular host countries • They support more directly the commercial application and development of appropriate technology in the local market. The latter product creation process has been shown to involve in-house R&D but also to be linked to the wider technological operation of the MNE group. The impact of globalisation on R&D has created opportunities for MNEs to establish geographically dispersed R&D facilities [31]. SME structures as fully independent operations that replace satellite R&D facilities could be of benefit for enhanced development efficiency. Green [32] found that top management support was directed at projects that: • were expected to make a greater contribution to the business goal • were represented by larger investments • were seeking new products versus incremental improvements, and • originated from business sources as opposed to R&D. Top management in an SME has a better understanding of R&D projects [32] and their individual performances as they are more closely involved in the operational aspects as well as the customer needs and therefore can make better judgement calls. This could be the reason that R&D in SMEs is more successful despite an SME’s apparent lack of infrastructure and resources. Bommer et al [33] studied the threats that organizational downsizing has on the innovation drive of R&D professionals: • Risk taking will be avoided. • Fewer suggestions will be made to superiors. • Fear will replace the desire to do the job well as performance motivator. Downsizing as a management tool, found in larger corporations, therefore impacts negatively on innovation [33]. Large corporations may loose their innovative edge as R&D erosion takes place. This could explain the advantage that SMEs may have regarding innovation. Moenaert [34] investigated R&D/marketing communication during the fuzzy front-end of establishing new technology. The author discussed the influence of communication on project success. Communication and an understanding between the customer and R&D are vital. In SMEs communication is made simpler through closer links that exist between R&D and marketing. Task variability (number of exceptions encountered during execution) should be reduced during the planning stages of an R&D project. Task analysability (known procedures that specify the steps to be followed in performing a task)

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should be maximized during the planning stages. Efficient uncertainty reduction increases the chances of a project to be successful and is achieved through information transfer between R&D and marketing. Marketing aggressiveness

High Low

1.7 1.2 1.2 1.1 Low High Technological aggressiveness

Figure 2.3 Median values of relative sales growth with respect to aggressiveness of R&D and marketing strategies [35]

Brockhoff et al [35] investigated the impact of technical and marketing aggressiveness experienced by a firm’s performance. The paper showed that technological aggressiveness has to be supported by marketing aggressiveness. No high returns can be expected if technological strengths are not effectively exploited through selling it. In the long run R&D effectiveness is reduced considerably if continual hard work is not rewarded by marketing successes. Figure 2.3 shows that the highest performers base their strategy on high marketing aggression and low technology aggression. The current study focuses on technology management and new product innovation. It is however clear that all efforts are in vain if it is not supported by an aggressive marketing strategy [35]. It might be that successful R&D starts with internal marketing and company strategy maintenance before the actual technical development work starts. Performance versus Newness 3.5 Performance

3 2.5 2 1.5 1 0.5 0 0

1

2

3

4

Newness

Figure 2.4 Relationship between performance and newness of technology [36]

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Meyer et al [36] studied new product strategies in small technology based firms. The authors introduced the concept of a “newness” factor. See Figure 2.4. Newness is a combination of technology (from incremental to revolutionary) and market application (from existing customers to new markets). Performance (sales growth) peaked at a moderate level of newness. The peak was achieved when the firm chose one key technology on which it could successfully build. When undertaking an R&D project the level of newness [36] must be carefully considered. The conclusion is not to innovate too aggressively without market support and not to innovate too broadly but to stick to one technology. For an SME this is even more important due to a lack of resources. If there is more than one major technology opportunity, consider hiving it off from the existing SME and starting another. Another possibility is to simply sell the other technology opportunities. Many researches have investigated the problems related to selecting R&D projects, customers’ needs, the success of R&D efforts and the relationship between R&D and marketing. Szakonyi [37], in dealing with non-obvious sources of problems related to selecting R&D projects to meet customers’ needs and addressing weakness within R&D’s and marketing’s individual operations found that the problems related to selecting R&D projects to meet customers’ future needs are common amongst the companies studied. The most obvious source of these problems is poor communication between a company’s R&D and marketing organizations. Apart from problems that arise due to the R&D and marketing interface, it was found that significant improvements were possible attending to issues within each of the R&D and marketing organizations. The author suggested three remedies that could result in improved communication in each of the relevant organizations respectively: • Broaden people’s ideas about their responsibilities. R&D must move closer to the customer and understand the customer’s needs. Marketing must identify customers’ future needs and analyse those needs in terms of new product characteristics. • Change how people and activities are managed. R&D should identify, evaluate and focus on projects. Marketing must review management (it is not just market share and sales), how marketing people are remunerated and how a new group within marketing can be created to handle a new product. • Renew efforts to identify customers’ needs. R&D people must come into contact with people (customers). Marketing should understand a customer’s situation better and endeavour to create product specialists. Customer communication is vital because it supports and makes possible competent trouble-shooting, which is the most important factor of R&D success, found by Pinto et al [38]. Pinto et al studied the causes of project failure during the R&D process. Numerous factors that contribute to R&D failure were identified. The most important cause/factor of failure was found to be a lack of trouble-shooting.

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The R&D activities of SMEs specifically have also been studied. Chakrabarti [39] considered the scientific output of small and medium size firms in high technology industries. It was found that R&D expenditure correlates with annual sales rather than net income. Growing firms spends more money on R&D than stagnant firms do. R&D growth does not necessarily lead to higher scientific productivity. A steady funding level for R&D is important in determining a higher level of scientific output. Yeaple [40] addressed the question why small R&D organizations are more productive than large organizations. The study investigated the question by addressing the R&D activities of five large corporations reduced to smaller activities in various formats i.e. skunk works, separate venture, autonomous division and two in-house groups in order that comparisons could be made. No small companies were involved in the study. Smallness as a primary causal variable may be misleading – a small company with small R&D is not the same as isolating R&D from a large company and making it small. Time spent on R&D increased from 8% to 40% after the separation of the R&D activity from the normal operation. Although everybody agreed that time spent with customers provided the most accurate information, only 6% of meeting time was spent with customers. Engineers were seldom permitted to speak to customers without marketing permission or presence. Although the skunk works appeared lean and focused (60% time spent on NPD) only 1.5% meeting time was spent with customers. The eminent danger was a new product developed in good time with little or no market demand. The financial incentives offered by the isolated R&D activities did not improve. Small companies offered major advantages over large companies. Yeaple [40] found that small R&D organizations are more productive than larger organizations. The risk factor is however prevalent when involved with small companies and cannot be ignored. This could be the reason why an individual would rather receive a smaller reward if he can work in a secure financial environment. 2.4

Technology

The natural extension of successful R&D activities is technology development. To gain a better understanding of technology management and new product development, this aspect of the literature survey is important. Aspects such as technology forecasting, technology management, the strategic planning of technology, technology innovation and various other influences on technology development were found.

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2.4.1 Technology forecasting In most corporations research units have turned into development units according to Cyert, et al [41]. These units can however still assist in technology forecasting. Managing technology includes forecasting and organizational adaptation. Dominant firms (larger corporations) may allow a minor firm to innovate technologically while it observes the results. When it has learnt enough to make a decision whether to adopt the new technology or not it can move in and once again become dominant. An SME on the other hand must therefore take more risks in its desire to grow through technology. Reisman, in his technology management review of the last forty years [42] comes to the conclusion that two future aspects are important: • Mature companies will, in great likelihood, rely on smaller and medium enterprises for product or process innovation • Foreign developers and producers (perspective from an USA viewpoint) will share more and more newly developed technology. If the USA perspective is taken as representative of larger business, then countries outside of the USA should see a growth in the number of SMEs, involved with technology development [42]. 2.4.2 Technology management Rubenstein [43] reviewed different trends in technology management. Some of the aspects relevant to the current topic (technology management in SMEs) are considered: • Technical entrepreneurship in large firms has produced many attempts and little successes while at the same time entrepreneurship violates many rules, procedures, etc in a firm • The R&D/production interface is placing more and more emphasis on lead-time, forcing concurrent engineering • Technology evaluation and audit remains considerably difficult especially in large firms where development teams are made up of a large number of players • Make or buy decisions are standard practice today and in some cases lead to a blind outsourcing rush. A balance has to be sought between the “NIH” syndrome (not invented here) and risk and cost aversion while reducing development time • Technology policy just about does not exist • The effectiveness of SBUs (strategic business units) is perceived to be high (it is a decentralization process) but the author is concerned about loss of control and direction. The difficulty of auditing and evaluating technology [43] might be one reason why intuition (often used in an SME either solely or in conjunction with some form of auditing process) in SMEs proves the better answer from time to time to indicate the direction technological development should take. Although a

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lack in technology policy is observed, it seems that decentralized technology development is successful. At the same time there is a threat of an even greater loss of direction, which may be attributed to a policy lack. The technology infrastructure of firms was investigated by Link [44]. Infratechnologies (technology infrastructure) increase the efficiency with which a technology based economic activity is conducted. An infratechnology acts to facilitate the development and use of product and process technologies. Examples are basic scientific and engineering data, methodologies such as measurement and recording of data, test procedures and interface definitions (ICD, base line specs). The level of spending on infratechnology is sizable (this research was done in large firms). The author found that infratechnology research (development of infratechnology) does enhance productivity growth. In large corporations this activity can be accommodated and even grown to a sizable activity in pursuit of product development support. An SME often cannot afford this type of development and so this will less likely be found in an SME. SMEs could therefore remain more focused (in the short term) on the development of the product/technology at hand with better end results than the larger corporation. Dermer [45], in a technical management note points out some of the pitfalls in technology management. The basis of the study is not clear. However the pitfalls mentioned are: • overvaluing technology, • interchanging research and development, • underestimating manufacturing problems, • failing to anticipate technology change, • inappropriate positioning, • ignoring the power of marketing, • disrespect for investor expectations, and, • misunderstanding innovation. Dermer suggests that companies differ primarily in three respects: • The depth of the specialized knowledge carried in its people’s heads (tacit knowledge) differs. • The need for and the mechanisms used to achieve balance in the company between the different components of technology differ. • The ways in which information overload and stress conditions are coped with differ. Organizations in danger of falling into the mentioned traps exhibit the following characteristics. They: • are unable to manage production efficiently while incorporating necessary changes in products and processes, • make inappropriate use of vendors, • exhibit insufficient R&D networking and • rely on too much in-house production.

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If the observations made by Dermer [45] are mapped onto an SME the following conclusions can be made. SMEs are often born out of an “overvaluing of technology” situation. It is the way in which this overvaluing is handled that puts the more successful operation apart from the rest. Ironically an SME can with much greater ease and less negative consequence interchange between research and development but often underestimates (through inexperience) manufacturing problems. Adler [46] suggests that when knowledge is the critical resource, knowledge management is the critical task. Knowledge (technology is a domain of knowledge) has the peculiar quality of not being used up by being used but indeed the more it is used the more there is. The author argues for the adoption of inductive and qualitative techniques to support the current mainstay of management science and operations research. Such techniques are more easily adopted by an SME, as less people are involved. This could be an advantage that the SME has to exploit. Less people of course mean less objective views and the advantage is therefore not automatically obtained. 2.4.3 Strategic planning of technology development Strategic planning involving technology and technology management is an elusive subject. Numerous studies [47,48,49,55,56] have been undertaken to address the issue. Iansiti [47] reported on an empirical study of the interaction between applied science and product development that considered the integration of the technology development process. The author developed a model for information processing through observation. Iansiti concluded that effective product development includes: • effective planning at the strategic level, • strong project management and • routines and approaches for technology evaluation, selection and integration. Technology evaluation, selection and integration [47] may not deliver immediate results (with the current development undertaking) but if embarked on and recorded properly could serve to evolve technological capabilities in a company in an appropriate fashion to provide the right foundation for future product development activities. In larger corporations communication requirements necessitates the above issue. An SME can often proceed without formal evaluation, selection and integration but with loss of the chosen core technology evolution. Brockhoff [48] investigated technology management as part of the strategic planning process. He suggested that major efforts have to be made in the education and training of technology managers and strategic planners.

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In an SME where the technology manager and strategic planner is often the same person reliance on intuition can make up for the lack of education and training [48] because in-time evaluation of intuition takes place and adjustments can be made. There is no need for formal communication and interactive transfer of knowledge to be assessed, evaluated and modified if necessary. Pegels et al [49] studied the impact of technology strategy on firm performance. It was found that the accumulation of knowledge and technical strengths contributes to the performance of the firm. Sales by employee and investment in plant material also contribute. The real impact of R&D was found to be on technology cycle time and technological strengths, which impacts on performance. A technology strategy should focus on the support that R&D can render and not view R&D as a separate activity [49]. In an SME, focused on achieving technological development and product innovation, R&D is intrinsically used as a support tool until growth (in size) takes place and raises the issue of considering R&D as a separate function executed by newly appointed employees. 2.4.4 Technology innovation and acquisition Irwin et al [50] studied the effect of the acquisition of technological innovations on organizational performance. The study investigated the relationship between technological innovations and the performance of an organization. Irwin et al [50] showed that the relationship between the acquisition of technology and financial performance was found to be positive and strongest with technology having attributes of high value, high difficulty of imitation and containing elements of rareness. At first the conclusions seem obvious. The relevance of the findings is probably best interpreted if consideration is given to the fact that high value does not necessarily mean large or complicated – it implies market value. Similarly, high difficulty of imitation not only refers to the attributes of the product or technology but also refers to the way the product can be marketed and how unique the product's value adding properties are. Elements of rareness are normally found when a product or technology first enters the market indicating that the greater the innovation, the more rare the offering. Collaboration in high technology environments is increasing. Steensma [51] studied the acquisition of technological competencies through interorganizational collaboration from an organizational learning perspective. The author produced a model to depict the interplay between collaboration, learning and technical competency development. Too much collaborative interdependence with a simple learning mode creates excess interaction and a learning gap. Peak performers often build on existing skills while less successful organizations utilize unrelated diversification.

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An SME should attempt to collaborate in areas that will strengthen its core and where it has the ability to assimilate information [51] and put it to good use in supporting its core activity. Stevens, in a paper on converting ideas to profits [52] suggested that nimble organizations today rely on smaller business groups. A growth minded company targets “radical” projects (long term) while a profit minded company targets improvement projects (short term). Mature innovative companies yield five common hallmarks: • Everyone in the company feels his/her role is connected to innovation. • The leader establishes the context and climate of innovation – he/she is not necessarily the innovator or inventor. • Innovative companies are experimental in all areas – not only technology. • Companies proliferate myths and stories about adventurous actions, even breaking the rules and having them accepted by the company. • An innovative company has a host of ways of connecting technical and marketing people and of connecting company people with customers without being directed or controlled. Synergy and leverage form two opposing factors of a balanced strategic alignment of products. Synergistic strategies focus on the development of platform technologies that can be used in any one of several future product developments. Synergistic programmes have less leverage because they are applied to a broad range of products. Leverage programmes focus on specific product development and are more specific and focused on one product/technology to ensure success. Technology roadmaps are important and help to guide priority allocation. More companies are turning to the “front-end” of the innovation process i.e. customer need identification. Christensen, cited in [52], found in a joint study that the dilution of effort by piling projects on top of each other was a sure innovation inhibitor. The most insidious was over-commitment of development capacity. Value-added work peaks at 70% when an engineer is working on two projects at a time, dwindles to 40% on three projects and is just 15% when working on seven projects at a time. Value-added time is defined as work that moved a project forward. 2.4.5 Other influences on technology development Strategic and economic factors that influence technology development need to be considered. Schilling [53] studied the economic and strategic factors driving technology success and failure with a view of determining the reasons for technological lockout to occur. Two types of lockout were identified: • The firm produces products in the absence of a dominant product that is subsequently rejected by the market as the market moves to a dominant design.

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There is an existing dominant design and the firm is unable to produce or sell products conforming to the standard.

In establishing a technology strategy to prevent technology lockout various issues were identified that have to be included in any successful strategy: • Goal should be to achieve a dominant design (a single architecture that establishes dominance in a product class [53]). • Core capabilities and absorptive capacity differentiate a company strategically and should be defined in the strategy, recognizing the role that technology development play in developing the core capabilities and absorptive capacity. • Installed base of a technology (degree to which the current technology is used by the commercial players) influences the likelihood of acceptance or rejection. • Entry timing is very important. To be the first to market in not necessarily the optimum in high tech environments. Too late to market will also increase the likelihood of technology lock-out. • Intellectual property protection becomes significantly important where there is an established dominant design in the market. Large corporations do more formal strategic planning [53]. They should be more deterministic in the successful planning of technology development. It seems however that SMEs are more successful in developing innovative products although an SME does virtually no strategic planning compared to a large organization. Foster [54] reported on the timing of technological transitions in the modern corporation. Various definitions are given: • Technological limit – barriers reached when developing various technologies – practical barriers are often reached before natural barriers – as limits are approached the returns from further R&D diminishes. • Technical potential – difference between current state of the art and the technological limits. • S-curve – represents the rate of progress of particular technology – good management involves the ability to make transitions to new technologies both smooth and timely so that the technical potential of the new technology is maximized. Various management problems are associated with technology development: • Technological myopia (technological progress short sightedness) is a lack of knowing when to invest in new technologies. Normally the best time is around the midpoint of the S-curve when the risk is less but a lot of potential remains. Getting rid of technological myopia creates the ability to displace old technology rather than to defend it. • The misreading of market signals (a tendency to discount signs of market penetration by new competitors) can be prevented, by getting the market definition right. Do not wait for market research before financial commitments are made to a new technology.

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Culture trap (tendency to give priority to the defence of existing product lines over the adoption of a new one) can be extremely debilitating and a conscious effort is required to prevent it.

Suggested solutions to overcoming the problems are [54]: • build knowledge to understand technological limits, • assess the proximity to technical limits by reviewing the position on the Scurve, • take action through performing R&D audits (R&D effort and investment versus R&D productivity and yield improvement), • involve the total corporation in getting tuned into change and • anticipate technological development far in advance. 2.5

New product development

Considering new product development the following issues could be identified: • new product development process, • management of the new product development process, • new product development success factors and • external influences and areas of cooperation. 2.5.1 New product development process The literature study revealed a significant number of articles on the new product development process. No specific attention was given to information pertaining to SMEs only. This was done to understand the broad process of new product development (NPD) and gain insight into possible ways of improving the process in SMEs. Thomas [57] defines the key steps as: • New product strategy development. • Idea generation. • Screening. • Business analysis. • Development. • Testing. • Commercialisation. Bowen et al [57] follow a more philosophical approach and define the seven key elements for outstanding development projects as: • Core capabilities and core rigidities. • Guiding visions. • Pushing the envelope. • Project leadership and organization. • Ownership and commitment. • Prototyping - rapid learning and early testing.

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Integration within a development.

Gerwin et al [59] in a paper on redefining the new product introduction process, defines the seven subdivisions of the “simplified model of the process” as follows: • Corporate strategy planning. • New product conceptualisation/formulation. • Formal product concept. • Technical specifications and design. • Product testing and production. • Marketing. • Sales support. Shrivastava et al [60] defines five steps in a development process, regarded as phases in a phase transfer process: • Idea definition. • Concept definition. • Product development. • Pilot manufacturing. • Marketing. A summary of the literature [57, 58, 59, 60] indicates seven principal focus areas or phases for the new product development (NPD) process to be managed to achieve a successful result: • Strategic planning taking core capabilities and limitations into consideration as well as environmental issues, • Idea generation recognizing needs and seeking the limits of technology to find solutions, • Screening various options for feasibility through forming a formal product concept or concepts, • Business analysis at which time the formal product concept or concepts are tested for commercial viability, • Development and prototyping to establish technical specifications and provide product for testing purposes, • Product testing and pre-production at which stage the development becomes the responsibility of the organization’s production facility and • Production and marketing is the stage or period in a product’s life where it becomes in marketable and sales volume and targets become the motivation. In an SME human resources are normally limited to the extent that the same individual is responsible for more than one of the above stages or tasks. Where more than one task is allocated to the same individual the tendency would be to execute the tasks (stages) concurrently. This may speed up the process but at the same time information flow now gets limited to that individual. A surge of activity may then be followed by a frustrating period where no progress seems to take place, due to a lack of information flow. Factors such as these mentioned should be taken into account when selecting an appropriate process for the company.

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The order of execution of the stages seems logical. In a particular situation however it may be advantageous to change the order or even repeat some stages. In an SME this tendency is logistically easier to entertain than in a large corporation. Even so, it should be planned for and not be done on an ad hoc basis. 2.5.2 Management of the new product development process Several authors investigated ways in which the new product development (NPD) process is managed in firms to gain a better understanding of the failure of successful product development even though the process is well defined and divided into manageable independent and controllable tasks or phases. Barclay [61], in a study that reviewed the NPD progress over nearly forty years, summarizes a modern view on elements required to achieve NPD success within any development framework: • An open minded, supportive and professional management: This is by far the most common factor cited. A clear need here is that management should provide strong support for new product development. Management needs to be able to create an atmosphere of trust, coordination and control. The importance of key individuals will often play a vital role during the innovation process. • A good market knowledge and strategy: Companies should look to the customer and the market for the majority of their new product ideas. A detailed market assessment should be undertaken, together with a thorough analysis of customer preferences. • A unique and superior product: The quality and value of the product itself is central to its success. Yet despite the literature and the obvious nature of the argument, failure to meet customer needs is by far the most commonly cited cause of failure. The primary limitations on a firm's effectiveness in innovation appear to be its ability and perhaps aggressiveness in recognizing needs and demands in its external environment. • Good communications and coordination: There is a strong body of evidence that demonstrates the positive link between good communication, coordination and successful innovation. The linking of R&D and marketing poses one of the most serious barriers in the process of successful innovation. One demands specific targets while the other wishes to 'keep options open' as the liaison progresses. • Proficiency in technological activities: Companies need to ensure that the resources are available and that the technical and production skills match the new product development being undertaken. The launch of the new product into production should be a smooth and efficient activity, and other development activities such as design and prototype testing need to be undertaken in a systematic and professional manner.

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Hise et al [62] investigated the effect of product design activities on the commercial success levels of new industrial products. The authors investigated the relationship between development success and the following of specific technical design steps. The study showed that any company performing some of the design steps were more successful. Furthermore, success increased with increase in design steps followed. The authors concluded "…new product developers may jeopardize the success potential of new industrial products by not performing specific design steps and by instituting an incomplete design and development agenda”. Researchers and designers should focus on how to reduce the time these design steps take, not in how to eliminate them. A balance is required to bring new products in quickly, but not at the expense of missing steps that will be critical to their commercial success. Attending to all the phases or steps in the NPD process is important. Another important aspect that became apparent from studying the literature is the way in which the steps were ordered. Clearly two extremes are possible if one assumes that all steps have to be included. The steps can be followed sequentially or in a random and less organized manner. It is important that all the stages of the development process be followed. No stage can be excluded but emphasis and specific conditions may change the importance and priority of the various stages from time to time. In an SME the NPD process may be followed less formally, making it possible to reduce turnaround time of some of the process steps without having a negative effect on the outcome according to Hise et al [62]. In larger organizations the decision to skip steps or shorten them, may take as long as simply executing it, leaving little or no possibility of reducing time to market or even introducing product improvements before launching. Takeuchi et al [63] observed six characteristics in the way (large successful) companies managed their new development projects: • Built-in instability: Top management sets broad and challenging goals. • Self-organizing project teams: This is similar to the process where a new company is formed. • Overlapping development phases: Movement from one phase to the next is allowed although not all the requirements for the present phase are met. • Multi-learning: All members of the team acquire a broad knowledge and wide range of skills. • Subtle control: Little but enough control is exercised to prevent chaos. • Organizational transfer of learning: Knowledge is transferred to outside the group, to new projects or to other divisions. This management approach can be compared to a rugby match (progress forward with a sense of randomness) while the more traditional method is compared to a relay race. The results of this approach are: • greater speed and flexibility, • enhanced responsibility, cooperation and commitment, • increased risk and initiative taking, • development of diversified skills,

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• •

Chapter 2

increased sensitivity to market conditions through involvement with outside suppliers and corporate renewal and change are promoted.

The authors point out some of the practical realities of the approach. It: • is not suitable for revolutionary projects, • is not suitable for mammoth projects, • increases stress under members of the team and • creates long working (voluntary) hours at the peak stages of a project. These observations are interesting when considering an SME. An SME normally does not undertake revolutionary projects, does not embark on mammoth projects, experiences stress amongst members and experiences long working hours during peak stages of a project. In a paper on the new age of new product development Scott [64] described the new paradigm for new product development (as opposed to the old sequential “passing over the wall” approach). The modern NPD activity is focused on the entire NPD process or set of activities, rather than separately and sequentially in each step of the process. It has become a cross-functional integrated process. Zirger et al [65] studied the effect of acceleration techniques on product development time. Time to market has become a strategic imperative. The authors found that not all of the twelve factors considered were positively correlated with speeding up new product development. Four factors correlated with increased speed in development: • Team structure and management variables (increased team functions, reduced number of projects, high priority on time) delivered the greatest impact. • Overlapping development activities slashes time by cutting project review preparation, presentation and resulting engineering changes. • Slightly increasing the number of major suppliers tended to lead to faster product development. • Reduced levels of management support reduced product development time relative to other competitive counterparts. Smith et al [76] emphasized the simultaneous evolution of product design and the associated manufacturing process. The earlier design choices create 7585% of a product’s cost. Of the total life cycle cost, 80% is determined at the early design stages. The authors suggested that integration should not be centred on one person. Input should be obtained from the production floor and a product champion should be found to oversee integration. Self-organizing teams and overlapping of the development phases are some of the characteristics found in large successful companies [63, 64, 65, 76]. Diversified skills are developed. A cross-functional integrated process is replacing the traditional "passing over the wall" approach. The overlapping of development activities, through cutting review preparation time, presentation

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Chapter 2

and resulting engineering change, and a reduced level of management intervention (patrolling the development process phase borders) reduce development time. The integration of the various phases should take place as early as possible as the early design choices create 75-85% of the product’s cost. A product champion should be found to oversee integration and input must be obtained from the production floor. Pavia studied the early stages of new product development in entrepreneurial high technology firms [66]. The object of the study was to expand the existing knowledge of the first three stages of the NPD process (NPD strategy, idea generation and screening) in small, entrepreneurial high-tech firms. The author recognized the fact that most of the studies done on the subject have been carried out on large mature firms. Pavia found that sources of innovation in high technology firms include internal personal contacts, experimentation and R&D. External vendor contact and research papers are also used. The understanding of customer needs, thereby creating a customer pull effect, is regarded as important input by successful firms. The annual strategic plan and technological gate keeping also serve as important identification tools. The author suggested that even in SMEs systematic methods of identifying new product opportunities have an important place even though informal techniques are often used. When making Go/No Go decisions in high technology firms it is based on financial issues, corporate and technological synergies, the differential advantage a potential new product would offer and a long product life. In successful high technology SMEs however the screening of new products rarely include financial criteria and is often based on intuition [143]. The educational (business) background of Go/No Go decision-makers seems to have little impact on most of the aspects of the NPD process. It is limited to the use of generating expected profit and expected sales [66]. Core competence and core capabilities are important attributes that should be utilized in managing technology and new product development. Prahalad [67] argued the role of core competence in growth through value creation by focusing on strategic intent and architecture, identifying and understanding core competencies and developing core products to create new business and promote growth. Leonard-Barton [68] presented a paradoxical view of core capabilities: in addition to enabling new product development, they can also serve to hinder and restrict thus becoming core rigidities. Core capabilities are a knowledge set that distinguishes and provides the competitive advantage. It includes four dimensions: • Skill and knowledge. • Technical systems. • Management systems. • Values.

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Chapter 2

Leonard-Barton argues that these core capabilities become less tangible as they move from technical to managerial systems and so become more difficult to change. Meyer et al [75] suggest three strategies for managing technology: • Form a critical mass of skills around core technology. • Develop a broad range of unrelated technologies without relying on one core technology. • Purchase a broad range of technology. The authors conclude, “…the building of an internal critical mass of engineering talent in a focused technological area, yielding a distinctive core technology that becomes the foundation of the company’s product development, offers the best opportunity for rapid growth of a young firm.” Market focus is equally important as technology focus. Managerial core capabilities should serve the technical core of a firm [67]. Management rigidity can become an obstacle rather than a support mechanism when technical innovation progresses too far ahead without considering management innovation [68]. In an SME where the same individuals perform technical and management duties it is easier to support change in both areas. Meyer et al suggests that a technology core having critical mass should be formed [75]. 2.5.3 New product development success factors Reports in the literature on new product failure are significant. Of all new products 30-40% are unsuccessful and half (50%) of R&D spending results in financial failure [69, 70]. Cooper et al [69] uncovered three independent dimensions in determining new product performance: • Acceptable financial performance was achieved where a project was well defined prior to product development. Product superiority in the eye of the customer was achieved and synergy existed between project needs and management resources and skills. • Capitalizing on an opportunity window was successful when a product performed a unique task, solved a problem that the customer was having and the product was in a market where customer needed change quickly. New or advanced technology used in the product design also contributed to success. • Market impact was achieved where the customer perceived superior product, higher quality and unique benefits versus the competition. Kleinschmidt et al [70] studied the relative importance of new product success determinants and compared perception with reality. The study set out to probe what separated winning new product projects from losers and in particular, to assess whether these success elements were consistent with management’s beliefs. The findings indicated serious and potentially damaging gaps between managers’ beliefs and reality. Managers tended to place far less importance

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Chapter 2

on marketing and business actions strongly linked to success than on technical ones. Idea generation and a clear product definition prior to development are key factors underlying success. Product definition is crucial and weaknesses must be uncovered and corrected prior to market release or else the competitors will find and exploit them, taking market share and profit from the company. [71]. Superior and unique product should be pursued [72]. A strong market orientation is required. Testing new ideas and products are vital prior to and during development. Three testing levels exist [73] namely: • concept testing, • product testing and • market testing. Concept testing is especially important and at the same time difficult. Gaps exist between the consumer’s expectations and actual product. Consumer participation causes modification of the concept, positioning and physical product. Changes in external environment (legal and societal) are also part of the feedback process. The thorough testing of new concepts [73] and products can be a daunting task for the SME. This is possibly one area of significant difference between an SME and a large corporation. SMEs rarely make use of rigorous testing procedures (which can take a long time). It could be the reason why even good ideas and viable market opportunities are not capitalized on even in a dynamic and highly mobile SME. Cooper [74] suggests a new product strategy in one document approach (Product Innovation Charter-PIC) containing two elements: • Objectives, exploring the role that product innovation will play in the company and the orientation that the company will pursue with its new product program. It must contain specifics and be reasonable and measurable. • Arenas, defining markets, applications, technologies and products. The choice of arena guides the entire new product process. The establishment of a new product development strategy is often overlooked even though it is considered important [64]. Sophisticated new product development process models applicable to different corporate structures and environments have been developed [60]. The knowledge base and competitive nature of new product development management is increasing. Firms are beginning to pull all the multifunctional elements of a new product strategy together in one document, which specifies the types of markets, products, technologies and orientation the firm will pursue with its new product program according to Crawford, cited in [74].

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Chapter 2

2.5.4 New product development, external input and cooperation Cooperation between companies, departments within companies and interaction with influences from outside the new product development effort are becoming increasingly important. MacPherson studied the contribution of external service inputs to the product development efforts of small manufacturing firms [77]. Collaboration, strategic alliances, R&D networks and joint ventures were not included. A positive correlation was found between successful SMEs and recourse to external sources of input. External help is often available at lower cost. Advice from suppliers although not directly applicable to R&D, contains information and knowledge developed by the supplier’s R&D efforts. It is becoming increasingly important to select suppliers carefully and to develop a working relationship with them. The initial sales contact person is often not the technical expert in the supplier’s company and other personal contacts outside of the commercial one has to be developed. External sources of input, results and cost are summarized in Table 2-2 [77]. Table 2-2 External sources of input, results and cost [77]

Source of input Private services

Public services Universities Suppliers, customers, distributors and informal business networks

Type of service Applied R&D Production engineering Industrial design Testing Same as private Same as private Advice

Results Cost Relatively poor High results

Poor Low Useful Medium Matches or Low surpasses private and public sector input

Care must be taken not to end up in a situation where only one supplier can provide the new product developer with support, locking out other suppliers. The success of the development can be greatly influenced by the success of the supplier. Bailetti et al [78] reported on the benefits obtained by product designers from direct interaction with leading edge users (users faced with needs which will become commonplace in several months or even years and is likely to bring the user substantial benefits). Four major benefits were identified: • The product formulation process became more productive and creative. • There was a greater commitment to the agreed solutions.

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• •

Chapter 2

Business perspective on technology solutions was enhanced. Stronger links with outside sources of knowledge were created.

Input from customers and potential users are seldom quantified. Interaction with users should be preceded by a working document indicating the results the designer hope to achieve. Customers and users are often not the same person for a manufacture that may be an OEM (original equipment manufacturer). McCutcheon et al investigated the relationship between supplier and the new product developer [79]. The current trend is to pass some of the development effort over to the supplier. Effective teaming of product designers and allied suppliers is likely to become an increasingly important element in the product innovation process. The current trend is to pass some of the development effort over to the supplier [79]. The supplier to the new product developer has contact (likely) with competitors as well. Cognisance should be taken of the fact that the particular supplier carries tacit knowledge (to a more or lesser degree) with him that could indicate technology trends followed by competitors. The supplier could also carry information to competitors. Hartley [80], in studying the suppliers’ contribution to product development came to the conclusion that simply adopting the supplier-involvement cited in the literature will not necessarily increase a project’s success or compress development time. It was necessary to include suppliers in the early stages of development to increase the perceived contributions of the supplier. Shifting design in specific cases to specific suppliers can have significant benefits. Hartley noted that the suppliers’ design responsibility and communications frequency did not have an impact on the new product development success. The responsibility for progress and successful completion of a project is obviously still in the hands of the new product developer and cannot be passed on to the supplier involved [80]. 2.7

Summary

The literature search focused on technology management and new product development. Articles with specific reference to SMEs were noted. Pertaining to the subject matter five literature streams were identified. For each article on SMEs, approximately nine were found, related to technology management and new product development in large organizations. The five literature streams prioritised according to the logical evolutionary process of technology or new product development are: • philosophy, policy, strategy and institutional issues, • innovation, • Research and Development, • technology and

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•

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new product development.

Philosophy, policy, strategy and institutional issues An SME should not singularly be involved with complicated development (more than its infrastructure can handle), as much iteration through the awareness environment is necessary to arrive at complex high technology developments. SMEs should focus on niche markets and concentrate resources to reduce iteration time in the awareness environment. The productivity revolution is over. Knowledge is the new factor of work and successful results according to Drucker [7]. This is part of the reason why an SME championed by an entrepreneur with niche knowledge can be successful today. The foundations of knowledge today are common to all, large or small. Availability through modern information technology (IT) is virtually the same to all. The difference is how it is applied. Apart from the technological know-how other forms of business skills are necessary to make an SME successful. Multiple iterations in the awareness environment shown in Figure 2.1 and on different layers (technology, management, etc.) can achieve these skills (experience) or it can be acquired through human resource inculcation. Cooperation with other players can provide appropriate additional human resources without burdening the overhead structure of an SME. An SME is what its core technology is and can protect it through hands-on involvement, even where alliances are formed. This would suggest that an SME could form cooperative alliances involving core technology with less risk of losing it. More substantial cooperative alliances can therefore be formed with other SMEs (involving their core technologies) with possible better results than would be the case of a large organization involved in a cooperative effort serving fringe activities. SMEs have to contend with low barriers of entry (initial investment for entry into the market that an SME serves is low due to smaller business turnover and investment) and should stake out a position that is less vulnerable to attack. An SME with limited resources is forced to prioritise the elements of its business. Forming alliances with other SMEs that focus on sales and promotion can be advantageous to the high technology SME. If such cooperation is envisaged it should form part of the strategic plan. Institutional involvement in SMEs and SME development are also mentioned in the literature. The main aim of institutional involvement is to support potential successful SME identification, formation and growth. In larger enterprises, dependent on the input from many employees, the abilities of a single individual is not that important compared to the effect and influence of the individual in an SME.

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Innovation Innovation is common to all enterprises’ technology development (and management) whether a large corporation or SME. Literature was surveyed to gain an understanding of innovation in order that aspects of innovation related to the SME situation may be identified. Successful innovation comes from hard work, building on strengths, affecting the economy and society and not taking unnecessary risks. Innovation strategy is based on changing values, creating niches, applying creative imitation, applying entrepreneurial judo and going all the way - focus on target markets and products. Innovation is not invention. Invention takes good ideas and hard work. It takes quite a few great inventions to yield one real innovation. Invention is absorbed in its features while innovations focus on the benefits that must be provided. The contrast between the perspectives of inventors and innovators provides some explanation for so many good ideas not resulting in innovations. The euphoria of creation usually prevents inventors from perceiving the prerequisites for inventions contributing to innovation. The unconventional views heralded by Peters [22] on the subject of innovation may be questioned at first. Closer inspection reveals alarming similarities with practices in (especially) informal SME structures. Ironically, most of the reported work is based on experience within large corporations. It suggests that large organizations should strive to achieve operational characteristics for innovation already present in SMEs. An SME, in seeking guidance on the subject may be enticed to follow big brother – the large organization. This would not be the correct approach. The SME should rather rely on its own strengths to build an innovative culture. Support for innovation should be consistent and bold despite the uncertainty of its outcome. The following factors can be found more readily in SMEs: • Top management is often also the blue-collar worker/s. • Commitment and reward is closely tied. • The entrepreneur and manager is often the same person. • Small teams encourage teamwork rather than individual performance. Following the above reasoning, appropriate innovation management can be instilled more readily and with less forced effort in an SME than in a large organization. SMEs must recognize this inherent strength and use it. Innovation speed is important. More successful innovation is probably linked to the presence of at least two champions, sharing the same innovation goal – one to address the technological development and one to provide in the resource management needs.

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Chapter 2

Much remains unknown about the ingredients for successful innovation in the small business sector. Based on findings from large firms, three cornerstone factors of innovation were identified [28] being process, strategy and resources. All three factors are widely acknowledged as being inadequate in SMEs. On the other hand, SMEs poses significant strength in flexibility and motivation. Research and development Research consists of technology expansion. Development involves the application of technology with the intent of bringing a new (or modified) product into existence. Research cannot be predicted or planned – it is best served by loose structuring. Development delivers best results if focused and directed - supported by a tight structure. Where SMEs attempt collaborative efforts, it may be advantageous to all parties involved if the sharing of responsibilities is done, taking the nature and infrastructure needs of research and development respectively into consideration. One partner could be research focussed while the other focuses on development. Top management in an SME has a better understanding of R&D projects [32] and their individual performances as they are more closely involved in the operational aspects as well as the customer needs and therefore can make better judgement calls. This could be the reason that R&D in SMEs is more successful despite an SME’s apparent lack of infrastructure and resources. In SMEs communication is made simpler through closer links that exist between R&D and marketing. When undertaking an R&D project the level of newness [36] must be carefully considered. The conclusion is not to innovate too aggressively without market support and not to innovate too broadly but to stick to one technology. For an SME this is even more important due to a lack of resources. If there is more than one major technology opportunity, consider hiving it off from the existing SME and starting another. Another possibility is to simply sell the other technology opportunities. Chakrabarti [39] considered the scientific output of small and medium size firms in high technology industries. It was found that R&D expenditure correlates with annual sales rather than net income. Growing firms spends more money on R&D than stagnant firms do. R&D growth does not necessarily lead to higher scientific productivity. A steady funding level for R&D is important in determining a higher level of scientific output.

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Technology The natural extension of successful R&D activities is technology development. New technology developed is used to develop new products. Appropriate and innovative technology will therefore pave the way for appropriate and innovative product. To gain a better understanding of new product development attention should be paid to technology development and the management of relevant aspects. Aspects such as technology forecasting, technology development, the strategic planning of technology, technology innovation and various other influences on technology management were found. Managing technology includes forecasting and organizational adaptation. Dominant firms (larger corporations) may allow a minor firm to innovate technologically while it observes the results. When it has learnt enough to make a decision whether to adopt the new technology or not it can move in and once again become dominant. An SME on the other hand must therefore take more risks in its desire to grow through technology. Reisman, in his technology management review of the last forty years [42] comes to the conclusion that two future aspects are important. Mature companies will, in all likelihood, rely on smaller and medium enterprises for product or process innovation and foreign developers and producers (perspective from an USA viewpoint) will share more and more newly developed technology. If the USA perspective is taken as representative of larger business, then countries outside of the USA should see a growth in the number of SMEs, involved with technology development [42]. SMEs are often born out of an “overvaluing of technology” situation. It is the way in which this overvaluing is handled that puts the more successful operation apart from the rest. Ironically an SME can with much greater ease and less negative consequence interchange between research and development but often underestimates (through inexperience) manufacturing problems which is what gives birth to newly developed technology. In an SME where the technology manager and strategic planner is often the same person reliance on intuition can make up for the lack of education and training [48] because in-time evaluation of intuition takes place and adjustments can be made. There is no need for formal communication and interactive transfer of knowledge to be assessed, evaluated and modified if necessary. A technology strategy should focus on the support that R&D can render and not view R&D as a separate activity [49]. In an SME, focused on achieving technological development and product innovation, R&D is intrinsically used as a support tool until growth (in size) takes place and raises the issue of considering R&D as a separate function executed by newly appointed employees.

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For an SME to create maximum value–added work the new product portfolio cannot be large because an SME has limited human resources and valueadded work peaks at 70% [52] if an engineer is working on two projects at a time. New product development Considering new product development the following issues were be identified: • new product development process • management of the new product development process • new product development success factors, and • external influences and areas of cooperation. A summary of the literature [57, 58, 59, 60] indicates seven principal focus areas or phases for the new product development (NPD) process to be managed to achieve a successful result: • Strategic planning taking core capabilities and limitations into consideration as well as environmental issues • Idea generation recognizing needs and seeking the limits of technology to find solutions • Screening various options for feasibility through forming a formal product concept or concepts • Business analysis at which time the formal product concept or concepts are tested for commercial viability • Development and prototyping to establish technical specifications and provide product for testing purposes • Product testing and pre-production at which stage the development become the responsibility of the organization’s production facility • Production and marketing is the stage or period in a product’s life where it becomes in marketable and sales volume and targets become the motivation. In an SME human resources are normally limited to the extent that the same individual is responsible for more than one of the above stages or tasks. Where more than one task is allocated to the same individual the tendency would be to execute the tasks (stages) concurrently. This may speed up the process but at the same time information flow now gets limited to that individual. A surge of activity may then be followed by a frustrating period where no progress seems to take place, due to a lack of information flow. Factors such as these mentioned must be taken into account when selecting an appropriate process for the company. The order of execution of the stages seems logical. In a particular situation however it may be advantageous to change the order or even repeat some stages. In an SME this tendency is logistically easier to entertain than in a large corporation. Even so, it should be planned for and not be done on an ad hoc basis.

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Four actions are observed from the above-mentioned list: • Observe - company capabilities and limitations are taken into consideration (screened) as well as environmental issues while company strategy is considered. • Think – ideas are generated while idea screening and business analysis take place. • Integrate/inform – ideas are turned into concepts that in turn are developed to demonstration levels (those ideas that pass the idea screening process), tested and piloted. • Do – prototypes that prove successful (screened) are produced, commercialised and marketed. The natural technology development management approach followed in an SME resembles the concepts put forward by the authors mentioned. The most probable reason for all SMEs then not being successful is a lack of sufficient self-discipline and control (usually to be exercised by team members themselves) and to keep on doing what comes naturally. In an SME a sense of informality exists although a systematic method of identifying new product opportunities plays an important role. In successful high technology SMEs the screening of new product opportunities are rarely done on a financial basis and are often based on instinct. A better knowledge base and experience that is drawn from when making decisions that appears instinctive probably support the more successful efforts. It is important that all the stages of the development process be followed. No stage can be excluded but emphasis and specific conditions may change the importance and priority of the various stages from time to time. In an SME the NPD process may be followed less formally, making it possible to reduce turnaround time of some of the process steps without having a negative effect on the outcome according to Hise et al [62]. In larger organizations the decision to skip steps or shorten them, may take as long as simply executing it, leaving little or no possibility of reducing time to market or even introducing product improvements before launching. Pavia [66] found that sources of innovation in high technology firms include internal personal contacts, experimentation and R&D. External vendor contact and research papers are also used. The understanding of customer needs, thereby creating a customer pull effect, is regarded as important input by successful firms. The annual strategic plan and technological gate keeping also serve as important identification tools. The author suggested that even in SMEs systematic methods of identifying new product opportunities have an important place even though informal techniques are often used.

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2.8

Chapter 2

Conclusions

Several factors have been identified that may influence the composition of an alternative new product development process. These factors will be analysed in Chapter 4 to gain an improved perspective on the possible structure of such a process. It is however necessary to first discuss the characteristics of a high technology SME, its operating environment and its relationship to various other role players in the market place. The following chapter deals with such issues.

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Chapter 3

Chapter 3 Characteristics of a high technology small to medium enterprise and its operating environment In §2.5.4 external sources of information and knowledge that a firm can draw from were mentioned, indicating the fact that an SME today does not operate optimally in isolation. This chapter elaborates on the nature of an SME, considers the modern SME environment and discusses linkages and cooperation with other entities. 3.1

Characteristics of an SME – modern trends

Large corporations are continually being reduced in size. In the USA the Fortune 500 in 1984 constituted only 10% of the US economy [82]. This trend is being followed across the world. SMEs have come to stay. This is true even if they are multinational. The question is then what attributes SMEs possess that makes them successful [82]: • Single corporation size has been replaced by network size. Outsourcing today is commonplace. Although product development might have become difficult to do, if managed with proper care its parts can successfully be outsourced. • The power of a network is found in the importance of each node. All role players want to feel needed to deliver the best results. Pertaining to product development, this situation again could be conducive to great results, if managed correctly. Mismanagement could however result in a lack of clear ownership and thereby destroy a marketable product. • The single most important aspect of small is found not in its absoluteness but in its appropriateness. It is necessary to give careful thought to the critical mass of an intended development effort. • The communications revolution has put huge amounts of information at the disposal of the individual and SME. Apart from the ease with which the expert in a particular field can obtain relevant information, that same expert can access information in a useable form across disciplinary boundaries. • As business become more universal, paradoxically the enterprise acting with a tribal mindset is more likely to achieve the best development results fuelled by an unprecedented closeness to the market place provided market input is part of the development process. The summary given by Naisbitt of the characteristics of an SME is presented in the dynamic model proposed in Figure 3.1. Although SMEs have always existed and will always exist, this model describes how a large corporation can devolve to a set of SMEs forming a virtual enterprise (VE).

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LARGE CORPORATION

Chapter 3

A SBU

B

SBU

SME

SME

SME

C

SME

SME

INFORMATION LINK SBU - Strategic business unit SME - Small to medium enterprise

VIRTUAL ENTERPRISE

Figure 3.1 The evolution of a virtual enterprise [Own source]

A virtual enterprise is a temporary partnership of independent companies and/or individuals (suppliers of specific goods and services, customers) who are linked through modern telecommunications to exploit and profit from rapidly changing business opportunities. In a virtual enterprise, companies can share costs, skills, knowledge and access to specialized expertise, access to regional and global markets, with each partner supplying what it can do best - whether a product or a service. This enterprise is called "virtual" because it is composed of partners of core competence and has neither central office nor hierarchy or vertical integration. [83]. As large corporations (LC) become larger it becomes necessary to find ways to increase efficiency and competitiveness. One way to do this is to divide the LC in smaller strategic business units (SBUs). The evolutionary process does not necessarily stop at this stage due to a continual drive towards business efficiency. See Figure 3.1. Eventually unbundling leads to splitting the SBUs into independent organizations. The independent new organizations are SMEs. As the information and knowledge era takes precedence, SMEs today link themselves up through information links forming information networks. This new network can be regarded as a virtual enterprise.

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Chapter 3

In summary the evolution of a virtual enterprise follows the stages shown in Figure 3.1. Large corporations develop strategic business units (Figure 3.1 stage A) and then dismantle themselves to form small to medium enterprises (Figure 3.1 stage B). The same SMEs (and other) then group together to form virtual enterprises (Figure 3.1 stage C). The relevance of the aforementioned reasoning on the present study is limited to two significant issues: • An SME can be established today and achieve growth through becoming part of a virtual enterprise (VE). It is not necessary to envisage (and plan for) growth resulting in a large corporation with today’s networking opportunities. An SME can have the best of both worlds by entering larger markets through networking where and when appropriate, yet remain sufficiently agile to adapt to changes in the market place and technology advancement by simply changing it's network involvement. • When an SME considers getting involved with a VE through networking, careful consideration should be given to its choice of partners. It is important that participants in a VE share the same core abilities and technology. This study is not an attempt to investigate the nature of VEs in depth. A particular SME situation with regard to its business environment is studied to investigate the potential opportunities such an SME has in a modern day high technology environment to achieve improved technology and new product development management. The SME situation relevant to the present study is discussed in §3.2. In §3.3 the issue of core business and the impact due to various cooperation situations are discussed. 3.2

SME situation relevant to the current study

Consider the situation depicted in Figure 3.2. For the purposes of this discussion only technology management and new product development functions are relevant. The company involved in the present study is a SME in South Africa that forms part of a large USA corporation (LC). It can be classified as an internal SME (SMEi – SME internal, typically a strategic business unit or decentralized part of the operation in the present case) according to Figure 3.2. Product development for the company is managed through the LC. The SMEi obtains access to new developments only through the LC. Collaboration with other SMEs (SMEe – external SMEs) takes place only at LC level. This is shown in the first stage of Figure 3.2. Now consider the situation where an SMEi operates in a specific country or geographic location (South Africa in this case). In general LCs are adopting new and innovative globalized approaches to the creation and use of technology through networks of geographically dispersed R&D facilities [31]. However, if opportunities for development and product innovation are identified in the region where the SMEi operates through collaboration with

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SMEs (SMEe) located in the same region, it is postulated that better cooperation (and therefore development results) will be achieved in collaboration with these local SMEs if the SMEi and not the MNE manages the collaboration. This situation is shown in the second stage depicted in Figure 3.2 that evolves from the first stage through A. SMEe

SMEe LC

A

SMEi SMEe

LC

B

SMEi

LC

SMEe

SMEe SMEe SMEi SMEe SMEe

SMEe

LC - Large corporation SMEe - Small to mediumenterprise (external) SMEi - Small to medium enterprise (internal)

Figure 3.2 SME situation relevant to the present study [Own source]

A third stage, emanating from stage two through transition B is possible where the SMEi actually moves out of the LC and operates as an independent company from a product development and innovation operation to serve the local market in which it operates. The LC gains the control of the local market through its alliance with the SMEi and supports it to even greater levels of product development and. The present chapter aims to achieve this goal through: • reconsidering the operational (development and innovation) link between the LC and the SMEi and • determining the nature and impact of the local SMEi - SMEe relationship/s on the LC - SMEi relationship.

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The successful establishment of appropriate links depends on various aspects such as: • the business relationship between the LC and the SMEi must remain unaltered, • the LC global goals and strategic plan (which is also the same for the SMEi) must be adhered to, • the LC must sanction the newly established link, • development and innovation efforts should not be duplicated, • although any product development undertaken by the SMEi may initially be focused on the SMEi local market it should be done in such a manner that it could be considered for release into the global market at some future date, • successful communication (at a daily operational level) needs to be established between the LC and the SMEi, • core business, abilities and technology of the LC and SMEi must be protected and grown and • intellectual property rights should be retained and protected or secured where necessary 3.3

Core business and its impact as a result of cooperation

The core activities (business, technology and capabilities supporting a singular focus) of an organization are central to its success. It follows that its impact on decisions made regarding cooperation with other organizations will be sufficiently important to view and to model the dynamic interaction between organizations with respect to the organization core [5]. It is conceivable that decisions regarding cooperation can be made not considering the core business. This will inevitably lead to lesser success or even failure. A justifiable decision regarding core business, not immediately relevant to the existing core activities, could be to develop a new core business, related to the existing core activity. This section addresses the interaction and dynamics between organizations with respect to the technology management and product development issues. An appropriate definition methodology is developed. Consideration is given to the development process in a modern large organization or company. A dynamic model is discussed, illustrating typical problem areas with respect to optimal new product development. A possible solution is suggested, illustrating the relevance of the present work, which investigates the importance of an SME as a central focus to technology management and new product development. 3.3.1 Definitions To illustrate the relevant concepts, an organization is defined as a collection of activities [85] forming set ORG (Figure 3.3a).

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ORG

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ORG

ORG

SME CB

a

ORG

SME

b

c

TD d

ORG - Organization CB - Core business SME - Smal to medium enterprise TD - Technology development

Figure 3.3 Graphic definitions of an organization and its relevant components [Own source]

From a technology point of view, a specific activity in the organization can be viewed as very important. This is the core business (CB) of the organization. In large organizations more than one core business can be present. CB forms a subset of ORG (Figure 3.3b). A large corporation can also have an SME as a subset, established in a specific geographic location, pursuing its core business (Figure 3.3c). Within this SME technology development (TD) can also be viewed as a subset of the SME (Figure 3.3d) and if properly managed this TD will contribute to the ORG core technology development through the SME, benefiting from the local market interaction and technology and new product development. Within the context of this work the terms “large” and “small” do not take on absolute values but should be seen as relative. A possible method to determine the size of an organization from a technology management viewpoint is to determine the relation between ORG and CB. In a large organization CB will form a small subset of ORG (Figure 3.4a). The CB in a medium organization will form a larger subset of ORG (Figure 3.4b) while a small enterprise will have ORG and CB as the same set (Figure 3.4c). One other important definition to be included is that of the individual consultant or entrepreneur which can be considered as a point source (highly focused on a singular aspect) of contribution to technology development or product innovation (Figure 3.4d).

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ORG ORG CB

CB

CB

a

ORG

b

c

E

d

ORG - Organization CB - Core business SME - Smal to medium enterprise TD - Technology development E - Entrepreneur or consultant

Figure 3.4 The relative size of organizations [Own source]

3.3.2 Some reasons for cooperation between organizations To explain the reasons for cooperation the concepts of base, key and pacing technologies as defined by Little cited in [81] are used. A base technology is common to most industry participants and most products of a business. It is no longer critical to the basis of competition because it is widely available to all competitors. A key technology has the greatest impact on competitive performance at any particular time, as it may not be available to all competitors or participants in an industry. A pacing technology is a technology in its early stages of development but with a demonstrated potential for changing the basis of competition. Some - but not all - pacing technologies will become key technologies in the future. Similarly, some – but not all – key technologies will become base technologies. Standards and industry specifications are ultimately written around base technologies. Large corporations will not look for cooperation or seek partnerships involving base technologies but rather because there is a pacing technology emerging. An SME likewise, should not be involved with a base technology as large corporations are in control and will dictate the market, but rather focus on pacing technology, striving towards niche key technology development possibly in cooperation with other SMEs commanding different but relevant pacing technologies. Key technologies form the core differentiator for any business and should be closely guarded. It is therefore not wise for an SME to try and compete with the key technology of other businesses, especially large corporations.

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3.3.3 Relevance of the development process A development process consists of a number of steps [60, 81]. Within the boundaries of each step the situation is stable. Goals, people, infrastructure or location do not change much. The difficulty is in transferring a project from one stable situation to another. The larger the company, the more transfer points exist and the more pronounced the division between transfer points become. A large company may have such a large product development unit that one group of people cannot take a project or product all the way through to completion. New ideas may be generated by engineering investigations. Work in this phase creates diversion. A number of competing ideas are tried in the development and investigation phases. In the engineering phase the goal is to converge to an optimum solution. Finally, when a decision is needed to actually launch the new product, the necessary authority is usually found higher up the hierarchy where marketing and purchasing has an influence. Cooperation usually takes place at a particular stage of development. The relevant strengths or core abilities of the chosen partner (idea generation and investigation, developmental, manufacturing and supply etc.) may vary from stage to stage which could inevitably lead to a situation that a particular partner, suitable in one stage may not be suitable in another. 3.3.4 Dynamic model of cooperation As shown by Tomiura, cited in [81], an important condition that needs to be satisfied to achieve productive cooperation, is an understanding of the chosen partner’s technology. A meaningful choice of partner would be guided by an interest in such a partner’s core abilities and an understanding of one’s own core abilities. If cooperation between two organizations are considered with core ability or business being the focal point various situations can be envisaged. Refer to Figure 3.5. For the purpose of this discussion each of the organizations can be an SME, a LC or a consultant (individual). Of importance are the relative sizes of the two parties, and the relationship between their respective core businesses. When two organizations seek cooperation an intersection of core technologies depicted in Figure 3.5a would probably prove to yield the most productive mutual result provided that the intersection of the respective core technologies is of meaningful size. Note that each of the organizations retains a portion of its unique core business.

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b

a

c

d - ORG (ORGANIZATION) - CB (CORE BUSINESS)

- CBI (CORE BUS INESS INTERSECTION)

Figure 3.5 Cooperation between two organizations [Own source]

Figure 3.5b depicts a situation where there is a possible sufficient core technology intersection but either of the organizations can assimilate the total core business of the other if it so chooses. This situation can lead to an amalgamation or a take-over threat by either of the parties if the same longerterm goals are not shared, since no unique core business remains in either of the organizations. Figure 3.5c occurs when there is no or little core business intersection. Such cooperation will prove fruitless or inefficient, as there is little or no understanding of each other’s business core. For the purposes of this study Figure 3.5d is of special interest. One organization, being larger than the other sees a cooperation opportunity with a smaller organization. The cooperation will however engulf the business core of the smaller organization. Various disadvantages emanate from this otherwise potentially advantageous situation: • the larger organization may end up inheriting the total smaller organization, including assets and liabilities that it does not need or want, • the smaller organization may feel threatened and therefore not contribute to the fullest, • the smaller organization may not be able to support the eventual cooperation result to the same extent as the larger organization, creating an imbalance in ownership,

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both parties may decide to reduce the core technology intersection with an accompanied mutual loss of effectiveness of the smaller intersection or the larger organization may need more similar intersections of its core with other smaller organizations to meet its needs, strategic vision or longerterm goals with a threat to the smaller organization of becoming obsolete at some point.

The latter scenario is significant for larger organizations. It can make it very difficult to find the right organizations to cooperate with. Figure 3.6a illustrates the situation where a large organization may have different needs to fulfil a productive intersection with its core business when cooperating with smaller organizations. First partner - idea generation and conceptualization

MNE

Second partner - development

Third partner - production

a

MNE

SME

b

Figure 3.6 Cooperation between organizations of different size [Own source]

From a large corporation point of view the development process discussed in §3.3.3 can be particularly debilitating in choosing a partner or partners when pursuing pacing technology. As for the SME, although less of a problem when considering its own needs, involvement with organizations larger than itself, may leave the participating SME obsolete when it has served its purpose for the larger organization. A summary review of the literature (§2.5.1) indicates five to seven principle focus areas or phases for new product development (NPD). In a large organization the initial stages often takes place outside a particular core business activity in a high technology company or corporation. This core business delivers input to the planning stages, which involves other decisionmakers in the organization but during the following stages the original

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decision-makers may not participate actively. However when a decision to select an outside partner for purposes of cooperation needs to be made, it often has to be referred back to the original strategic planning decisionmakers (top management). This would require information flow and reasoning that can be of high technical content and motivation, which the top management is not familiar with and needs to be convinced of. The organization technology management and new product development strategy have a fundamental influence on such decisions as discussed in §2.1 and specifically in [9]. In [81] the last three stages are considered to illustrate the difficulties a large organization has in establishing cooperation and selecting partners. During the idea and concept generation phase (when a project is started), those working in advanced engineering or engineering investigations have a general knowledge of the potential offered by a new technology or technologies. The project leader initiates decisions regarding cooperation locally. His preferred choice will be the small entrepreneur selling his skills in a new technology where the large organization is weak. After convincing top management and selecting a partner, work is carried out in close cooperation. Rudimentary specifications are written under control of the project manager. At this point the project is transferred to engineering for further development, pilot production and testing. Notably the power to decide about cooperation is transferred as well. In engineering, interest in production facilities and capabilities emerge and the small entrepreneur is no longer considered a suitable partner. Engineering management looks for a company of reasonable size (it may even be a subsidiary) to handle manufacturing but not big enough to dominate the development work. Top management may again be involved in the final choice. Production considerations are important and detailed specifications are written and modified when new knowledge (especially production related) is generated. As the project grows or the new product becomes accepted, purchasing (and marketing) becomes more and more involved in the process. They too have their own preferred suppliers, not necessarily coinciding with those previously chosen on advice of the design-engineering department. Again, top management may be involved. People who know little about the new technology or the capability of various suppliers make decisions. When purchasing strategy comes into play, there is a tendency to pick large, reliable and well-known suppliers. The large supplier may have his own R&D resources. He may even suggest off-the-shelve product developed in-house in competition with the original development work undertaken in the previous stages. Management may see benefits in reduced specification writing and reduced risk in referring field problems to the large supplier for solutions. Consequently a mechanism of partner changing is established, as depicted in Figure 3.6a There may be no collective awareness of this process in the large organization. Rational decisions are made in different departments of the company and at different levels. However, each internal transfer of the project

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establishes new rules for choosing partners. The greater the size of the organization, the more probable is a change of partner after one of the internal project transfers. After each transfer the large organization suffers from the NIH-syndrome (not invented here), which is an additional problem added to the partner changing. Both internal and external know-how can diminish or disappear in the process. This model holds significant implications for the SME participating with a large organization. It is usually impossible for the SME to see through the cobweb of political games in the large company that transfers project authority to new groups. It is extremely difficult for the small company to judge if it will even be in the picture when actual production starts. The stagnant SME often has no alternative production or customer, which can compensate for the sudden loss of a large customer. Therefore it takes big risks. Figure 3.6b depicts a situation where original cooperation between the large organization and a particular SME has been severed. The more agile SME can rebuild its core through moving into another field as the larger organization now poses a threat. What was pacing technology in the SME originally may now have become key technology pursued vigorously by the large organization, making it difficult for the SME to compete. This situation will most likely not end up in a win-win result because: • the SME has to redirect its efforts perhaps through acquiring new employees carrying new pacing technology, • the LC may acquire SME expertise through transfer of people from the SME to the LC and • the LC may try to further its newly acquired key technology not yet matured with its own resources resulting in lesser success through lesser mobility. 3.3.5 Towards a solution The problem for the large organization is mainly a lack of awareness of the decision process. The described stepwise approach to new technology and product development is the result. The inherent delays, duplication of work and incumbent uncertainty need to be avoided in the presence of required new technology and product innovation to keep up with the competition. Johnson [81] suggests several solutions: • In-house resources can be established timely through hiring a suitable manager and giving him the resources to create a group covering the new technology. • An SME proficient in the new technology can be bought and its work redirected to suit the large organization. • A joint venture can be formed with an SME, which is in possession of the new technology.

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All the suggested solutions involve capital investment by the large organization and loss of agility of the original SME or carrier of the new pacing technology. An additional management burden is added to the core business, introducing new cultures into the (already) large organization. Time is lost in organizational architecture rebuilding to make up time in technology development. The large organization has to carry bigger financial risks for a pacing technology that may never become a key technology. Observing the results of the dynamic model, an alternative suggested solution is possible. Assume that the large organization already has independent subsidiaries operating as SMEs. If such a particular SME can be identified that is in a position to take charge of new product development and product innovation (either geographically or technologically) the large organization can effect more successful cooperation by empowering the SME to manage the process of cooperation and not just the development. The process is shown in Figure 3.7.

SMEi MNE

MNE – Multinational enterprise SMEi – Small to medium enterprise internal

Figure 3.7 Subsidiary SME cooperation with other SMEs [Own source]

The identified SME in control of core technology (either directly or through delegation) of the large organization is placed in a position where it can cooperate much more successfully with smaller SMEs of similar size. The dynamic model discussed shows how it is possible and why it is important to focus on core abilities and technology to achieve the establishment of an SME relevant to the present study, discussed in §3.2. 3.4

Conclusions

The impact of the nature and size of a high technology SME on technology and new product management were reviewed in this chapter. Aspects such as size, the dynamics of changing corporations and the core business of an organization as a driving force were addressed. The high technology SME operating environment was considered as well as the relationships that an SME has with other role players.

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In the following chapter an alternative new product development process is proposed, taking the above mentioned issues into consideration and also incorporating the information obtained from the literature survey, reported on in Chapter 2.

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Chapter 4 An alternative new product development process for a high technology small to medium enterprises The current study is aimed at improving the product development process in an SME associated with a large corporation that would be conducive to successful development with specific reference to solar photovoltaic water pumps. To justify a new approach to photovoltaic (PV) water pumping, culminating in a new product or range of product, it is necessary to structure the environment in which the thought and development process takes place. Relevant issues include: • the new product development environment, • the existing market and product survey, • idea generation and evolution, • new product definition, • product development, • new product testing and evaluation, • the commercialisation process and • the SME operating environment. In general many companies must address the high failure rate of new products [69,70]. Studies have shown [62] strong links between product success and implementing key steps in the new product development process. This is especially true of the technical design steps. It is therefore important that the relevant process steps be identified and understood. In this chapter conclusions based on the literature survey reported in chapter Chapter 2 are used as a basis to determine the best possible technology and new product development management methodology applicable to the SME situation under study. It is also necessary to understand and take into account the operating environment of said SME, studied in Chapter 3. The conclusions and structure developed in this chapter will then be applied in part 2 to the design and development of a new solar powered water pumping system to be marketed globally if local development prove successful. 4.1

The traditional product development process

The development of new products has to take place considering the market, the needs and limitations of the particular company, existing base technology and the strategic reasons for undertaking the new development. A new idea, although essentially good, cannot stand-alone and could prove to be disastrous. The key steps in the new product development process are well defined. Various authors come to the same conclusions regarding the principle steps although a different nomenclature may be used and priorities assigned [57,

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58, 59, 60]. Whether these key steps are directly applicable to the relevant SME or whether emphasis shift applies, or whether certain steps are not appropriate and needs to be replaced/omitted, basic knowledge of these key steps [57] is a good starting point. See Figure 4.1.

Strategy

Idea generation

Screening

Business analysis

Development

Testing

Commercialization

Figure 4.1 Key steps in the generic NPD process. [Own source]

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It is important to note that each step or stage is divided from the other through a transfer process. This transfer process may include: • change of people, • change of discipline, • change of venue, • change of responsibility and/or • change of budget. Usually an orderly transfer from one stage to the next would need some form of auditing. The stage-gate process [142] is typical of such a process. In the following paragraphs the various steps are discussed [57, 58, 59, 60]. It should be noted that the commercialization phase contains aspects of after sales support and product disposal that the origination company is responsible for. These aspects fall outside the scope of this work. 4.1.1 New product strategy Any successful company requires a strategic plan. New product development should be included in such a plan. Before a new product or range of products can be developed successfully, the strategic reasons for doing so must be investigated. Such reasons should form the basis that defines an organization’s direction and be in support thereof. New products can be a source of competitive advantage and can provide opportunities for reinforcing strategic direction. It can enhance corporate image. New products can provide long-term financial return on investment and capitalize on R&D spending while also utilizing production and operation resources and influence the human resources of a company, providing more job opportunities either directly or indirectly. Less tangible influences that new products can have include an organization’s commitment to social responsibility and the role the organization plays in industry. Although the strategic reasons mentioned are not the only reasons to engage in new product development, the list should be kept in mind throughout the development process A comprehensive new product strategy helps to define the importance of the new development to the organization. It forms the basis for defining clear goals for the new product or range of product and provides preliminary criteria against which new product decisions can be made.

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4.1.2 Idea generation This first phase in the development of a new product is not based on idea generation at random but rather the end result of a thorough market and technology survey. New concepts are formed based on the information gathered and experience obtained from the market place. Eventually new ideas are sifted and reworked until a new product definition is formulated. Concepts are turned into designs for evaluation purposes The mortality of new products is high. To achieve growth objectives, organizations need to generate a sufficient flow of new ideas. 4.1.3 Screening Concepts and prototype designs are evaluated and screened to reject possible market failures or high-risk options. Not all ideas are feasible. At first it might seem trivial to ignore the “bad” ideas but care should be taken that premature or incomplete ideas (with good future potential) are not lost. 4.1.4 Business analysis After screening and evaluation, the ideas are submitted to a business analysis that evaluates the remaining product concepts for estimated sales, costs, profitability, marketability and other financial indicators. 4.1.5 Development If a new product idea meets business analysis criteria, it enters development. This step may include R&D, engineering, and other activities to develop prototypes and operational products. Because these activities often require heavy financial commitment, the business analysis step is all the more important. 4.1.6 Testing Ultimately, the product is submitted to testing, such as use testing, various forms of market testing, and other procedures that will facilitate measuring market response to the new product. Prototypes are tested using alpha (in house), beta (field trials) and gamma (standards and accreditation) tests.

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4.1.7 Commercialisation Finally, commercialisation involves the launch strategy for the new product, as defined by the target market segment, the marketing program, and launch timing. At specific steps in the process (such as screening, business analysis, and testing), decisions can be made on whether or not to go ahead with the project. These go/no-go decisions fulfil management's role of imparting some sort of discipline to the process. In an SME this area of management could be vitally different from large corporations. A single individual could be responsible for the complete spectrum of decision-making. The state-of-the-art process described above will be used as a basis to develop an appropriate set of procedures applicable to the SME under study. In order to do so, the environment of the relevant SME should be considered. Chapter 3 elaborated on this subject. 4.2

Characteristics of a high technology small to medium enterprise

Chapter 3 elaborates on the characteristics of a high technology small to medium enterprise with specific reference to its operating environment. In this section specific internal characteristics of a high technology SME are discussed. Two terms are used in the description of the enterprise under study. In this paragraph the importance of these concepts with respect to the present work is highlighted. The concept high technology is in many ways self-explanatory. It refers especially to sophisticated industrial systems and equipment in the field of electronics [1]. High technology for the present refers to sophisticated systems with the possibility of creating: • uncertainty, • paradigm shift thinking and innovation, • new product and process technology and • new markets. A small to medium enterprise differs from a large or multinational enterprise for the purposes of this study as follows: The large company or enterprise has such a large product development unit that a new product to be developed cannot be taken all the way through to completion by one group of people while in the small to medium enterprise case it can. In absolute terms a small to medium enterprise in the European context can be identified as having less than 250 employees, a turnover of less than Є40M and less than 25% outside shareholding [94].

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Chapter 4

Specific issues involved in new product development in a small and medium enterprise

In this section the limitations as well as the unique assets in support of new product development that a typical SME faces are considered. A new product development process suitable for SMEs is suggested. This process is used in the following chapters to guide the development of a solar powered water pumping system. Studies done on small entrepreneurial high-technology firms [66] have resulted in interesting information. Said companies: • "Rely on informal techniques to generate new product ideas, with heavy reliance on input from customers." • "Often develop new products to solve problems articulated by their customers." • Use "customer acceptance and market potential as a more important screening criteria than strict financial hurdles". • Use effectively "…the annual strategic plan as a new product identification tool, environmental scanning, and a database of customers suggestions may provide the entrepreneurial firm with an extra competitive advantage to identify feasible new products that meet its customer's needs" and • The educational background of decision-makers has little impact on the stages of the new product development process studied. In studying organizations Vermette [86] found that relationship based organizations outperform measurement-based organizations. Measurementbased organizations rely on measuring performance against set performance indicators. Relationship based organizations foster strong relationships between different disciplines, between suppliers and buyers and between joint R&D partners. This is typical of an SME through personal contact at various levels. It is necessary to understand the limitations, needs and special attributes of the SME regarding product development if an appropriate NPD process for an SME is to be developed. 4.3.1 Small to medium enterprise limitations An SME is faced with limitations regarding new product development (NPD) when compared with a large organization. Such a comparison aids the understanding of the SME situation and leads to a better understanding of options that the SME should consider to further successful management of NPD. It would otherwise be too easy (and incorrect) to come up with a wish list of NPD needs. Different SME sizes, structures and operating conditions will influence both needs and limitations. Although a generalization of the NPD process for SMEs would not be directly applicable to all situations the study seeks common ground to serve as a guide.

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Limitations include financial issues, human resource issues, strategic planning and project management, the threat that globalisation brings, restrictions when cooperating with other SMEs and the difficulties encountered in developing countries. 4.3.1.1

Financial issues

The financial issues regarding development of product and technology, which an SME is presented with, depends on where the SME is in its growth process. A new independent, technology based SME usually requires a large percentage of funds employed to support technology and product development. A young SME (less than five years in existence) has difficulty in obtaining financial support unless the entrepreneur makes (significant) sacrifices [Appendix G]. The entrepreneur can make personal funds available, which results in a growing loan account for the SME. Usually only small development efforts can be supported in this way as the entrepreneur is also at the beginning of his/her personal financial growth. The directors (owners) of the SME may opt for a salary sacrifice to fund development without losing ownership or control over the new technology. Personal sacrifice and commitment are required. If the technology under consideration is a pacing technology that can become attractive to industry at large, this approach may produce large returns in the medium to longer term. It has been shown that an SME can more successfully cooperate with SMEs of similar size. Such cooperation could support development funding as the financial burden can now be shared. From a financial point of view cooperation rarely succeeds if the production and marketing of the product is not also considered at the outset. Development is a burden while production and marketing result in income. A sharing in the longer-term production and sales initiative should support the incentive for a cooperation partner to participate in development. Government grants are available but limited for the new SME with little or no track record. Collateral to support surety is often required. Grant schemes usually require a similar investment than the grant itself from the SME. An SME asset base may initially be small. One valuable asset that it possesses is the new technology that is under development (potential pacing technology). When faced with a lack of funds to further or complete a development it may consider selling off some of its ownership in the new technology. Potential new investors should share the same long-term views. Management control of the SME should be retained (in the interest of completing the development). Involving investors at the strategic planning stages can be a viable source of obtaining funds. Often this is however not the case. The SME ends up not being able to complete a product development project and is forced to

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sacrifice ownership to obtain funds for completion of the development. This situation occurs due to a lack of strategic planning discipline and management resource. 4.3.1.2

Strategic planning

Where an SME is faced with limited resources, this should be considered during the strategic planning stage. Sustained development should be planned for. The SME should attempt to complete the development in the planned time with the financial support available. This would ensure retention of control and ownership of the developed technology or product. If market demands change and call for a change in direction or earlier completion, the SME could find itself pressurized to invest more funds or human resources than planned for. It may not be able to satisfy the new needs or direction change resulting in a loss of control or undesired alteration of the development program in the short term. Although difficult the SME may choose to stick to the original strategic plan and goals. This option is only viable if the SME devised a sound strategic plan taking as many circumstantial influences and market dynamics into consideration as possible. Only then will the SME be able to continue with confidence and keep on pursuing its goals without creating uncertainty and reducing the security of the development environment. 4.3.1.3

Human resource issues

By its very nature an SME may have limited human resources available. The same individual (entrepreneur) is often responsible for various aspects of the business. Strategic planning, financial evaluations and decisions, marketing and sales, execution of tasks and operational management and product development are some of the responsibilities that must be executed with diligence to ensure the business success of an SME. Objectivity can be lost, over-extension of the individual is a real threat and defocusing can take place. Any product development effort (the original goal of the entrepreneur) can become diluted very quickly, an inbreeding of ideas starts to take place and the development is soon guided by the market needs, financial restrictions and personal time available from the entrepreneur. Cooperation between SMEs is a viable solution to the problem. Different entrepreneurs, although continuing with their own normal daily business, can share responsibilities for the development task and in doing so still achieve successful development.

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Chapter 4

Project management

In large organizations project management serves as a very important communications tool due to the large number of persons involved with development. In an SME the communications issue is less relevant as fewer people are involved. It is common to have one or two people responsible for product development. This could however result in insufficient attention being paid to the other aspect of project management. 4.3.1.5

The impact of globalisation

Globalisation is often thought of as a process in which only large organizations can participate. This may have been the case in the past. With the new information era and networking possibilities SMEs can today also participate in the globalisation process. The added advantage that an SME has is the ability (and agility) to participate and plan globally but act locally in its own market and influence sphere. Large organizations realize this and are increasingly seeking cooperation with SMEs at local level to strengthen their organizations. To achieve better results large organizations should consider the formation (or hiving off of a business unit) of an SME that can cooperate with other SMEs in the same geographical region. 4.3.1.6

Difficulties encountered in developing countries

SMEs invariably need support especially during the earlier stages of their growth. Various authors discuss the forming of new SMEs through spinning off companies from R&D organizations [16], through enterprise development centres [17] and the incubator concept [18]. In developing countries the mechanisms mentioned are not common and SME support very often is limited to the single entrepreneur’s financial ability to backup any support sought. 4.3.2 Unique SME assets that support new product development If an SME was faced only with limitations regarding product development and innovation the recorded successes of SME in this field would not make sense. Pavia [66] found that SMEs often rely on informal techniques to generate new ideas with heavy reliance on input from customers while using customer acceptance and market potential as more important screening criteria than strict financial hurdles. The author found that SMEs used the annual strategic plan (where it exists), environmental scanning and a database of customer suggestions effectively as a new product identification tool.

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Informal techniques to generate innovative new product ideas

A new concept can be generated “instantly” and permeate through an SME in less time than would be the case for a large organization due to the less formal environment. In an SME individuals with an active market experience are also responsible for innovation and product development. Any new idea or concept can be tested immediately with colleagues at the point of inception. Sources of ideas and product can vary almost instantaneously and emphasis changed with short notice. Word of mouth may be considered important and the very next day input obtained from state tenders could replace it. The SME must guard against informal techniques becoming ad hoc techniques. Using an informal approach still requires a structured plan to support it. 4.3.2.2

Close co-operation with the market place

An SME invariably has personal contact with customers in the market. This situation creates opportunities to listen to people and more clearly understand needs. Needs can be verbalized in a technical manner and through persistent communication the customer’s needs can be refined to feasible potential solutions acceptable to the customer. 4.3.2.3

The customer as new idea referee

It is less complicated for an SME to expose a selected customer to a demonstration prototype to do concept testing. The innovator is often the same person as the strategic decision-maker and risk taker. Such an individual can decide on the risk factor associated with exposing new pacing technology prematurely and does not have to wait to obtain permission, as would be the case in a large organization. 4.3.2.4

Reduced evaluation and decision time

A single individual or small group of people is responsible for the ideas, concepts, screening and prototyping activities in an SME. When the same group is also responsible for customer supply and support, personal communication with customers make it possible (and attractive) to draw customers into the evaluation (screening) process. The direct communication links that exist make it possible to reduce evaluation and decision making time as well as enhancing the validity of decisions, as the more objective customer is part of the process. In large organizations special effort has to be made to communicate with potential customers and solicit response. The SME often experiences this process as a natural extension of the development activity. It is important that external communication be managed responsibly to reduce the risk of leaking premature information but ultimately the responsibility is again vested in the same decision maker or decision making group, reducing turn-around time.

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What is normally a sequential process in a large organization, becomes a concurrent process with potential reduces execution time. 4.4

The development of the proposed alternative new product development process for a high technology small and medium enterprise The more conventional process followed by larger organizations (and for reasons that are valid and appropriate for these organizations) was mentioned in §4.1. Reports in the literature also allude to how and why the various steps are implemented or not implemented [63] and what results (success or failure) are obtained [62]. Accelerated development time [65], concurrent tasks [76] and the way in which core capabilities are treated [68], serve as a starting point to determine the character and format of a more appropriate process for NPD and product innovation, applicable to independent SMEs and SME associated with large organizations. Such a process is developed in this section and reasons are given for its validity. In part 2 this process is applied to the development of a photovoltaic powered water pumping system. The proposed process is developed using four phases. Phase 1 considers the rather theoretical generic NPD process model depicted in Figure 4.1 and focuses on making the process more effective. Phase 2 deals with the interdependence between the various stages. Phase 3 addresses the nature of the interaction between the various elements of the model. In all cases the proposed new product development model is based on specific hypotheses. During phase 4 a work breakdown structure is established that forms a functional process, based on the proposed new product development process. 4.4.1 Phase 1 – Making the traditional process more effective Large volumes of information are available, suggesting various ways and methodologies of implementing the traditional steps or stages in NPD [57, 57, 59, 60]. The SME, by nature of its limited human resources and task sharing amongst people rarely, if ever can invest the time to follow the detailed execution of the process. Attempts to pedantically follow these guidelines often result in frustration, as it does not fit into the natural capabilities of an SME. Phase 1 results in a simplification of the traditional process applicable to large organizations. During this phase: • the informal nature of an SME should not be contested - for fear of failure an innovative development project can be born dead if it is forcibly cast in a rigid procedure with seemingly sound checks and balances. This situation comes about when various team players try to safeguard themselves by not taking collective responsibility for the success of the development. It does mean however that mutual trust exists and that

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•

•

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different team members at least share some common knowledge of the business administration, operations and core technology of the SME. an "over-the-wall" approach should be prevented - limited human resources (relative to a large organization) make it impractical to define specific tasks or responsibilities to individuals without overlap. In an SME task boundaries become blurred. Accept it and use it to the advantage of the development process. simplification does not mean skipping stages in the process. -the erosion of boundaries between the various development steps does not mean the elimination of some of the stages. It is the way in which the different activities are managed and executed that makes the difference. a technology or product development budget is included in the yearly strategic plan – the flexibility and agility of an SME can create loss of focus and effectiveness if jumping from one incomplete product to the next is allowed. What should be a valuable asset to the SME, can turn out to be its downfall. The influence of close market contact is often to blame for this problem. Continued suggestions for “product improvement” to achieve the faultless “market winner” has to be contained to obtain a base specification which can be pursued to completion. A brilliant idea or set of ideas cannot generate an income – it takes a complete saleable product to achieve sales.

Several actions can be identified that form the basis of the reasoning behind the development of the proposed NPD process for high technology SMEs during phase 1.These actions are stated as hypotheses to be tested in Chapter 5. H1

The new product development process in an SME can be simplified by integrating the idea or concept generation stage with the strategic planning stage.

The idea or concept generation effort should be seen as part of a high technology SME’s strategic plan. This situation is found in an SME where new ideas in any case form a fundamental part of the company’s strategic thinking and motivation for its existence. Recognizing the -as yet informal new ideas at the outset and making provision for it in the strategic plan can construct a more focused and executable plan. Vague statements such as “…introducing new technology…” should be avoided. Include goals that already contain technical content and indicate possible research direction. It does after all already exist in the minds of the SME champions with a technical inclination. In doing so, a more productive environmental scanning process can be followed to avoid duplication through first establishing a general strategy format that will be filled in at a later stage. Boundaries (establishment of financial, resource, technology and other limitations) can be defined more realistically. H2

The new product development process in an SME can be simplified by integrating the business analysis stage with the idea or concept generation and screening stages.

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Business and technology issues are integrated and not treated as separate efforts. The conceptualisation, screening and financial analysis of new ideas are integrated to achieve concurrent action, resulting in commercially viable concepts that get to the market sooner. In an SME this situation is possible due to either the same individuals being responsible for all steps or close contact existing between the responsible individuals. In larger organizations it is not uncommon for financial decision makers to wait for final tested prototypes before a decision can be reached. This happens because a lack of technical knowledge and/or trust in fellow co-workers exists. Such a situation is often avoided in an SME because the same individual/s are responsible for both financial and technical decisions. H3

The new product development process in a high technology SME can be simplified and made more effective by involving external stakeholders such as suppliers during an integrated development, testing and business evaluation process.

During the development and testing of a potential new product in an SME the process can be accelerated and executed with more predictable positive results if the development and testing of such a product is integrated. Integration at this level and stage ensures the shortest possible feedback time and reaction to any corrective action and redesign necessary. This is possible because the individual responsible for the development and the testing is often the same person or department in the organization. At the same time a close relationship exists with suppliers (personal contact) that can be of great advantage if exploited by involving the suppliers or suppliers. The buyer or buying function in an SME can also be involved at the earliest possible stage, allowing maximum continuity for purposes of procurement once the development has been completed satisfactorily. By involving the suppliers of components and technology (to be used during the new product development process) the designer makes use of the latest available technology and also prevents the inclusion of near term obsolete components in the new product design. Preventing isolated development and testing in this way can prevent rework and redesign requiring significant modification. Early review of cost considerations, and if necessary any reassessment of the product is also possible. If the processes are staggered, feedback from tests and any business review impact only at a later stage, making corrective action more difficult and costly. H4

The new product development process in a high technology SME can be simplified and made more effective by involving external stakeholders such as customers during an integrated testing and commercialisation process.

Although external stakeholders such as customers, users and distribution networks need to be included in the initial new product conceptualisation phase, such stakeholders are often forgotten during the final testing and

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commercialisation stages. An SME has the agility to prevent the negative impact of such a practice by integrating the final testing and commercialisation stages and also involving external stakeholders at this stage. Inappropriate packaging and incorrect pricing for example can be devastating even though the envisaged new product performance is acceptable. An SME that is primarily a producer not supplying the end-user directly should consider bulk packaging and not individual packaging. In such a case the SME should focus on the direct customer. The particular SME’s customer may be a distributor or original equipment manufacturer (OEM) with different needs than the enduser. The distributor wants to sell the product while the user wants to use it. Pricing may therefore have to make provision for a trader (volume discount should be considered) to effectively distribute the product if the SME has limited sales and distribution capability. When the four hypotheses mentioned are followed in a typical SME environment with limited resources and sharing various tasks the conventional new product development process evolves into a proposed simplified new product development process depicted in Figure 4.2. It is probable that this simplification process occurs naturally in an SME. The hypotheses will be tested in chapter Chapter 5 through a limited industry survey to determine the validity thereof. The proposed new product development process consists of the following stages: • Plan – During this stage the new product environment is scanned. Customers, needs, competitors, technology etc. are investigated. Scenarios are constructed and opportunities are matched with technological capabilities. Next, boundary conditions are determined and preliminary specifications are set. Resource, technological and financial limitations are considered. • Conceptualize – Innovative new ideas are generated. Various tools, methods and motivators are used. Situational, group and individual inputs are considered. The screening process follows. In fact the screening process is executed concurrently with the idea generation process. The business analysis is also carried out, resulting in a feasible innovative new concept. Note that in an SME either the same individual or the same department within an SME often concludes these activities. • Develop – Selected concepts are breadboarded (in the case of electronics) or models are built and the functional aspects verified and demonstrated where possible. The engineering of a prototype or prototypes follows the breadboard process. The prototype/s is/are used to demonstrate functional and cost aspects. They also serve to develop a formal base-line specification for the envisaged product. The next step is the making of production prototypes. These prototypes can be used to construct preliminary bills of material (PBOM), design production and test fixtures and do preliminary field trial testing. Throughout the development stage testing takes place. Testing needs differ as the development progresses and should be adapted accordingly.

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Traditional n ew prod uct develop ment process

Hypoth esis

Chapter 4

Proposed new pro duct develo pment process

Strategy H1 Integrate idea generation and strategic planning

Plan Scan environment Determine boundaries Compile strategic planning

H2 Integrate business analysis, concept screening and new idea generation

Conceptualize Generate innovative ideas Screen new ideas Compile business analysis

H3 Integrate testing, development and business analysis and involve external stakeholders

Develop Breadboard design Engineer prototypes Make production prototypes

H4 Integrate testingand commercialization and involve external stakeholders

Implement Generate PBOM Set up production Commercialize

Idea generation

Screening

Business analysis

Development

Testing

Commercialization n p d p 1 . c fl

Figure 4.2 Proposed new product development process for a small to medium enterprise – phase 1 [Own source]

•

Implement – The implementation process starts off by the completion of a thorough preliminary bill of material (PBOM). This document serves as a

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production roll-out plan and dictates procurement, construction and timing activities. Production is set up. Time, resources, area and equipment are dedicated to production. Commercialization follows through the marketing roll-out plan. 4.4.2 Phase 2 – Identification of task interdependence Previously the interconnectivity between the various stages of the NPD process was neglected. Considering such relationships it can at best be described as chaotic. If repetition and hierarchy are ignored, the result can be similar to Figure 4.3. Simple linear connections (output and input) are indicated. Influence on the process and especially on the linkages is brought about by bottlenecks, constraints and enabling factors [87] that all play a prominent part on the process execution from time to time.

E n a bl in g fa c t o rs Co mm ercializatio n

Idea Gen eratio n

Screening

B o tt le n e c ks Te s t i n g

C o n st r a in t s

Strateg y

Business an alysis De velo p me nt np d p 3 . cf l

Figure 4.3 The interaction between the various stages of a conventional new product development process showing some of the relevant aspect [Adapted from 87]

Some authors compare the process to a biological system citing qualities such as integration, communication, flexibility and adaptation [88]. It is perhaps not unexpected then that the less measurable factors in the process

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such as knowledge of the customer and having a feel for changes in the marketplace seem to have more of an impact on product development success than tools and techniques such as quality function deployment (QFD), design reviews, or computer driven rapid prototyping tools (simulations etc). Some of the more formal tools are in fact contra-indicated [88]. Emerging systems such as the process of development require many decisions at all levels all the time [87]. If the proposed process is considered many of the inputs and outputs between stages (Figure 4.2) disappear due to the fact that they are absorbed in new stage definitions. It does not mean that such activities (communication, transfer of knowledge and information, test results, market and operational inputs etc) do not need to take place anymore. It simply means that such activities are now executed with near zero time delay. As in phase 1, several inputs/actions can be identified that support the reasoning leading to the proposed new product development process more appropriate for SMEs and in fact found to be an intrinsic part of successful high technology SMEs. Phase 2 considers the interconnectivity between various activities within the new product development process proposed. H5

In the new product development process for an SME it is difficult to prioritize the stages of development, especially after the process has started.

During the development of the proposed new product development process for SMEs an explicative modelling process is used to convey ideas, hypotheses and concepts. It is a natural tendency to simplify a system or process when attempting to develop an explicative model. Simplifying the interdependency between various stages reduces a system or process to its most basic embodiment. While useful for purposes of understanding the different components of the system or process, it results in a static representation. Since logic analysis demand cause and effect, priority needs to be allocated. With an evolving process such as new product development, task priority may change all the time. To define a start and stop (entry and exit) becomes difficult. This would indicate a circular nature and is illustrated in Figure 4.4. H6

Because of the difficulty of identifying priority from time to time during the new product development process, there can be only one driver in the more successful development teams.

Successful product development is often indicated where a strong product champion is present. Such a person can normally contain the new product development (NPD) process by serving an arbitration function and providing the glue to maintain cohesion between the various tasks that must be performed. It does not have to be the design engineer or marketing manager but is usually a significant team player in the NPD process. The nature of this function in the NPD process is one of integration and support. Such a champion could be called the "Integrated Development and Engineering

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Support" manager. In this sense the term "engineering" is applied in a broad sense and should be interpreted as "problem identifier and solution provider". The IDES manager treats all activities with the same level of importance. No distinction is made between different levels of importance and also between different sizes of the various activities. (See Figure 4.4) H7

A cohesive new product development team in a small to medium enterprise experiences the same externalities and recognizes such externalities as opportunities and not threats.

If a process is made up of various stages or elements that function properly as a whole, all elements will be influenced in a similar manner by any externality. The complete process will be contained by such externalities. As soon as external influences threaten a dysfunctional team effort, various elements start to blame each other for non-performance or failure. Normally this is the case when an external influence was not anticipated in the initial stages of the project and the team was not assembled to handle such external influences. A cohesive process team can counter such late entries.

Plan Scan environment Determine boundaries Compile strategic plan

Implement Generate PBOM Set up production Commercialize Constraints

IDES manager Develop Breadboard design Engineer prototypes Make production prototypes

Bottlenecks

Enabling factors

Conceptualize Generate new ideas Screen new ideas Do business analysis

Input/Output

npdp4.cfl

Figure 4.4 Proposed new product development process for small to medium enterprises – phase 2 [Own source]

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4.4.3 Phase 3 – interaction between the various elements The last phase in the evolution of the proposed new product development (NPD) process appropriate for SMEs considers the nature of the interaction between the various elements. Huizenga [90], in an article on product development says that "A successful product design depends on the entire organization communicating and working together throughout the design process", but fails to identify the various forms and types of communication in the process flow diagram. In this phase of the development of the proposed NPD process (Figure 4.5) two types of communication are identified to support successful new product development. H8

Control communication between the various elements coordinated by and through the IDES manager is vital for coherence between the various elements of the model.

In an SME the centralization of communication is inherent to the size and number of people involved. In a large organization centralized communication may not come naturally. Although communication seems to be such an obvious part of teamwork, it is rarely specified in NPD models. AN SME, more so than a large organization probably makes better use of the seemingly ad hoc nature of the communication that all elements of the model experience with respect to the IDES manager. The non-linear nature (impact that later results have on earlier decisions' validity) of the NPD process introduced through such centralized communication can at times prove difficult to manage in large organizations following a stage-gate process and may even be contra-indicated. [88] H9

Product and process technology feedback is probably the most important attribute of any successful new product development process in a small to medium enterprise.

Cross-functional teamwork is advocated widely today. [95] This is the case mainly due to the now accepted importance of feedback (and other areas of communication). Feedback introduces yet another potential element of nonlinearity. Product technology feedback is encountered in the early stages of development. During this process conceptualized ideas and potential product versions are evaluated against the initial needs analysis, environmental conditions and envisaged strategy. In an SME size and centralized management will again favour this type of feedback, especially when the feedback indicates the need to make changes or adjustments to the idea generation and conceptualization process. In larger organizations such feedback can become too costly and may be counterproductive. Indications are that three-way communication may be less productive than two-way communication [96]. Once a specific product configuration has passed the initial screening and evaluation process, a pilot production phase is entered. During this period of a

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product's developmental cycle, consideration needs to be given to the company's production capabilities. Such capabilities include all resources. This is especially important where radical developments are considered which may challenge the company's existing manufacturing capability. Interacting with all aspects of the operational side of the business provides process and manufacturing technology feedback. The latter may indicate changes to the design to include more cost effective production possibilities, resulting in a more profitable product. While established product launched into the market may provide feedback that would indicate the need for new product family models, the initial launch period (beta period) of a new product may provide feedback that indicate advantageous product improvements that are possible to implement, prior to freezing the manufacturing prototype. The phrase "make a little, sell a little" is especially valuable to obtain useful feedback from the production process [89]. Figure 4.5 shows the complete evolution of the proposed new product development process based on the traditional process developed for larger corporations (typically Fortune 500 companies in the USA). The communication and feedback interfaces are indicated in Figure 4.5. This explicative model proposed will be used as a basis to develop a functional process in the next section. 4.5

Functional process

In §4.4 a model was developed for a NPD process appropriate for an SME. The nature of the model is explicative and serves as a basis for the implementation of a detailed and functional NPD process. A NPD process can be viewed as a project management activity. As such, the elaborate discipline and all the management tools of the project management environment are available to the NPD officer (IDES manager). 4.5.1 Project management process The Project Management Institute (USA) Standards Committee has published a document appropriately named "A guide to the project management body of knowledge" [91]. In addition, the Project Management Institute (PMI) published an exposure draft version of "Project Management Institute Practice Standard for Work Breakdown Structures" [92] explaining the best practice in structuring a work breakdown structure (WBS) for managing a project such as developing a new product.

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Plan Scan environment Determine boundaries Compile strategic plan

Implement Generate PBOM Set up production Commercialize Constraints

IDES manager Develop Breadboard design Engineer prototypes Make production prototypes

Bottlenecks

Enabling factors

Conceptualize Generate new ideas Screen new ideas Do business analysis

Input/Output

Control communication: Reports Budgets Plans Screening Policies Post mortem

Product and process technology feedback: Development feedback Manufacturing feedback npdp6.cfl

Figure 4.5 Proposed New Product Development Process for SMEs – phase 3 [Own source]

The proposed new product development process (Figure 4.5) can be mapped onto a more appropriate format allowing implementation of project management principles. Project life cycles or processes depend on the nature of the project. This is illustrated in [91]. An example given for software development contains typical elements of the requirements needed to implement the proposed new product development process. Primarily the hypotheses stated in phase 3 of the proposed new process development serve as guidelines to conceptualise the project management process shown Figure 4.6. Three "forces" drive the applicable project management process. A discussion follows. IDES manager – the project or product development officer (Integrated Development and Engineering Support manager) forms the hub of the process and is responsible for the management of the process through

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regular planning and evaluation. Planning and evaluation are often regarded as steps in a process. The proposed new product development process relies on continuous planning (also revising plans) and evaluation of all activities and tasks to provide focus. This "force" gives rise to the next hypothesis. H10

The project or product development officer (Integrated Development and Engineering Support manager) forms the hub of the process and is responsible for the management of the process through regular planning and evaluation

Radial phase focus – the four basic stages identified (plan, conceptualize, develop and commercialize) are maintained to retain focus on the various components of the new product development process without creating a "pass over the wall" situation, which leads to the following hypothesis. H11

The four basic stages identified (plan, conceptualize, develop and commercialize) are maintained to retain focus on the various components of the new product development process. IMPLEMENT

PLAN

Produce, sell and feedback

n

pi le st gi c pl an

Do

Evaluate

te

Observe

t

IDES manager

n an me Sc o n r vi

Plan

e in s m ie er a r et nd u bo

te ra e M en O G PB

d ar bo ns a d ig r re es ee es B n d p gi ty on ti En t o o uc s pr od pe pr ty e to ak pr o

M

DEVELOP

ra

od

io

D

up

pr

t uc

en

t Se

e

om

m

c

iz

C

C

om

er

l ia

te ra ive as e t is de en va as i ys G no e l w a in id n e an n s e s re ne c i S s bu e l pi m o C

CONCEPTUALIZE npdp07.cfl

Figure 4.6 Project Management Process mapped onto the proposed new product development process [Own source]

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Spiralling progress – normally the planning (or any other) phase will be "completed" before the next phase is entered and so on. This does not happen in an SME where communication and awareness of all phases are shared continually due to the interdisciplinary or multidisciplinary nature of the structure and resources of an SME. Consequently focus shifts continually from phase to phase during the process, suggesting the next hypothesis. H12

Communication and awareness of all phases are shared continually due to the interdisciplinary or multidisciplinary nature of the structure and resources of a small to medium enterprise. Consequently focus shifts continually from phase to phase during the process resulting in a "spiral" process.

4.5.2 Work breakdown structure A work breakdown structure (WBS) is used to define and manage the project's (new product development in this case) work scope. It provides a "family tree of the work of the project. The number of levels can vary from two to five, depending on the complexity and control required for the specific new product to be developed [93]. It is important to identify each element through a concise numbering process to make identification possible. Basic principles guide the compilation of a suitable WBS [92]: • identify the final product of the project – a successful new product in this case, • identify the major deliverables – development plan, concept, prototype and commercial product in this case, • incorporate required levels of work detail and • review and refine the WBS until all stakeholders agree that the product development can be successfully completed. Figure 4.6 underpins the development of a WBS for the proposed new product development process. The proposed new product development process for SMEs work breakdown structure (WBS) is shown in Figure 4.7. The illustrated WBS shows tasks down to the second tier (or level) as indicated by the WBS numbers in the second column. The relationship between various tasks (and further refined task levels) is not shown. At this time it is necessary to point out that the cyclic (and feedback) nature of the proposed new product development process as illustrated in Figure 4.6 is rather difficult to capture with existing project management software tools. Existing software make provision for forward relationships. The natural need and tendency to communicate virtually ad hoc and provide regular feedback on a multidisciplinary basis found more readily in an SME than in a larger organization can also not be managed using the existing products. This statement is a generalization and the author accepts that existing products may support such a need to a more or lesser extent in some cases. The scope of the current work does not include the development of a suitable tool but should serve as an analysis of the requirements for new product

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development in an SME, forming the basis for further work to develop or adopt existing tools.

Figure 4.7 New Product Development Process Work Breakdown Structure (level2) [Own source]

It is also worth mentioning that the current work does not aim to produce an exhaustive compilation of all levels of detail required for new product development but should provide a guideline for the development of the necessary detail for a specific product to be developed. 4.5.3 Case study – Photovoltaic powered water pump Figure 4.8 is a WBS developed to the third level, which will be used for the development of a photovoltaic powered water pump to illustrate the use of the proposed alternative new product development process. 4.6

Conclusion

The presented model for NPD in an SME is based on many attributes found in an SME that is not necessarily present in larger organizations. Such attributes include: • small size that makes for simplification of processes, • informal co-existence of team members that reduces tension in the work place and aids communication, • lack of compartmentalization the prevents passing projects over the wall from time to time, • ease of including technology and product development in the strategic plan due to focus, • ability to work without requiring prioritisation of tasks as the same people often share responsibilities, • having the luxury of a multidisciplinary leader or driver that can act as a product champion or IDES manager with interest in various elements of the process and

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•

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awareness of the same externalities due to size and communication and mutual motivation found in small groups to counter the negative influence of externalities.

Figure 4.8 Proposed new product development process (level 3) [Own source]

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The SME, using the proposed model, will be able to handle random rather than deterministic feedback. Feedback loops will be recognized early to enable fast reaction. Non-linear effects can be used to the advantage of the development. (Examples include engineering design changes that can be implemented virtually without delay to maximize the impact of a design improvement.) The model favours early conversion of technology to demonstration product due to its circular nature. Early prototyping and communication make this possible. Innovation will always be strengthened as new knowledge can be implemented at a late stage. Similarly, design changes can be vetoed as effectively to prevent a culture of continual design without closure. In the following chapter the proposed NPD model will be exposed to a limited scope industry survey to determine the applicability of the model as well as the basis for its development. The development of the survey tool as well as the results will be discussed Part B of this thesis is a case study where the proposed model is used to develop a photovoltaic powered water pumping system with solar energy.

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Chapter 5

Chapter 5 Proposed new product development model acceptability survey An alternative process for the management of new product development in a small to medium enterprise was developed, based on a survey of the appropriate literature, deductive reasoning and personal experience [See Chapter 2 and Chapter 3]. The development of the suggested alternative process started with the recognized stages of a typical new product development process extracted from the literature. Characteristics of a small to medium enterprise were analysed and nine hypotheses were formulated which when applied to the traditional process resulted in the proposed alternative process. In addition, a functional process was deduced from the model in the form of a work breakdown structure (based on three hypotheses) that can be used as an input to a project management tool or procedure. 5.1

Summary of the research hypotheses and the resultant proposed new product development process to be validated.

The development of the suggested alternative new product development process is based on a set of hypotheses. The first four hypotheses, when applied to the recognized stages of product development, make the process more effective: H1

The new product development process in an SME can be made more effective by integrating the idea or concept generation and the strategic planning stages.

H2

The new product development process in an SME can be made more effective by integrating the business analysis, new idea screening and idea or concept generation stages.

H3

The new product development process in an SME can be made more effective by integrating the development, testing and business analysis stages.

H4

The new product development process in an SME can be made more effective by integrating the testing and commercialisation stages.

The next three hypotheses recognizes the "chaos" present in the informal structure of an SME and how to interpret it in such a manner that is advantageous to the SME new product development efforts: H5

In the new product development process for an SME it is difficult to prioritize the stages of development.

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H6

There can be only one driver in a successful new product development team in an SME.

H7

A cohesive new product development team in an SME experiences similar externalities and recognizes such externalities as opportunities and not threats.

The next two hypotheses address the issue of communication and feedback in the SME new product development process, which is often ad hoc but with an inherent sense of purpose: H8

Communication coordinated by the new product development driver is vital to the coherence between the various elements of the new product development process in an SME.

H9

Product and process technology feedback is a very important attribute of any successful new product development process in an SME.

To complete the proposed new process, the evolution thereof is finalized with a practical implementation tool that, in the present case is a typical project management work breakdown structure. The suggested work breakdown structure developed, is based on the following three hypotheses: H10

The project or product development officer (driver of the new product development process) forms the hub of the process and is responsible for the management of the process through regular planning, task execution, observation and data collection and evaluation.

H11

The four basic stages identified i.e. plan, conceptualise, develop and commercialise are maintained to retain focus on the various components of the new product development process.

H12

Communication between and awareness of all phases are shared continually due to the interdisciplinary or multidisciplinary nature of the structure and resources of an SME. Consequently focus shifts continually from phase to phase during the process resulting in a "spiral" process.

An overall picture of the evolution of the suggested new product development process is shown in Figure 5.1 and Figure 5.2 and shows the application of the various hypotheses that have to be validated. In the following paragraphs of this chapter the research design to test the stated hypotheses will be discussed.

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The research goal will be addressed, followed by a discussion on the research design. Various aspects of the research design are addressed. The sampling method is discussed as well as the questionnaire design. Results are given and conclusions made. 5.2

Research goal

In this chapter the stated hypotheses on which the development of the proposed new product development process is based, are subjected to an industry survey to determine the validity and applicability of both the suggested alternative process and the proposed work breakdown structure. 5.3

Research design

During the research design phase the collection, measurement and analysis of the data are planned. Research design can be classified according to various descriptors [97]: • nature of the study, • method of data collection, • power of the researcher to produce effects in the variables under study, • purpose of the study, • nature of the time dimension, • topical scope of the study and • research environment The study is described accordingly. 5.3.1 The nature of the study This part of the study (Part A) ends with an exploratory study in this chapter. The validity of the hypotheses developed based the findings in the literature study undertaken in Chapter 2, are tested with a quantitative study based on a limited scope industry survey. In part B a case study is used to perform a qualitative study on the proposed new product development process for small to medium enterprises.

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Traditional new product development process

Str ategy

Chapter 5

Hypothesis

Proposed new product development process

Strategy H1 Integrate idea generation and strategic planning

Plan Scan environment Determine boundaries Compile strategic planning

Enabling factors

Idea generation

Screening

H1 Screening

H3 Deve lopm en t

Co nceptu alize Generate innovative ideas Screen new ideas Compile business analysis

H6

Business analysis

H4 Development

H5

H3 Integrate testing, development and business analysis and involve external stakeholders

Develop Breadboard design Engineer prototypes Make production prototypes

Testin g

H7

Plan Scan environment Determine boundaries Compile strategic plan

Implement Generate PBOM Set up production Commercialize

Constraints

Business an alys is

H2

H2 Integrate business analysis, concept screening and new idea generation

IDES manager Develop Breadboard design Engineer prototypes Make production prototypes

Bottlenecks

Ide a gener ation

Conceptualize Generate new ideas Screen new ideas Do business analysis

Input/Output

npdp4.cfl Testing H4 Integrate testingand commercialization and involve external stakeholders

Comm ercializatio n

Im plem ent Generate PBOM Set up production Commercialize

Commercializa tion n p dp 1 .cfl

Figure 5.1 The evolution of the proposed new product development process through application of the stated hypotheses - part 1 [Own source]

Figure 5.2

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IMPLEMENT

le st ra an

Do

Evaluate

pl

Observe

c

IDES manager

gi

Plan

te

DEVELOP npdp6.cfl

te ra e M en O G PB

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Product and process technology feedback: Development feedback Manufacturing feedback

pi

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Control communication: Reports Budgets Plans Screening Policies Post mortem

n

d ar bo ns ad ig er s re s B de ne pe gi ty on ti En o t o uc s pr od pe pr ty e to ak pr o

H12 Input/Output

om

H11

H9

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H10

up

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Conceptualize Generate new ideas Screen new ideas Do business analysis

t Se

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Figure 5.1

Develop Breadboard design Engineer prototypes Make production prototypes

om

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Constraints

H8

IDES manager

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a ci

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Plan Scan environment Determine boundaries Compile strategic plan

Bottlenecks

Enabling factors

Implement Generate PBOM Set up production Commercialize

PLAN

Produce, sell and feedback

te ra ive as e t s de en va s si i G no ea w ly a in id n e an n s e s e re in Sc s bu le i p om C CONCEPTUALIZE npdp07.cfl

Figure 5.2 The evolution of the proposed new product development process through application of the stated hypotheses part 2 [Own source]

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5.3.2 Data collection Personal interviewing and a questionnaire are used to collect the data. As such the data collection process is communication based. An experience survey with limited scope is done. When persons are interviewed in an experience survey, their ideas are sought about important issues of the subject. This allows the researcher to establish what is important across the subject's range. 5.3.3 The power of the researcher to produce effects in the variables under study The study is ex post facto. With an ex post facto design the researcher has no control over the variables in the sense of being able to manipulate them. The researcher can only report what happens. For the purposes of this study it is important that variables are not influenced, as this would introduce bias. 5.3.4 Purpose of the study The purpose of the study is descriptive. The validity of the hypotheses are determined through obtaining sample population opinion. Interrelationship between variables may exist but no causal relationships are investigated. Cross tabulation is done to support the validity of the results and determine trends in the results. 5.3.5 The nature of the time dimension The study is cross-sectional and represents a snapshot of one point in time. It is recognized that the product development process and the nature of organizations are ever changing. This could cause the applicability of the proposed process (or any other process) to change over time. 5.3.6 Topical scope of the study The limited scope survey used in Part A and this chapter is a statistical study and is designed to obtain a broad industry perspective of the proposed hypotheses. The hypotheses are tested quantitatively. In Part B a case study is conducted with emphasis on detail to support the limited scope survey in testing the applicability of the proposed new product development process.

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Chapter 5

5.3.7 The research environment and target population The research environment is the industry sector in which South African high technology (electrical power processing and power management) small to medium enterprises are involved. The target population for the purposes of this survey is the company officers responsible for new product development in enterprises involved in the development of new products for niche and new markets. 5.4

Sampling method

Due to the immediate unavailability of a complete sampling frame nonprobability (convenience) sampling is used. While the preferred method is probability sampling [97] it is considered too costly and not necessary at this stage of the present work, as the main aim is exploratory descriptive results. Non-probability sampling methods are often used to test ideas. In the present study a convenience sample is used, allowing the researcher to choose whom ever he finds. 5.5

Survey questionnaire design

The design of the survey questionnaire [Appendix M] was based on the hypotheses to be validated. The questions in the first four sections were designed using a 5-point Likert scale, probing the respondents for agreement or disagreement. Section A of the questionnaire is an attempt to test the validity of the assumptions used during phase 1 of the development of the suggested model while section B addresses the validity of the assumptions used for phase 2. Similarly section C tests the validity of the assumptions made on which phase 3 is based. Finally section D tests the industry agreement with the assumptions used to arrive at the proposed functional process. The questionnaire is preceded by a covering letter (explaining the reason for the questionnaire) and a list of definitions, explaining the terminology used. 5.6

Results

A descriptive report of the sample is included in Appendix N. All the respondents are male. The bulk of the respondents is between 30 and 40 years of age. Most of the respondents (71%) have more than 10 years experience. The nature of the business that the respondents are involved with vary over the spectrum of high technology operations. A significant number (80%) are involved with product realization related activities. A significant portion of the respondents (77%) are involved with niche markets. Most of the companies (76%) were started through entrepreneurial activities. The number

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Chapter 5

of employees varies with a significant portion (33%) having 4 and less employees. The business activities include production, development and sales. A large number of respondents reported 10% or less of their activities devoted to any one of production, development or sales. It is interesting to note that development forms 10% and less of the business activity in 45% of the reported cases. If the mean (the median produces approximately the same results) is considered the split is approximately 40%-20%-40% respectively for production, development and sales. The results are presented in Figure 5.3 and Figure 5.4, showing the frequency of responses in Figure 5.3 and the percentage contribution in Figure 5.4. The "UNBIASED" opinions were ignored while the "STRONGLY AGREE" and "AGREE" were grouped as well as the "STRONGLY DISAGREE" and "DISAGREE".

D4 (H12)

D3 (H11)

D1 (H10)

C2 (H9)

C1 (H8)

B3XB4 (H7)

B4 (H7b)

B3 (H7a)

B2 (H6)

B1 (H5)

A6XA9 (H4)

A9 H(4b)

A5XA8 (H3)

A8 (H3b)

A6 (H4a)

A5 (H3a)

A4 (H2)

50 45 40 35 30 25 20 15 10 5 0 A3 (H1)

Respondent frequency

Industry opinion of the hypotheses used to develop the proposes new product developm ent process

Questions (Hypotheses) Agree

Disagree

Figure 5.3 Industry opinion of the hypotheses used to develop the proposes new product development process – respondent frequency

The hypotheses are stated in §5.1. A complete set of results is available in Appendix N.

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5.7

Chapter 5

Conclusions

The average age and years experience of the respondents and the general company characteristics fit the anticipated survey profile. The survey was conducted with a questionnaire using five sections. Section A addresses the structure of the new product development management structure and is designed to test the first four hypotheses (H1 through H4) on which the first evolutionary phase of the proposed new product development process is based. Hypotheses H1 and H2 enjoy significant industry agreement (80% and 81% respectively agree – see Figure 5.3 and Figure 5.4). A5 and A6, while not supported to the same extent, also enjoy significant support (54% and 50% respectively) from the perspective of integrating the relevant stages. Additionally questions A8 and A9 are agreed with to a large extent (94% and 92% respectively) indicating support for stakeholder involvement. Industry opinion of the hypotheses used to develop the proposes new product developm ent process 100% 90%

% Contribution

80% 70% 60% 50% 40% 30% 20% 10% D4 (H12)

D3 (H11)

D1 (H10)

C2 (H9)

C1 (H8)

B3XB4 (H7)

B4 (H7b)

B3 (H7a)

B2 (H6)

B1 (H5)

A6XA9 (H4)

A9 H(4b)

A5XA8 (H3)

A8 (H3b)

A6 (H4a)

A5 (H3a)

A4 (H2)

A3 (H1)

0%

Questions (Hypotheses) Agree

Disagree

Figure 5.4 Industry opinion of the hypotheses used to develop the proposes new product development process - % contribution

The cross tabulation of A5 and A8 (A5XA8 = H3) results in a 51% agreement with both statements, while A6 cross tabulated with A9 (A6XA9 = H4) results in a 48% agreement with both statements. These results indicate less industry support for integration during the latter stages of development but at the same time industry also does not disagree.

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Chapter 5

When H1, H2, H3 and H4 are cross-tabulated with question A7 (Each stage in the new product development process in an SME should be dealt with separately) and the option to agree with the particular hypotheses and disagree with A7 (separate stages) is considered the respective percentages are 53%, 58%, 38% and 38% (see Appendix M). This is significant considering that each option in a 2 by 2 cross tabulation has an expected 25% outcome. In addition a few other questions are included in section A of the questionnaire to test the consistency and reliability of the responses. Industry opinion on other issues regarding new product management structures is also sought. It is clear that industry agrees with the need for a structured process (97% see Figure N.8 question A10) and that 'dealing separately with stages' enjoys a 41% support. Thus a structured process with some degree of integration of the various stages seems to be the preferred option. Section B investigates industry opinion regarding task or stage interdependency during the new product development process. Hypotheses H5 and H6 are questions B1 and B2 respectively. The cross tabulation B3 with B4 results in hypothesis H7. Industry agreement with these hypotheses is 50%, 92% (Figure 5.4) and 65% (Figure N.23). The cross tabulation of B1 and A7 sheds more light on the results obtained for H5. It seems that task or stage prioritization is difficult if stages are integrated (33% of respondents – see Appendix N) and easier when stages are separated (see Figure N.24). The proposed new product development process suggests integrating various stages, and encountering difficulty with stage or task prioritization, which is then also the most likely tendency according to the industry. The results indicate that industry in general is in agreement with the proposed set of hypotheses (H5, H6 and H7), which forms the basis for phase two of the proposed new product development process. Section C of the questionnaire addresses communication during the proposed new product development process. Both hypotheses (H8 and H9) are supported by industry (93% of respondents agree in both cases). The last section in the questionnaire, section D, deals with the format of the actual process. All three hypotheses are strongly supported by industry, confirming the role of the product development officer (H10 with 95% agreement), the importance of retaining the four basic steps of the new product development process (H11 with 92% agreement) and agreeing with the "spiralling" nature (see §4.5.1) of the proposed process (H12 with 95% agreement). The statistical survey presented in this chapter shows that the hypotheses on which the proposed new product development process is based, are supported (agreed with) by a sample taken from the relevant industry members.

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Chapter 5

While industry agreement was obtained, indicating that the proposed alternative process is based on structures and activities present in a high technology SME, the proposed model suggests non-obvious structure and methodologies that may support more predictable new product development success in an SME if implemented. This would imply that the proposed process is not intentionally used in SMEs and selling the concept to SMEs still has to follow the development thereof. This exploratory survey is broad and descriptive. In Part B the developed process will be used in a case study, during which a photovoltaic water pump system will be developed. The applicability of the suggested alternative new product development model will be tested.

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Part B - Case study In Part B the proposed new product development (NPD) model is applied to the development of a photovoltaic water pump system. Chapter 6 is an environmental scan, boundary setting and strategic planning exposé of photovoltaic water pumping systems powered by solar energy. Chapter 7 covers the innovative idea generation, the screening of options and the business analysis of a new photovoltaic water pumping system. In Chapter 8 the prototype system is designed and evaluated. Engineering information of the system design is contained in the appendices. Chapter 9 elaborates on commercialisation issues, production and marketing. Merchandizing material and a design tool are contained in the appendices.

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Chapter 6

Chapter 6 PLAN: Scan environment, determine boundaries and compile a strategic plan IM PLEMENT

pi

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Scan the proposed product environment

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6.1

PLAN

Produce, sell and fe edback

d ar bo ns a d ig r e s re s e B ne e d i yp on ng t ti E to o uc s pr od pe pr ty e to ak pro

In this chapter the planning phase of a solar powered water pumping system is documented, based on the proposed new product development process for high technology small to medium enterprises. This stage covers the scanning of the potential new product environment, determines the operational boundaries and addresses the strategic planning aspect.

e at e as e r ti v s de en va s si G no ea w i ly a in id n e an en ss e e n cr S si bu le pi om C

The proposed new product CONCEPTU ALIZE environment consists of an DEVELOP external and an internal Figure 6.1 Roadmap to indicate the environment. The external structure of this chapter [See Figure 4.6] environment pertains to issues outside of the company while the internal environment describes the company influence on the potential new product. npdp07.cfl

6.1.1 External environment In the case of the potential new product under review (solar powered water pump system) several external factors can influence the outcome of the new product. These factors include: • background to photovoltaic systems in general, • water supply aspects and • status of photovoltaic water pumps. 6.1.1.1

Photovoltaic systems background

The commercial use of photovoltaic power generators has long been in the making. Many examples of the successful application of PV power generation systems (PVPGS) in remote areas (and grid connection) have been demonstrated worldwide. The economic viability of PVPGS has been established [98]. It is not within the scope of the present work to comment on the general application of PV systems but rather to concentrate on water pumping (although general comments here render completeness.) Various

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Chapter 6

aspects of the technology have been investigated, implemented and verified including modules (generators), balance of systems (BOS), system design etc. To date the use of PVPGS has often been seen as part of the particular application, giving rise to the development of specialized utility products such as high efficiency low voltage lighting, high efficiency motors to power pumps etc. This was necessary due the fact that until recently the efficient use of energy was not of primary importance. Various reasons have however made the development of energy efficient equipment necessary such as lighting [99] (230Vac) and pump and motors [100] (230Vac). The world demand for such products are growing resulting in significant cost reduction, infrastructure creation and ongoing development. In point of fact the development in these areas are so rapid that any development specific to the photovoltaic systems (not including PV generation equipment but rather appliances and utility products) is negligible and probably falling further behind with each passing day. The results of these realities can be seen in the fact that although huge efforts are being made to implement PVPGS world-wide and especially in developing economies where the luxury of a widely distributed grid can no longer be afforded, very little progress is being made relative to other developments. In fact significant portions of the efforts are spent on: • social issues, • evaluation programmes, • economic aspects, • accreditation programmes, • market development, • technology investigations and • need analysis etc. Mostly activities are technology driven, experimental and of a market thrust nature. The rare occasions where market pull is experienced can be identified as: • privileged applications (luxury such as second and weekend homes, game farms), • aid programmes (community development in foreign countries) to enhance future markets for developed economies that need new markets for sustained growth and • low cost consumer markets (180V). Motors commonly available are rated at 230V three phase or 400V three phase. Such motors (to achieve base speed) need link voltages of the order of 600V (for the 400V motor). Again, some manufacturers select to use specialized motor designs (reduce voltage). This redesign of the motor creates the opportunity to increase the motor efficiency. The solar module array presents a particular problem when being selected. As mentioned, the operation of an AC induction motor and larger DC motor systems normally relies on the solar module array terminal voltage to generate the link (DC) voltage, determined by a fixed number of series connected modules. An increase in power would therefore require the addition of a complete series string of solar modules (to maintain the correct bus voltage). Possible solution Standard modules (15V, 50-90W at peak power operation) should probably be used. The modules manufacturing process is expensive and difficult to change and if specialized modules are to be designed into a system solution it may lead to unacceptable supply risk. While it is possible to redesign the motor (or even select another motor type), several aspects related to submersible motor manufacturing and also the desire of the company to use standard stock motors indicate that if the standard motor design can be used it may offer a commercial and logistical benefit. Some twenty years ago the company investigated the development of a solar powered water pump system using a brushless DC motor [117]. The operational characteristics were acceptable but to implement the new design and manufacture it proved difficult. Eventually the development was halted. The company does not manufacture submersible pumps (as is the case with solar modules) and being a OEM pump manufacturer supplier of motors, a solar module water pumping systems designed around standard pumps will

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Chapter 7

add benefit to the viability of distributing the new product concept through the company's existing customer base, serving an established infrastructure in the borehole pumping industry. The power conditioner offers some opportunity of innovation. If the DC link can be displaced from the solar module array (variable voltage and power – difficult to control and logistical implications when it comes to array selection) to a point where the voltage can be treated as a common bus, this common bus can be used to feed an inverter powering the motor. Power will have to be handled twice but the logistical advantages may outweigh the disadvantages. Figure 7.5 is a graphic summary of the thought process: • recognising the functional components of a PV water pumping system, • considering the interfacing between different components, • taking note of the existing commercial product available, • identifying the area of least compatibility and • postulating a possible solution. Summary The main embodiment of the proposed solution is based on recognising the advantages to be found in breaking up the functional requirements of the power conditioner in two sections – that of DC-DC voltage conversion and DCAC voltage conversion. Figure 7.6 diagrammatically explains the system. The implications of this possibility also need investigation. This would include efficiency aspects, installation and packaging issues, market acceptance and general feasibility. Proposed System Description. A possible system (see Figure 7.6) to be considered for new product development comprises the following components: • solar module with integrated DC-DC converter (output 350-450Vdc) incorporating maximum power point tracking capabilities, • high voltage DC bus to which all solar modules with integrated DC-DC converters are connected in parallel, • DC-AC converter serving as an electronic commutator incorporating energy efficient motor control, • conventional submersible three phase induction motor and • conventional submersible pump (positive displacement or centrifugal).

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Functional components

Input

Solar module generator

Power conditioner

Motor

Pump

Varying solar insolation

Varying power levels at varying DC voltage

Varying AC power at fixed V/F

Rotating shaft at varying torque and speed

Units of 50-90W at 15V DC

Varying (V & F) AC power

Rotating shaft at varying speed and torque

Varying flow rate at varying head

Modules 50-90W

Specialized PV pump inverter

Various models (fixed V/F)

Multitude of pump models

Practical terminal characteristics

Output

Commercial Product

Chapter 7

DC/DC Possible Solution

Modules 50-90W

x Fi

ed

D

C

AC motors

Pumps

DC/AC

DENG6.CFL

Figure 7.5 Development of a range of PV water pump systems – thought process [Own source]

7.2

Evaluate/screen new product idea/s

The screening process in this study is an ongoing and permanent process. Different from a stage-gate process applicable to large organizations, it seems that a high technology SME experiences continuous screening. Eventually one (maybe more but in this case one) concept for new product development needs to be considered and ultimately exposed to an evaluation process to gauge the probability for success.

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Chapter 7

DC-DC converter integrated in module junction box

PV generator

DC-AC converter serves as electronic commutator

Integrated DC-DC converter

HV bus

PV

Integrated

generator

DC-DC Converter

Design allows for modular dynamics i.e. 100W to 1kW

DC-AC converter (elec. com.)

Energy eff. control V,f Vpeak

HV DC bus to accommodate long conductors from module array to pump site

Conventional submersible motor used to power submersible pump

IM 3ph

Pump

Control is energy efficient i.e. controls V,f, wave shape

DENG2.cfl

Figure 7.6 Proposed new PV water pumping system [Own source]

7.2.1 Evaluate technical performance Based on the current market situation, the company needs and a survey of the state of the art the following advantages are sought with the new proposal: • Cover as wide as possible a range of pumping duties with the same system. The range of pumping duties of interest to solar water pumping spans solar module array peak power levels from 100W to 4kW. • Retain modularity where possible. Although modularity comes at a cost premium it can offer significant advantages as far as inventory holding,

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• •

• •

Chapter 7

serviceability, system design and marketability is concerned. Attention needs to be given to practical considerations. As far as the proposed system is concerned and recognising the use of standard motors, pumps and solar modules, the focus from a developmental point of view (regarding modularity) will be on the power conditioning function. Use conventional motors and pumps. Large inventory levels to cover conventional pumping duties are in existence. It is not be feasible to add to this inventory but rather use it. Use solar modules available in the market. Available solar modules are designed to charge 12V batteries and although not the best solution for solar power water pumping, the cost of solar module manufacturing investment prohibits additional exotic designs. Minimise any additional inventory items. Additional new inventory items should be selected carefully based on cost contribution to solar powered water pumping systems. Use the existing pumping infrastructure in the commercial arena. Probably the most important advantage to be sought is the development of a PV pumping system that can be supported by the traditional water pumping industry. Achieving the previous goals, supported by training and technical assistance will contribute to this end.

Before embarking on the detailed development of a prototype system or doing any modelling and simulation work, it is necessary to investigate a few technical aspects. The aim is to determine the constraints of the working environment against the backdrop of present technology, systems and cost. It is after all not feasible to pursue the proposed system at an unacceptable cost premium or loss of system efficiency. The different components of the proposed PV water pumping system are considered and discussed as far as efficiency, implications of modularity, cost and technical feasibility are concerned. System aspects to be considered include the: • influence of solar irradiance, • solar module module/array, • DC-DC converter, • high voltage bus, • DC-AC inverter, • induction motor and • pump. The different aspects are shown graphically in Figure 7.7. The aspects are discussed with reference to: • relevance to the overall system, • efficiency aspects, • modularity, • engineering design considerations and • modelling.

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Chapter 7

Solar Irradiance

Conventional Power Conditioner

DC/DC Converter

High Voltage Bus

DC/AC Inverter

Energy Conversion Chain

PV Module / Array

Induction Motor

deng7.cfl

Pump

Figure 7.7 Different aspects of the proposed PV water pumping system [Own source]

7.2.1.1

Solar Irradiance

The source of energy in the case of PV systems is the solar irradiance available from the sun on a daily basis. Although not an intrinsic part of the solar powered water pump system, the characteristics of the available solar irradiance have to be considered carefully in the design of any pumping system powered directly (no energy storage) from a solar module array. More

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Chapter 7

specifically the varying nature of the solar irradiance level over a typical day has a direct bearing on system performance. Ideally all the available power at any point during the day, irrespective of level has to be utilised to a maximum. It can be shown [127] that the best daily performance is achieved when this is the case. For purposes of detailed simulation and modelling variables such as global and diffuse irradiance on the horizontal, wind speed and ambient temperature are required. Ground reflection also has to be considered. Simulation software is available from some manufacturers of equipment, but the software is usually designed for and dedicated to a specific manufacturer's product or range. The available software also requires information that is not readily available. The present new product development should incorporate system design and simulation software that can be utilized by the general distributor of water pumping systems that may not necessarily be a photovoltaic specialist. 7.2.1.2

Solar Module/Array

The actual conversion of light energy to electrical energy is done by the solar module array. A solar module array consists of a combination of solar modules. The most important parameter when designing an array is the required peak power to deliver the daily water requirements at the dynamic head for the particular application. The array is then made up of a combination of series and parallel-connected modules of chosen size to achieve workable voltage and current levels. The location of the borehole is determined by the ground water availability while the array position is determined by the fact that the array should be exposed to full sunshine over a solar day for maximum operating efficiency of the array. This fact can mean that the distance between the array and borehole can be considerable such as is the case where a borehole is located in a valley and modules have to be mounted on top of an adjacent hill. Modules are available in two commercial technologies at this time viz a viz crystalline and amorphous silicon. The choice of technology could also have an influence on the overall system design and should be taken into consideration. Comparative studies [124] have indicated that there is little difference at this point in time and would probably not influence the envisaged system design in any direct way. If modularity is to be pursued the size (power) of the modules could have an influence on the eventual success of the system. Modules of relatively low power rating might not be the best choice as solar powered water pumping systems usually requires higher power levels (>200 W) which will result in a large number of modules per array. In the design of an array the required voltage often prescribes the minimum number of modules connected in series. Higher voltages will of course favour cable losses but at the same time reduce the flexibility of choice regarding

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Chapter 7

power increments. This limitation can be removed with the proposed modular approach. 7.2.1.3

Power Conversion

The power conversion stage, which serves as impedance matching between the solar module array and the electric motor, is viewed as the most challenging component of solar powered water pumping systems for the present development. The essence of the proposed system addresses this aspect. As such it is necessary to view any proposal carefully against the backdrop of conventional or state of the art products or technologies. Table 7-1 is an attempt to do this. In summary the following observations can be made: • A modular approach can hold significant advantages as far as overall system design is concerned because of added flexibility in array design to match the required power levels. • Achieving comparable power conversion efficiencies in the power conditioning stage is probably the greatest challenge in the proposed system especially as far as brushless DC motors (BDCM) are concerned although in the current approach, calling for the use of conventional submersible motors with implied advantages, is a prerequisite. 7.2.1.4

The Electric Motor

The self-imposed restriction of using conventional submersible induction motors has been discussed previously. From a technical point of view it is however important to maintain the correct perspective. The power range of interest (200W – 4kW) must be kept in mind. Traditionally DC motors have been used in solar powered pumping systems mainly for its compatibility with solar module characteristics but also for its high efficiency. Typical efficiencies are 80 – 85%. More recently BDCM have raised significant interest. Recorded efficiencies are 80 – 90% [129]. The use of switched reluctance motors (SRM) are also being investigated. Efficiencies of 87% have been recorded [131]. With conventional submersible induction motors efficiencies of 78 – 84% can be expected [132]. These efficiencies are at the lower end of the range of efficiencies recorded for all motor technologies employed in solar powered water pumping. The influence of the power conditioner on the motor performance also has to be considered carefully. Issues such as optimal motor efficiency and delivery of the required load torque especially at start-up have to be addressed to ensure eventual success.

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Chapter 7

Table 7-1 Comparison between Conventional Products and the Proposed Power conditioning System

Description

Power conversion efficiency

Modularity

Sizing efficiency

Cost

Engineering aspects

Conventional power conditioners Conventional products are single unit converters having the PV array as input and the motor terminals as output. The power level of the system prescribes the choice of model – usually limited to two to four over the power range 0.5-5kW The power is handled once (normally) during the conversion process. Typical efficiencies are: • for an inverter powering an induction motor – 85 - 87% [128] • Inverter powering a brushless DC motor – > 95% [129] In a conventional approach different inverter sizes are required for different applications. This may mean different input voltages to accommodate different array configurations. If a fixed input voltage to the inverter is considered a minimum number of modules in series is required from the design. Conventional systems use series connected strings making the peak power selection resolution 300500W [§7.1.4.1]. This could result in an average "mismatch" compared to the required performance of ± 150250-W which on a nominal 1kW system is 15-25%. In principle a single powerconditioning unit should attract the least possible cost as far as the power conditioning function is concerned. System cost should however also be considered, influenced by the terminal limitations of the power conditioner.

If varying input voltages have to be accommodated fundamentally different power conversion equipment models have to be designed with specific operating criteria or a limited range of models (power) will have to be accepted.

Proposed power conditioning system The proposed system consists of two conversion stages: • Converting the module output (12Vdc) to high voltage (350-450Vdc) • Converting the high voltage (DC) to an appropriately controlled voltage to power an induction motor The power is handled in two stages: • A DC-DC converter with typical efficiency envisaged 85-92% [130] • An inverter with efficiency expected to be 94 – 97 % at nominal voltage • The total efficiency expected is 80 – 89% With each DC-DC converter integrated with a PV module, producing a high link voltage which is at the same time the maximum design voltage for the DC-AC inverter, all modules can be connected in parallel, making it possible to select the array size in single module increments. Although different DC-AC inverter sizes are still required, the design input voltage remains the same. The proposed new design uses a parallel-connected array, making the peak power selection resolution one solar module or 50-85W. The resulting average "mismatch" compared to the required performance is then 25-42.5W, which on a nominal 1kW system is 2.5-4.25%. Normally modularity of any description comes at a cost. In this particular case the following issues pertain: • Integrating the DC-DC converter with the module reduces packaging cost • Flexibility in array design could have a system cost implication far outweighing any increase in the cost of the power conditioning equipment. Modularity in this case will make more appropriate sizing and selection possible. Cable losses will be reduced with the proposed system as operation at the highest possible system voltage can be achieved at all times irrespective of power level.

Sufficient evidence exists to warrant the pursuit of the proposed system even though higher efficiencies are not expected at subsystem (motor) level. It must

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Chapter 7

be noted that the proposed system can accommodate BDCM and SRM technologies. At present though the conventional induction motor is the preferred choice. 7.2.1.5

The Pump Element

The scope of the present work does not include an in depth investigation into hydraulic issues of water pumping. Nevertheless as the new approach is system based some understanding and recognition of the current state of affairs regarding the pumping element is necessary. During the design phase of the proposed new product attention should be given to the characteristics of pumping elements available. Two categories of pumps need to be mentioned: Centrifugal pumps. This type of pump relies on centrifugal force to displace water. As such the load torque is dependent on the second power of the speed with little starting torque required. For optimal efficiency induction motors driving this load characteristic must be provided for. Centrifugal pumps are the popular choice for professional solar powered water pumps. Limitations are encountered at lower power levels due to low efficiencies. Volumetric pumps. It is clear from the literature and the market place that volumetric pumps are widely used and investigated as the best contender for solar powered water pumps at lower power levels (below 1kW). In most cases diaphragm type pumps are used. Reliability seems to be a problem as it is very difficult to control water quality in boreholes as a rule. Diaphragm pumps do not tolerate abrasive water. Helical screw pumps are emerging as a viable alternative, as submersible varieties are becoming available. Significant results have been obtained [133] indicating that helical screw pumps need to be accommodated in any new approach. The helical rotor pump (or any volumetric pump for that matter) has a high starting torque. In the proposed system this characteristic may be catered for in a later model. During the design phase detailed attention should be given to the required shaft characteristics to power both the mentioned pumps. 7.2.2 Evaluate/screen the marketability of the proposed idea/s In a high technology SME it is often the case that the individuals involved with the SME become "technology-logged". The chosen technology and its pursuit become the number one priority of the SME and contact with commercial and business reality can often be lost. As Stevens et al state: "There are many examples of largely failed new business development efforts involving much creativity and inventiveness, but lacking in business discipline." [134]. While the technical evaluation of a new product is more readily quantifiable, the evaluation or screening of any new product development regarding

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Chapter 7

marketability has to be priority in any successful high technology SME (and indeed any business). Research has shown [141] that those businesses that use a systematic management process to evaluate new product ideas and concepts – regardless of the specific approach – outperform the rest. In the case of the present development, the design of the product is largely based on making existing technology more marketable. The focus of the new development is on: • the reduction in stockholding cost, • the simplified selection of product, • the use of conventional components such as pumps, motors etc. and • the retention of modularity so that expansion of the system is simple. Several major players in the market place were contacted and the concept of the new product discussed. It was obvious that the concept, if priced correctly would be acceptable, if not desirable, to the market. The fact remains that the cost of the overall system is high because of the significant cost contribution made by the photovoltaic modules in any PV water pump system. Collaboration with photovoltaic module manufacturers (or a single manufacturer at first) may be necessary to help with the introduction of the concept to the general market place. 7.3

Business analysis

The business analysis of a new product development project is fundamentally important in the decision making process when evaluating the viability of a potentially new product. The business analysis consists of a review of: • the growth potential, • the margin potential and • the profitability. 7.3.1 Growth potential A high technology SME relies on fewer products for its commercial success compared to a large corporation or a more general SME. For this reason it is important for an SME to establish sufficient growth of a potentially new product. Conversely a successful SME focuses on new product with high growth potential. In the present case study the envisaged product is targeted at a market with considerable growth opportunity if it is successful. It is difficult to quantify this statement – something that a high technology SME often experiences. This happens because new markets are often pursued by high technology SMEs. Paradigm shifting technology is often used in new products for the first time

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Chapter 7

and niche market opportunities are often reacted on, giving rise to new product opportunities that would otherwise never have been investigated. Such circumstances give rise to a high technology SME usually being involved in high growth potential new products. 7.3.2 Margin potential A high technology SME always has the opportunity to pursue high margin potential new products if such products shift paradigms. The more the paradigm shift however, the further the new product moves from the known and the more difficult the marketing task becomes. In pursuit of the proposed new solar water pumping system consideration was given to the image that existing products have created for solar water pumping per se. Specific high cost items (such as the inverter used in three phase systems) were however targeted to obtain a high margin potential product. 7.3.3 Profitability Profitability remains the true driving force when evaluating any new product. In some cases other motives such as ability demonstration, market testing etc. may be the goal but that also has a price and ultimately somewhere in the organization profitability impact can be quantified. The current development can be assessed based on upfront cost (development cost), unit cost, sales price and units sold (or forecasted). Table 7-2 is an example of a typical preliminary profitability study. When calculating the profitability it is prudent to include cost of sale even at an early stage to provide a true reflection of the product's viability. Table 7-2 Profitability calculations and break-even estimate [Own source] Upfront cost Power Converter Year 1

Solar Module Converter Power Converter

Year 2

Solar Module Converter Power Converter

Year 3

Solar Module Converter Power Converter

Year 4

Solar Module Converter

Unit cost

Sales price

R

40,000.00

R 2,000.00

R 3,500.00

R

40,000.00

R

R

R

45,000.00

R

Units sold/year

Profit (CoS =20%)

1 R

-38,800.00

900.00

11 R

-37,360.00

R 2,000.00

R 3,500.00

3 R

-41,400.00

45,000.00

R

R

900.00

45 R

-34,200.00

R

30,000.00

R 2,000.00

R 3,500.00

20 R

-6,000.00

R

30,000.00

R

R

900.00

100 R

-6,000.00

R

5,000.00

R 2,000.00

R 3,500.00

100 R

115,000.00

R

5,000.00

R

R

500 R

115,000.00

600.00

600.00

600.00

600.00

900.00

Net situation

R

-76,160.00

R

-151,760.00

R

-163,760.00

R

66,240.00

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7.4.

Chapter 7

Summary

In this chapter the second stage of the proposed alternative new product development process was applied to the development of a photovoltaic water pump system. The results are summarized briefly to facilitate the demonstration of the alternative new product development process. In the actual application significantly more information is available. Table 7-3 is a summary of the conceptualization stage, incorporating the various tasks. Table 7-3 Summary of the conceptualization stage [Own source]

Conceptualization stage Task Summary State of the art review. All the components of a photovoltaic Generate innovative water pumping system should be considered. Components or new product issues such as storage tanks, site security, array mounting ideas structure, riser and discharge pipe, the motor cable and borehole construction, although seemingly trivial can account for the largest percentage of failures. A photovoltaic water pump system design, making use of the existing borehole pumping infrastructure and knowledge base can only be an asset contribute to the proliferation of such systems. Available options. A tremendous variety of different PV pumping solutions has emerged over the last years and it is by no means exhaustive. Ironically the variety may increase to open up new lines of thought in an endeavour to find a more standard solution. To generate innovative solutions or product sub-system boundaries may have to be transgressed. Problems with existing systems. The analysis of problems experienced with existing PV pumps and pumping technology can serve as a rich source of information in setting guidelines for the specifications, appropriateness (cost, size etc) and overall viability of any new thoughts on PV pumping systems and technology. Concept engineering. The state of the art was reviewed. Photovoltaic modules (various technologies), AC and DC motors, user issues, most commonly used sizes, power conditioning equipment and company resources were considered. The thought process includes the identification of the functional components of a solar water pumping system, consideration given to the interfacing between different components such as photovoltaic modules and power conditioners, taking cognisance of the existing commercial product available, identifying the areas of least subsystem compatibility and postulating a possible solution. The main embodiment of the proposed solution is based on recognising the advantages to be found in breaking up the functional requirements of the power conditioner in two sections – that of DC-DC voltage conversion and DC-AC voltage conversion. Evaluation of Technical performance evaluation. The proposed system

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Chapter 7

Conceptualization stage Task Summary new product consists of two conversion stages. The first stage converts the ideas module output (12Vdc) to high voltage (350-450Vdc). The second stage converts the high voltage (DC) to an appropriately controlled voltage to power an induction motor. A DC-DC converter with an efficiency envisaged between 8592% [130] generates the high voltage DC link. An inverter with an expected efficiency of 94 – 97 % at nominal voltage generates the 3 phase motor supply. The total efficiency expected is 80 – 89%. With each DC-DC converter integrated with a PV module producing a high DC link voltage, which is at the same time the maximum design voltage for the DC-AC inverter, all modules can be connected in parallel, making it possible to select the array size in single module increments. Although different DC-AC inverter sizes are still required, the design input voltage remains the same. The proposed new design uses a parallel-connected array, making the peak power selection resolution one solar module or 50-85W. The resulting average "mismatch" compared to the required performance is then 25-42.5W, which on a nominal 1kW system is 2.5-4.25%. A more conventional approach may end up with a mismatch of up to 25%. Normally modularity of any description comes at a cost. In this particular case integrating the DC-DC converter with the module reduces packaging cost while flexibility in array design could have a system cost implication far outweighing any increase in the cost of the power conditioning equipment. Modularity in this case will make more appropriate sizing and selection possible. Cable losses will be reduced with the proposed system as operation at the highest possible system voltage can be achieved at all times irrespective of power level. Marketability evaluation. In the case of the present development, the design of the product is largely based on making existing technology more marketable. The focus of the new development is on the reduction in stockholding cost, the simplified selection of product, the use of conventional components such as pumps, motors etc. and the retention of modularity so that expansion of the system is simple. Several major players in the market place were contacted and the concept of the new product discussed. It was obvious that the concept, if priced correctly would be acceptable, if not desirable, to the market. It was however not possible to obtain guarantees of market size etc. The fact remains that the cost of the overall system is high because of the significant cost contribution made by the photovoltaic modules in any PV water pump system. Collaboration with photovoltaic module manufacturers (or a single manufacturer at first) may be necessary to help with the introduction of the concept to the general market place. Growth potential. In the present case study the envisaged Business

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Task analysis

Chapter 7

Conceptualization stage Summary product is targeted at a market with considerable growth opportunity if it is successful. It is difficult to quantify this statement – something that a high technology SME often experience. Margin potential. A high technology SME always has the opportunity to pursue high margin potential new products if such products shift paradigms. The more the paradigm shift however, the further the new product moves from the known and the more difficult the marketing task becomes. In pursuit of the proposed new solar water pumping system consideration was given to the image that existing products have created for solar water pumping per se. Specific high cost items (such as the inverter used in three phase systems) were however targeted to obtain a high margin potential product. Profitability. The current development can be assessed based on upfront cost (development cost), unit cost, sales price and units sold (or forecasted). When calculating the profitability it is prudent to include cost of sale even at an early stage to provide a true reflection of the product's viability. For the product under development in this study it is estimated that payback time will be 3 to 4 years with good margins in the long term provided that the product can be marketed successfully against the backdrop of high photovoltaic module costs relative to the rest of the system components.

In the next chapter the development stage of the proposed development process is applied to the present case study.

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Chapter 8

Chapter 8 DEVELOP: Breadboard designs, make engineering prototypes and make production prototypes IM PLEMENT

PLAN

Produce, sell and fe edback

pi

on

le st pl an

Do

Evaluate

c

Observe

t

IDES manager

gi

Plan

te

e in s m ie er ar et nd u

te ra e M en O G PB

ra

D

o

ti

om

pr

c du

n en ca m S on r vi

et

up

e

en

S

iz

C

om

e

al

bo

C

m

i rc

d ar bo ns a d ig r e s re s B de ne e i yp on ng t ti E to o uc s pr od pe pr ty e to ak pro

In this chapter the development phase of a solar powered water pumping system is documented, based on the proposed new product development process for high technology small to medium enterprises. This stage covers the breadboarding of designs, the making of engineering prototypes and the generation of production prototypes.

e at e as e r ti v s n a de e v s si G no ea w i ly a d e n i i n an n ss ee e r n c S si bu e l pi om C

M

The development phase of a new product, often referred to as the research and development stage is sometimes regarded as the complete engineering practice CONCEPTU ALIZE required to develop a successful DEVELOP new product, especially in a high Figure 8.1 Roadmap to indicate the technology SME where technology structure of this chapter [Figure 4.6] dominates. As shown in this study and pointed out in the case study this is not the case. However, it remains an important stage of the new product development. npdp07.cfl

8.1

Breadboard designs

The breadboard process (applicable to electronics design and development) consists of a preliminary design and breadboard stage and a mechanical design and packaging stage. 8.1.1 Preliminary design and breadboard The purpose of this stage in the development of a new product is to: • generate block diagramme and do preliminary design, • conduct a feasibility review, • design the circuit/s, • build and test, • update schematic/s and • conduct a design review.

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8.1.1.1

Chapter 8

Generate block diagramme and do preliminary design

The present case study entails the development of a power conditioning system for a photovoltaic water pumping system. The concept is described in Chapter 7. Figure 7.7 illustrates the different aspects of a solar powered water pumping system. In this stage of the development attention is focused on the power conditioning aspect and more specifically on the DC-DC converter, the high voltage bus and the AC-DC converter. It is envisaged that the eventual new products will comprise the DC-DC converter and the DC-AC converter. Energy Conversion Chain

Solar Irradiance

Block diagramme and preliminary design

Solar Module / Array D C-DC Converter (SMC) design issues: DC-DC Converter (SMC)

Topology and efficiency Modularity Design considerations Preferred implementation

High Voltage Bus DC-AC Converter (PC) design issues: DC-AC Converter (PC)

Induction Motor

Control and efficiency Constuction Design considerations Preferred implimentation

Conventional Power Conditioner

Pump deng9.cfl

Figure 8.2 Identification of design requirements [Own source]

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Chapter 8

Based on the author's experience a new product needs a "project name" at the earliest possible convenience. The project is called SUNWATER. The name evolved from earlier developments. It does not mean that the final marketing plan will use the name SUNWATER but it is an in-house accepted name. SUNWATER is made up of the DC-DC converter and the DC-AC converter. In the case of this development the DC-DC converter will be called the Solar Module Converter or SMC and the DC-AC converter will be called the Power Converter or PC. The two components constituting the new development are identified in Figure 8.2. DC-DC Converter or Solar Module Converter (SMC)

Solar module < 150W Nominal 15V at maximum power

High voltage DC link 350-450Vdc

DC-DC converter 15Vdc to 350-450Vdc

Input control Maximum power point

Mosfet Driver circuit

PWM generator

Output control Vout Iout

Single Solar Module DC-DC Converter or SMC

Figure 8.3 Block diagramme of the proposed Solar Module Converter (SMC) [Own source]

Figure 8.3 is a diagrammatic representation of the SMC stage. All the necessary functional components and interface parameters are shown. The input to the SMC is the terminals of a solar module not exceeding 150W. This size is based on the envisaged state of the art for the foreseeable future or possibly two modules in parallel, each not exceeding 75W (popular production size). The output of the SMC is a DC link of 350-450Vdc. This DC link will be the common connection point for all the modules (with integrated SMC) in an array. The output is a two-wire connection. The reason for using only two wires (dc positive and dc negative) emanates from the nature of a typical installation where the solar module array may be far (in excess of 2km) removed from the borehole or location of the DC-AC converter or power converter (PC). Any ancillary voltages required by the PC have to be generated within the PC.

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Chapter 8

Power conversion topology A fixed frequency pulse width modulator (PWM) controls the DC-DC power conversion circuit. A MOSFET driver circuit drives the power conversion circuit. A power conversion (DC-DC converter) circuit topology needs to be selected taking the present development parameters into consideration. The parameters include a high voltage transformation ratio, a widely varying output voltage for a fixed (almost) input voltage, maximum average efficiency, low cost and ease of packaging. At power levels below 250W such as the present development, a boost topology would have offered the most economical topology because this would have not required a transformer. The high voltage transformation ratio and the wide output voltage range required however, implies that a transformer will be required. The low input voltage makes the use of a half bridge input topology with centre tap transformer a good choice. Voltage doubling can be accommodated with MOSFET technology available. The PWM circuit is controlled by three parameters: • the solar module from which the module operating point is derived to achieve maximum power transfer • output current to protect the SMC and • output voltage to limit the maximum link voltage. Solar module maximum power point tracking operating The maximum power available from the solar module should be available at all times. To achieve maximum power point operation, various known techniques are available. In this particular case additional aspects that should be considered include cost (the target cost is less than 10% of a 75W solar module), size, complexity and operational reliability. Various authors comment on maximum power tracking techniques [136,137,138,139]. Advantages and disadvantages relevant to the present development are tabled in Table 8-1. In [Appendix E] a comparative study was done to determine the most cost efficient solution. It was necessary to investigate the most appropriate solution for the present development because both cost and energy efficiency are important in this case.

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Chapter 8

Table 8-1 Comparison between advantages and disadvantages of various maximum power point tracking methods [139]

Maximum power point tracking method (MPPT) Constant voltage

Advantage

Disadvantage

Very simple implement

to Not very effective to maintain maximum power Temperature Simple to implement – Design must be compensation no calculation required calibrated for the photovoltaic technology used as the form factor is important Voltage and current Provides good More complex to perturbation maximum point tacking implement even under widely varying conditions Power calculation with Provides the same Most difficult to perturbation around degree of power point implement maximum tracking even when conditions change Figure 8.4 illustrates a typical solar module characteristic when both temperature and solar insolation are taken into consideration. A temperature compensated technique was considered the best choice for the present development as a compromise between cost and effective operation. It was decided that such a scheme would be designed into the DC-DC converter circuit. From the figure it can be seen that for a large variation in insolation level (condition 1 is 100W/m² while condition 3 represents 100W/m²) the maximum power point of the photovoltaic module does not shift noticeably with respect to voltage. In fact, even a 2V variation results in less than 2% deviation from the peak power point.

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Chapter 8

1

80 70 60 50 40 30 20 10 0

0.99 0.98 0.97 0.96

%Deviation from maximum

Power (W)

Module Power

0.95 0

5

10

15

20

25

Voltage (V) Condition 1

Condition 2

Condition 3

%Deviation

%Deviation

%Deviation

Figure 8.4 Typical solar module characteristic when temperature and solar insolation are taken into consideration [139].

Output protection The output of the SMC must be controlled. All input power is converted to the load. If the demand drops, the output voltage will rise. To prevent excessive voltage on the output, the maximum output voltage must be limited. Under high load conditions (including short circuit) the output current must be limited for the same reason – all input power converted to the output will result in a high current under low output voltage conditions. DC-AC Converter or power converter (PC) The DC-AC (power) converter (PC) converts the DC link voltage to a three phase variable voltage, variable frequency source to power the standard three phase induction motor. Figure 8.5 illustrates the proposed DC-AC converter configuration.

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Chapter 8

Various aspects of the power converter (PC) design must be considered before making a final design: • selection of power devices and driver circuit, • 3 phase generator, • over-current protection and the starting circuit, • motor flux control and • the power supply unit (PSU). Selection of power devices and driver circuit The proposed system will operate with input voltages up to 450V. This voltage makes the use of MOSFET devices unattractive. Insulated gate bipolar transistors (IGBT) devices are available that will meet the required specification. The proposed design requires the peak motor current under locked rotor conditions to be available. This must be considered when selecting the IGBT power devices. Three phase generator While various options exist that produce three phase motor control signals, the present design requires a low cost reliable solution. The proposed system also differs from the usual in that it does not require PWM control. The DC link voltage, being variable offers the possibility of using a pulse amplitude modulation (PAM) technique mixed with PWM to obtain the modulated output signals. The PWM signal would have a fixed modulation depth. The PAM (DC link modulation) will be used to generate the required frequency for a given DC link condition. A commercially available PWM generator (HEF 4752) will be used as it can be implemented without requiring any software development and because other solutions do not seem to offer any additional benefits in view of the proposed system. Over-current protection and the starting circuit The over-current protection circuit is important, as it is required that the power converter (PC) be robust even under conditions where cable faults (long cables to motors in boreholes etc.) may occur. Another aspect of the over-current circuit that may proof to be unique is the requirement that normal locked rotor motor current can be supplied. This condition can however not prevail but only be allowed to last long enough to create high starting torque conditions. This important aspect of the design will be reviewed carefully.

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High voltage DC link 350-450Vdc

3 Phase six switch bridge

Chapter 8

Output filter

Overcurent and start circuit

IGBT driver circuit

Voltage controlled oscillator (VCO)

3 Phase generator

Variable voltage variable frequency (VVVF) output

Power supply unit (PSU) DC-AC (Power) Converter (PC)

Figure 8.5 Block diagramme of the proposed DC-AC power converter [Own source]

Motor flux control An appropriate flux control scheme is required. Initially centrifugal pumps will be considered. Various techniques and control hardware incorporating basic control methodology (HEF 4752) is available. The envisaged system however makes use of a variable DC-link voltage. This will have to be taken into consideration when designing the circuits. See Appendix C for the detail design of the flux control scheme. In addition an over-modulated motor phase voltage (square wave) is envisaged to reduce the required DC-link voltage and to reduce inverter switching losses. Motor efficiency is negatively affected by using square wave modulation (presence of harmonics) but the practical availability of components (gate drivers, link capacitors) to meet the DC-link voltage is an important consideration.

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8.1.1.2

Chapter 8

Feasibility review,

The feasibility of the conceptual designs needs to be reviewed. This stage of the development can be traumatic for various role players in many organizations and for various reasons. In an SME the feasibility is reviewed on a regular basis and at all business levels. In the case of the present study this was the experience. The most convincing aspect of the proposed new product concept is the modular approach making system sizing and selection easier. If the design can keep the efficiency levels viable across the wide input power range and remain competitively priced, the concept is worth pursuing to the next level. Some additional marketing effort will be required (in addition to the usual) as the apparent weakness of the concept is the dual power conversion; first the DC-DC conversion and then the DC-AC conversion (see Figure 7.6). 8.1.1.3

Circuit/s design

The two circuits to be designed include the DC-DC converter and the DC-AC converter. Information required include: • input specifications, • output specifications, • selected circuit topology and • functional requirements. Table 8-2 DC-DC converter design aspects

DC-DC converter design parameters and aspects Parameter or Specification or aspect function Input voltage ±15Vdc Input current

±10Adc

Output voltage

0-350/450Vdc

Remarks The maximum power point operating voltage of the solar module is approximately constant. A maximum input power of 150W is the design aim. Standard 3 phase 400Vac (line-line) induction motors are to be used. Maximum operating frequency to be determined by voltage that can be generated. Under sinusoidal modulation conditions phase voltage Vrms = 0.624/1.73*Vdc (ideal). For Vrms = 230V that would require Vdc=640V. For square wave modulation Vrms=0.77/1.73*Vdc or for Vrms=230V Vdc=516V. With 450Vdc (practical component limit) Vrms ≈ 200V

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Chapter 8

DC-DC converter design parameters and aspects Parameter or Specification or aspect function Output Pout/Vout current

Remarks

The output current Iout = Pout/Vout is dependent on the input power and the output voltage. Under motor starting conditions (high power, low voltage, high current) the output current must be limited as it can reach unacceptably high values. Circuit Push-pull The input voltage is low and a high voltage topology transformation ratio is required. Efficiency is important. Transformer Ferrite material The transformer design will be unconventional. The input voltage is approximately constant while the output voltage will vary from (practically) 50450V at constant power. This will require high winding ratio but also high currents. The transformer will have to be oversized to achieve both low resistance losses and a high voltage transformation ratio. Inductor Ferrite material The inductor required must have a high efficiency. Switching MOSFET MOSFET devices are best suited for this devices application as the input voltage is low and a high efficiency is required. PWM Suitable for push- Any one of many devices that can provide the generator pull operation at required control can be used. (SG3525 etc.) ±20kHz Peak power Vpeak = const. To detect peak power a simple scheme whereby detection Vos the measurement of the open circuit solar module scheme voltage will provide an indication of the maximum power operating voltage. Protection Maximum output The DC-DC converter is essentially a power voltage converter. If the load is small (low current) the output voltage can become too high. The voltage has to be limited to a set peak value. Protection Maximum output The DC-DC converter is essentially a power current converter. If the load is high (motor start condition) the motor current will be high and the voltage low. The DC-link voltage will then be low and the current high. The current has to be limited to a set maximum value. Efficiency Best over wide The DC-DC converter has to deliver the best input power possible efficiency over the widest possible input range power range. The efficiency under various output conditions (voltage versus current) is also important. Cost ±10% of solar The cost of the DC-DC converter must not module exceed 10% of a 100-150W 12V solar module (or a parallel combination of the same power).

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Chapter 8

The design information is summarized in Table 8-2 and Table 8-3. Circuits were designed according to the design information, manufacturing practicalities, existing product formats and company standards. In the electronic development process an external contractor was used. Outsourcing presents vast opportunities today but needs to be addressed with caution. Intellectual property must be protected. Agreements should include design and development as well as manufacturing components. Appendix A and Appendix B contain the block-diagrammes of the designed circuits. In following paragraphs changes and additions to the original designs will also be discussed. These changes and additions are also shown in the schematics contained in the appendixes. Table 8-3 DC-AC converter design aspects

DC-AC converter design parameters and aspects Parameter or aspect Input voltage

Specification or function 0-450Vdc

Input current Output voltage

0-3Adc

Output frequency

To determine motor speed range

Circuit topology and switching devices

Bipolar three phase bridge with IGBTs

0-350Vac phase, phases

per three

Remarks The maximum voltage is limited by component ratings such as the gate driver circuits practically available. The envisaged input power rating is approximately 1.5kW. The practical DC-link voltage limits the alternative output voltage. With 350Vac phase to phase generated by the bridge circuit, a motor phase voltage of approximately 200Vac can be provided. Submersible motors are designed for nameplate voltage less 5%, which means that a 220V per phase nameplate motor, actually has a design voltage (optimum slip) of 209V. With the present set of conditions it is estimated that an output frequency of 42-26Hz will be achieved. For the present application this is acceptable. Various topologies with a reduced number of switching devices have been investigated. However the current development focuses on a complete water pumping system and will use a six switch three-phase bridge that is well understood. IGBT devices are the most appropriate for this application. Devices with a current capability suitable to provide motor starting currents (under normal direct on line start conditions) must be selected to make provision for the starting requirements under abnormal conditions during which a pump may be stuck due to the presence of sand etc. in the

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Chapter 8

DC-AC converter design parameters and aspects Parameter or aspect

Specification or function

IGBT driver Six-switch driver circuit with three isolated driver circuits required. Control

The voltagefrequency relationship must be controlled

Underload condition

System prevent running

Controlled power-up

must dry

Remarks pump. If square wave modulation is to be used, provision must also be made for higher peak currents. A driver component (or subsystems) must be selected that will take care of issues such as shoot-through (simultaneous switching on of top and bottom devices in a phase arm), provide sufficient switching speed for the IGBTs and possibly provide over current protection. The envisaged system operates with a variable dc link voltage. The link voltage will be used to control the output frequency. A method or strategy must be developed to accommodate this requirement. The DC-AC converter should be able to prevent dry running of the pump. It should also reset the condition automatically after a discretionary period. After a shut down or power down condition, provision must be made for a controlled restart or power-up situation

A controlled restart on powerup must be provided Maximum Peak currents The switching devices must be protected but current must be limited provision must also be made for starting conditions where the higher motor starting torque (higher current than the normal operating current) may be required to start a pump that has locked up because of solids or other foreign matter in the water Power +15Vdc, +5Vdc The DC-AC converter will be supplied with only supply for the variable DC-link (two wire). This link is the control variable from 0 to 450Vdc. An auxiliary supply is electronics required to supply the converter electronics. Efficiency Best over wide The DC-AC converter has to deliver the best input power possible efficiency over the widest possible input range power range. Output filter Controlled output Inductors are required on the output of the impedance inverter to make provision for current rise time control under short circuit conditions. Cost Less than a The aim is to keep the cost below that of a conventional conventional inverter to make the perceived inverter value of the envisaged system higher.

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Chapter 8

Build and test designs

The designed circuits were built and tested. This phase of the development is often viewed as the research and development process. While such a view is not incorrect, is must be realised that it is only part of the process. The build and test phase consists of possibly more than one iterations. During the present study three basic iterations were used. Iteration 1 – basic functional operation The basic circuits were bread-boarded and the subsystems functionality investigated. On the DC-DC converter circuit a snubber was added on the output of the rectified secondary of the transformer to improve operational reliability after initial failure mechanisms were identified. The efficiency improved as well. The transformer design was changed to improve the manufacturability (and further increase the efficiency). The driver circuit of the DC-AC converter presented some reliability problems, using the current protection function. An external current limiting circuit was implemented, incorporating the starting requirements. The PWM control device (HEF4752) became redundant during the development process. An alternative solution had to be found. A micro-controller based PWM generator was developed that served as a direct (drop-in) replacement. Iteration 2 – performance and efficiency The efficiencies of the circuits were measured. Efficiency is an important design input parameter for this development. See Table 8-4 on page194. The DC-DC converter efficiency was measured. Note that the circuit and transformer design was optimised to achieve best efficiency over a wide operating range. Figure 8.6 shows the efficiency of the DC-DC converter as a function of the output voltage. The typical operating range of the system is from 200V upward. The initial inductor of the DC-DC converter was not designed optimally. The design was adapted to improve the efficiency. Some cost sacrifice was necessary in this case.

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DC-DC converter Efficiency vs Output voltage 95.00%

Efficiency (%)

90.00%

85.00%

80.00%

75.00%

70.00% 0

100

200

300

400

500

Voltage (V)

Figure 8.6 DC-DC converter efficiency versus output voltage. [Own source]

DC-DC converter Efficiency vs input power 95.00%

Efficiency (%)

90.00%

85.00%

80.00%

75.00%

70.00% 0

50

100

150

200

Input power (W)

Figure 8.7 DC-DC converter efficiency versus input power [Own source]

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Chapter 8

If the efficiency as a function of input power is considered (Figure 8.7) it is clear that higher power levels make for a better efficiency. This is one reason why the DC-DC conversion process was separated from the DC-AC conversion process and designed in modular format so that the system can operate with the required number of DC-DC converters, operating near maximum rating. While the DC-AC converter efficiency was expected to be much higher it has to be verified. Once again, the challenge is to produce a circuit with best efficiency over a wide range of operation. The usual operating point will be at input voltages of 200V and greater. Figure 8.8 shows the efficiency as a function of the input voltage. This measurement was done with a typical pumpmotor load. The average efficiency of the DC-AC converter is 96%, which is not unexpected. The switching devices used are rated to handle the motor locked rotor current but have a fixed on-state voltage (being IGBTs), which means that the on-state losses cannot readily be reduced. The use of the low switching frequency (square wave modulation) keeps the switching losses reduced. This would contribute to the high DC-AC converter efficiency. The DC-AC converter efficiency as a function of input power is shown in Figure 8.9. It shows that an efficiency of 91% is already reached at 100W input power, which is approximately 10% of the rated power.

DC-AC converter Efficiency vs input voltage 100.00% 98.00%

Efficiency (%)

96.00% 94.00% 92.00% 90.00% 88.00% 86.00% 84.00% 82.00% 0.00

100.00

200.00

300.00

400.00

500.00

DC Voltage (V)

Figure 8.8 DC-AC converter efficiency versus input voltage [Own source]

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Chapter 8

DC-AC converter Efficiency vs input power 100.00% 98.00%

Efficiency (%)

96.00% 94.00% 92.00% 90.00% 88.00% 86.00% 84.00% 1400.00

1200.00

1000.00

800.00

600.00

400.00

200.00

0.00

82.00%

Input power (W)

Figure 8.9 DC-AC converter efficiency versus input power [Own source]

Optimisation of the circuits and components such as the transformer for the DC-DC converter was done using experience, measurement and calculation. A very useful tool for the designer/developer in an SME is a spreadsheet. While modelling and simulation software is available an SME often does not have the resources (human and financial) to acquire such tools. Often more than one such a tool is required to do design and modelling. In an SME the technical development can be supported with good results by the use of a spreadsheet as an assistance tool in the evaluation of measured data, the testing of basic ideas and the verification of assumptions. This does however imply advanced fundamental simulation proficiency. Table 8-4 lists the instruments used during the development phase. Table 8-4 List of instruments used.

Parameter

Test equipment

Toptronic 515, Vdc, Vac, Robin 2004 Adc, Aac Tektronix TX3 Power, wave Tektronix THP shapes 720 Recorder Vdc Toptronic 511 and Adc

Accuracy

Other specifications True RMS