1. 1 Exhibit 1: Integrated Product Development (IPD) – Level 1 Innovation is the engine driving revenue growth Innovation Engine Manufacturing Products New Mature Revenues Investment in Innovation Other Purposes Businesses invest in new products because the expected yield in long term growth and profits is greater than other alternatives Paying Customers

2. The Innovation (IPD) Process Parallel Development of Product, Production System and Marketing Materials Manufacturing Ramp up and Market Introduction Project and Process Management Documentation and Data Management Sales, Service & Support Conceptual Design & Product Planning Opportunity Scanning 1 2 3 Overview: Level-2 4 5 2

3. Exhibit 3: Innovation Engine by Tina Seelig

4. Definition Freeze Time to market Break Even time Opportunity Investigation Innovation Cycle time Profit Zone Release Obsolescence R&D Market Research + _ Cumulative Discounted Cash Flow Periodic Discounted Cash Flow Step 1 Steps 2 & 3 Step 4 Step 5 Investment IPD 1&2 Exhibit 4: New Product Cash Flow

5. Step #1: Opportunity Scanning Customer, users & Competition World of Technology Manufacturing Sciences Scan & Identify LearnTest Technical Markets Manufacturing Integrate & Prioritize Queue of Potential Business Opportunities Core Competencies Business Strategy Opportunities Exhibit 5: IPD Overview- Level-3 Business Opportunity SWAG* (Mission Statement) *Scientific Wild Ass Guess (swag)

6. Step #2: Conceptual Design (Ulrich & Eppinger merged with Osterwalder) Design and Develop Customers and Business Model Customer Segments Build and Test Mockups, Prototypes and Business Models Identify Customer Needs Establish Target Specifications Generate Product Concepts Select Product Concept(s) Set Final Specifications Plan Downstream Development Mission Statement Test Product Concept(s) Business Model Exhibit 6: IPD Overview - Level-3 Benchmark Competitive Products and Business Models Product Specifications Key Activities Value Proposition Distribution and Sales Channels Customer Relationships Key ResourcesKey Partnerships Revenue Streams Cost Structures Create and Manage Intellectual Property (IP) Research and apply Appropriate Industry, Business and Engineering Standards

7. Step #3: Simultaneous Product-Manufacturing- Marketing Development (aka Detailed Design) Project Plan Lessons Learned System Design Product Definition Development Team Engineering SW/HW Packaging Production Legal Marketing/Sales Advertising Integrate & Test Product Data & Documentation Management Manuf. Ramp-up Market Intro Exhibit 7: IPD Overview: Level-3 Project Management

8. Step #4A: Manufacturing Ramp-up Production Plan Lessons Learned Production System: Build vs Buy, Fabrication, Assembly, Quality Control, Packaging, Shipping Supplier Management Finished Products Product Specs. Relationships Exhibit 8: IPD Overview: Level-3 Production Management Best Practices Step #4B: Marketing Ramp-up Market Plan Lessons Learned Distribution System: Sales and Advertising Advertising and Distribution Management Marketing Materials Relationships Sales Management

9. Step #5: Distribution, Sales and Service Marketing Materials Lessons Learned Distribution System (channels): Whole seller, retailer, sales and promotion Service and Warranty Payment ($$$$$$) Finished Products Exhibit 9: IPD Overview: Level-3 Sales, Service and Customer Support

10. New Product Cash Flow Time to market Break Even time Opportunity Profit Zone Obsolescence R&D Market Research + _ Cumulative Discounted Cash Flow Periodic Discounted Cash Flow Step 1 Steps 2 & 3 Step 4 Step 5 Investment

11. New Product Cash Flow Time to market Break Even time Opportunity Profit Zone Obsolescence R&D Market Research + _ Cumulative Discounted Cash Flow Periodic Discounted Cash Flow Step 1 Steps 2 & 3 Step 4 Step 5 Investment 5% of resources spent, 85% of future expenses defined

12. New Product Cash Flow Definition Freeze Time to market Break Even time Opportunity Investigation Innovation Cycle time Profit Zone Release Obsolescence R&D Market Research + _ Cumulative Discounted Cash Flow Periodic Discounted Cash Flow Step 1 Steps 2 & 3 Step 4 Step 5 Investment IPD 1&2

13. 13 In conclusion: we are in this to do good and to make money! Without profits we have no economic development, no jobs and no societal wealth!

14. 14 Value of Opportunity The value of an opportunity for new products is the sum of the following: –the magnitude of the customer need –the price and profit margin the market will tolerate –the technical, market, and manufacturing feasibility –the magnitude of the sustainable competitive advantage

15. 15 Opportunity Scanning Best Practices (Relate to New Product Cash Flow model) A prioritized queue of opportunities lead to earlier project start and finish Good alignment between product and market needs accelerates acceptance Early identification of large scale opportunities maximizes mature sales volume Sustainable competitive position delays product obsolescence