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perceived more commercially applicable :ban another). Typically it is found that the judgement of commerclai applicability for any one individual seems Zo rest on a struc=ure of about 8 'sub judgements' on average. These personal judgement sets typically show quite a high degree of overlap within any team of decision makers. This eszab!ishes a foundation of consensus for Zhe next s~a~e of the me,hod, in which the interviewees are brought zone:her ~n a group session where the individual judgement sets are reconciled to a commonly agreed and operationally defined set of judgements all of which are agreed to contribute :o uhe overall perception of 'commercial applicability'. The GR~DC judgemental sea appears as Appendix I, illustrating the types of jud~emen~ which were isolated in this particular a;plica:ion. The judgements are isolated as bi-polar dimensions, ~hich means than they can subsequently be used as scales &~inst which projects can be ranked or scored. In the final stage of ~he method all the projects constituting the GR&DC ;reject portfolio were scaled by the group against their agreed set of judgementa! criteria. This quantitative data was ~hen analysed using the principal components method familiar to DF_~TA evaluations. This technique had the advantage of i!!us:ra~ing: a) The contribution of particular 'sub judgements' zo the overall perception of 'commercial applicability'. b) The prioretisation of projects relative to this structure of judgement, and in terms of perceived difference/similarity to one another. The utility of this technique within the GR&DC context has been in the identification of product applications projects. The conference reported here represents an extension of the technique to support a joint R&D/Marketing approach :o: C w LF CC BATCo document for Legal Services • Health Canada 19 May 1999

a) Generation cf innovative product project propositions. b) Iden~flcz=ion of a jointly agreed set of judgemen=al criteria re!~zing to perceived commercial applicability. c) Eva!u~:ion cf the innovative propositions against the commercial a~plicability criteria. The conference represents a significant further step in the Commi~men~ to ge~ =he most out of the R&D/Marketing interface, particularly in terms of providing marketing relevant leads for R&D project activity. An obvious approach to uniting R&D/~arke~ng =h~nking on the generation and evaluation of project leads is to bring selected R~D and Marketing professionals to~ether in discussion. The conference ~as therefore based on six internationally selected Marketing professionz!s and four members of GR&DC Product Applications group. All too often however, 'creativity' sessions fail through lack of s=ruc=ured outcome, therefore GR&DC's experience with Strategic Projec= Selection was incorporated into the structure of the three day conference. %_. C ~Z BATCo document for Legal Services • Health Canada 19 May 1999

-" r'-- CREATi STn. CT..maD VITY : THE PROCESS This technique recogzises zhat there are three stages to t~e process of generzziz~ project ideas: DATA ACQUISITION CONSTRUCTIVE CRITIQUE SYSTEMATIC ANALYSIS T~T .- DATA ACOUIS.~_O., (DAY I) Refers to the conuributions which the delegates make to initiate the process of structured creativity. In :his case each individual made a formal, one hour presentation to the conference durln£ the first day. The timing was designed to allow sufficien~ discussion time for points of clarlfica~ion only at this sta~e. The presentatlons required considerable pre-work and were used as a means Of generating a number of concrete projeou ideas for the conference to subsequen~!y work with. The insuructions to the delegates, in preparing their presentation, were as follows: "The theme of your presentation must be a personal interpretation of: a) The current tobacco marketing scenario, it's key comstraln~s, challenges and opportunities; b) A prediczlcn of future market trends, directions, cons~ralnts, and opportunizies; c) A persona! view of the current and future develop- ment of consumer needs, attiZudes, and segments; d) Views on current and future product trends, needs and opportunities. The presentzzion should be structured in such a way as to end wi:h :wo fully specified product project pro- posals accompanied with reasonable specifications of product parame:ers, consumer relevance, market scenario and, idea!!7, :arget segment and communication strategy." K_b b C7~ CD BATCo document for Legal Services : Health Canada 19 May 1999

These formal presentations are reproduced in full within ~he voluze which accompanies this renorZ. CONSTRUCTIVE CRITIQUE <DAY 2) Refers to the subsequent process in which, after due time to 'incubate' the ideas presented in the papers, each contribution was re-visited and construcziveiy examined by the group for technical feasibility, marketing possibilities, and any refinements/alterations to the basic idea. This stage resulted in an agreed statement for every project proposition specifying the strategic objective, constraints applying to its achievement, The product specification, the technical feasibility and the marketin~ strategy. SYST:~ATIC ANALYSIS (DAY 3) Refers to the process of setting up a system of judgements which can be used to evaluate the final outcome of the first two stages. In this case individual delegmtes were interviewed durin~ the evenings of ~he first two days of the conference to systematically draw out the types of personal judgement which they made when considering those aspects of projects which they felt contributed most to the probability that the project will succeed in commercial application. On Day 3, these individual judgement sets were consolidated through group discussion to a consensus set which was then used as a judgemen:al framework against which the project ideas generated in Days 1 and 2 were evaluated. Eventual ana!zsis was by principal components technique. C: C ~c Ox BATCo document for Legal Services : Health Canada 19 May 1999

The conference is therefore designed both to generate project ideas, and to develop a sysnem for their evaluation against a criterion of commercial applicability. The conference structure is as follows:- DAY ONE DATA ACQUISITION Personal present- ations of projec: propositions. DAY ONE (EVE) INDIVIDU~ INTERVIEWS DAY TWO CONSTRUCTIVE CRITIOUE Deve!opmenz of s~rauegic objectives and consideration of feasibility. I DAY TWO (EVE) INDIVIDUAL INTERVIEWS DAY THREE SYSTEMATIC ANALYSIS Agreement of a consensus se~ of judgements. Scaling of project propositions against the judge- ment sez. Analysis of results. C C w BATCo document for Legal Services • Health Canada 19 May 1999

STRUCTUP.ED CREAT'_V:TY : THE OUTCO!,'.- The Jud~emental Set All delega=es were subjected to a psychological interview conducted by the conference convenor either on the first or second evening of the conference. These interviews, based on pairwise comparison of project ideas, produced a Total of 69 judgements (an average of 8-8 ~udgements per delegate, excluding the convenor and one delegate who had been intervie~'ed on a previous occasion). To i!!us%rate the diversify, of judgements identified as relevant :o commercial applicabillzy, this list of judgements is reproduced in full as Appendix If. It should be re-emphasised that these judgements are 'bi- polar' that is, they represent dimensions with logically opposite ends along which projects could be scaled or ranked :o i!lus~rate their relative positions. It is apparent from Appendix [I that there exists a high degree of overlap across individual judgement sets, which contributed to =he relative ease with which the group came to an agreed consensus set of judgemen=s on the final day of ~he conference, it is interesting to note ~hat no fundamental differences in judgemental structure emerged between those delegates with a Marketing, and those with a Product Applications background. The finally derived set of judgements was discussed to produce an agreed operational definition of what each term meant. This ~greement on definition is most important since any lack of precision a~ this stage inevitably leads to 'bending' of the judEementa! rules at later stages when particular projects are being evaluated. The judgemenzal set, with associated definitions, was finally agreed as; C CO BATCo document for Legal Services : Health Canada 19 May 1999

i. High V Low Behavioural Valida=ion 'A measure of ihe evidence which exists to suppor= a proposition, i.e. Evidence versus speculation, where high = specific observed consumer behaviour and Io= = inferential specu!a=ion.' 2. Large V SmAll Tarse: Marke~ 'The size of :he target market expressed in equation terms as the number of potential markets X the pro~ected size of each affected segment within those marke~s.' 3. Short V Lonz Lead Time to Manufacturabili~y 'The time required :o design :he product and develop the necessary technology in an=icipation of scale produczion, where short = < 1 year, and long = ~ 3 years.' 4. Easy V Hard =o Communicate 'Ability to exDress the claim clearly within the constraints of the given market.' 5. High V Low Ex:ernal Risk 'The probability of provoking a significant attack from external groups which could undermine the ability of the company and industry to continue to operate profitably.' 6. Positive V :;e~azive Manufac=urer Cost ImPact 'A measure of the economic benefit to the manufacturer considering variable costs, fixed and semi-variable costs, and asset u:±lisation.' @a/eo C~ C_ Co. BATCo document for Legal Services • Health Canada 19 May 1999

7. High V Low Five Year Return on !nves:ment 'Defined by total offer deve!opmenz cost, by zotal m~rke~ing inves~menz requirement, by variable margin yield derived from unit volume potential.' 8. High V Low Commercial Applicability (Master Construct) -o0o- - . I: is interesting to compare this judgemenzal set with the earlier set derived from in-house GR~DC acZivity under Strategic Pro~ect Selection. This comN~rison is il!uszrzted in Table i: TABLE 1 COM/~ARISON OF GR&DC A2:D JOIN'f- R&D/MAtRKETINO JUDGEMEh~rAL SETS CR&DC SEUIATEGIC PROJECT SELECTION Degree of Technical/Cost Feasibility ) Long Range V Imminent ) De~ree of Breakthrough Reeuirement ) Technology Push V Commercial Pull ) Degree of Consumer Relevance ) De~ree of Evidenced Certainty of Success) Size of Creative ODDortunit7 M~nitude of Business Impact R&D/YARKETING STRUCTURED CKEATIVITY Lead Time :o Mmnufac=urabili~y Behavioural Validation Size of Target Market Contribution to Profit ODtimlsation Low V Hieh Co~erclal Communicability Ease of Cc=munication Degree of Commercial ADD!Icabl!Ity Defensive V Offensive Low V High Clari=y of Objective Info:nna:ion V Produ¢: Orientation Positive V Nesative .Manufacturer Cost Impact 5 Year Re=urn on Inves:ment De~ree of Commercial Applicability Dezree of External Risk r-- L-. BATCo document for Legal Services • Health Canada 19 May 1999

It is notable zhzt despite the difference in objectives for these exercises, the degree of correspondence in judgemental structures is impressive. Degree of external risk is apparently the sole judgement unique to :he joint R~D/Marketing exercise, whilst the three judgements unique %o the GR~DC exercise reflect :he more parochial emphasis of such an in-house approach. THE PROJECT PROPOSITIONS The proceedings of :he conference generated 13 discrete, product based project propositions, :he only propositions which mere arrived a: by more than one delegate being sides:ream reduced cigare%tes and slim cigarettes. The initial, uncritiqued presentations are reproduced in the companion volume zo this report. Each project proposition was subjected to critique during the conference designed zo produce an agreed specifica%~on of: I. STRATEGIC OBJECTIVE (The commercial aim of :he project) 2. CONSTRAINTS (Applying to the achievement of the objective) 3. PRODUCT SPECIFICATION (Physical/subjective features of the product design) 4. TECHNICAL HOW? (Design options, and the technical feasibility of achieving the product specification) 5. MARKETING HOW? (Quality of strategy required to market the product proposition) C'- C C~ BATCo document for Legal Services • Health Canada 19 May 1999

The 13 ~ropositions were as follows: I. MODIFIED MENTHOL/SPICE FLAVOURED PRODUCTS 2. THE 'AMELIORATED' CIGARETTE 3. SHORTER LENGTH~REDUCED TOBACCO CONTENT CIGARETTES 4. IXDIVIDUALLY HEAT SEALED CIGARETTES 5. 'FRONT END LIFT' CIGARETTES 6. CO~[PENSATABLE FILTERS 7. NICOTINE OPTIMISED CIGARETTES 8. ULTRA SLIM CIGARETTES 9. MOIST SNUFF I0. FULL FLAVOUR CIGARETTES !I. LO~ CO CIGARETTES 12. HIGH EXPANDED TOBACCO CIGARETTES 13. LO~ SIDESTEEA~/AMELIORATED AROMA PRODUCT Critiqued specifications of these propositions appear in the next see:ion of :his report. .--..% C_ OZ_• O~ "-4 BATCo document for Legal Services • Health Canada 19 May 1999