A Case Study on Automotive Battery System Design - Title Page - MIT

The methodology used by de Weck has many similarities to the work in this thesis, identifyinguncertainty and developing flexibility using real-options valuation methods. The primarydifference between this thesis and the case study on flexible product platforms is the uncertaintyin the core technology due to product innovation and the real-time support provided for Fordrather than merely another case study.2.7: Flexibility in R&DResearch and Development (R&D) is a highly uncertain investment. Due to the nature of R&D,there existshigh uncertainty in technology and market demand. Technology researched for oneapplication often finds a second, third, or fourth life in a new one. Post-Its are a ubiquitousexample, as the reusable glue was an innovation looking for a product, taking multiple years tofind a home on the work desk (3M).Flexible design in R&D is incorporated due to uncertainty. A microchip may be created withmultiple interfaces, in order to tolerate usage in a range of system applications. A FieldProgrammable Gate Array (FPGA) is a reconfigurable processor, used widely in R&D projectsprior to productization, where a dedicated processor will eventually be used. Leaving flexibilityin a component, system, or application allows the R&D team to acknowledge the risk that theirproduct may or may not be directly tied to a known end product or application. When theapplication becomes clear during product design, the FPGA might be replaced by a cheaper, nonflexiblededicated microchip.From a business standpoint, R&D is difficult to value. Just as the science and engineering teammust remain flexible due to the uncertain outcome of research, the business team must assess the19