Product development in the era of digital transformation and sustainability

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Product development is undergoing transformation. In December 2020, following in the footsteps of the European Commission, the Japanese government announced that it would position digital and green initiatives as the drivers of economic recovery from the COVID-19 pandemic. Many companies have acknowledged the government’s announcement by setting ambitious targets, and R&D organizations are addressing a range of development areas and methods to help achieve these targets.

What structures and topics should management, especially R&D leaders, consider when building an R&D organization that can lead business growth? This article discusses two paths: the use of digital in R&D and product development to make decarbonization a force.

Digital in R&D

In addition to technological advancements in 5G, AI and the Internet of Things, new efforts in the digital sector are underway. One example is digital twinning through the integration of IT and operational technologies or products and software. Adapting to such rapid changes requires leveraging digital technology and expertise, such as using design thinking to understand customer needs, using agile development to reduce lead times development and realizing revenue from software prior to product launch. In other words, CTO skills need to be integrated with CTO skills (Exhibit 1).





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Product development to make decarbonization a force

For many years, product development has been understood in terms of the trade-off between cost, customer value (quality and functionality), and development time. Sustainability is now a new factor to consider, adding to the complexity of the product development process. To succeed, companies must now learn to assess the balance between innovation and decarbonization to make new product and portfolio decisions (Figure 2).


Marginal abatement cost curves are used to set targets and prioritize.



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