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GGI RapidNews R&D Product Development eZine: Volume 2, Issue 5 - June 27, 2001
GGI RapidNews is published monthly

 

NEWS & NOTES
GGI Office Move: After approximately 15 years in Cambridge, Massachusetts, GGI has relocated to Needham, Massachusetts, just off Boston's inner circumferential (Route 128/I-95). Our new location should be more convenient for visitors, and offers us about five times the floor and storage space. Our contact information is located in the signature block below, and directions to our office are in the PDF attachment. If you plan to visit Boston, please call to visit our new office if your time permits.

[This is the first PDF attachment since initiating the newsletter. Such attachments will continue to be infrequent.]

 

R&D SURVEY RESULTS
Metrics Survey: Free downloadable copies of the 2000 R&D Metrics Survey Description and/or Survey Questionnaire are available in our Market Research Reading Room at http://www.goldensegroupinc.com/readmarket.shtml. You will also find free downloadable files for GGI's 1998 Product Development Metrics Survey. The 1998 and some 2000 Metrics Survey results are now available for purchase at http://www.goldensegroupinc.com/cgi/catalog.cgi?display_p355.

Each month we share selected R&D survey results with RapidNews readers. We thought you might also be interested in characteristics of 2000 Survey respondents, as well as some results from the survey section on Portfolio Management and Portfolio Selection Metrics. Those results are bulleted below.

Two-thirds of the 2000 Survey respondents came from public companies, the rest from private companies. Four out of five of those respondent companies replied to the survey from a profit center perspective. One out of five replied from a cost center perspective. The vast majority of 2000 Survey respondents (90%) said that their manufacturing processes were "Repetitive/Discrete Manufacturing," followed by "Process Manufacturing" and "Job Shop Operations." Many respondents claimed that all three manufacturing process categories were present. Over one-half of the survey's replies came from the following seven industries: aerospace, automotive, consumer products, durable goods, industrial, electronics and medical products.

  • There has been a 50% increase in the past five years in the percent of company sales that are due to new products, as measured by the "Current Year Sales/Profits Due To Products Released In The Past N Years" metric. That metric was popularized by 3M in 1988, and is now calculated by half of all companies. In 1995, companies reported about 20% of their revenues coming from new products developed in the prior 3-4 years. In 1999, companies reported about 30% of their revenues coming from new products developed in the prior 3-4 years.

  • 38% of companies report using the 4x4 matrix popular in financial analysis that plots Product Investment vs. Product Return. 27% of companies report using or also using the 4x4 matrix popularized by the Boston Consulting Group in the 1970s that plots Growth Potential vs. Market Share. 21% of companies report using or also using two other 4x4s, Return vs. Life Cycle and Market Risk vs. Technical Risk. 15% of companies report using or also using the Product Price vs. Product Performance 4x4.

  • 30% of companies review a potential product idea more than two times before finally accepting or rejecting it. 33% of companies review project/product proposal two times. 11% of companies only review it one time. 14% of companies report no formal process for reviewing project/product proposals. 12% report using other review/approval methods that are not measured by the number of pre-approval/reject reviews.

Our next R&D Metrics Survey will be conducted early in 2002. If you would like to participate at that time, please send me an e-mail indicating your interest in doing so.

 

PUBLICATIONS
Machine Design Special Supplement Issue: GGI has written an article for the July '01 Machine Design Supplement entitled "Measuring Product Development." Our initial interest in new product development projects was to determine the degree of standardization that existed in industry in the area of Project Metrics, within a company and across all companies. The importance of having standardized measures across development projects may seem obvious, but is not always practiced. A manager's interest in measuring any business process derives from an interest in that process' effectiveness and/or efficiency vis-a-vis particular business objectives. Measurements of effectiveness determine how well a process like product development accomplishes a company's business objectives. Measurements of efficiency determine how economically they do it.

 

NEW WEB CONTENT
Job Search Gateway: GGI has recently introduced another mega Gateway: Job Search. The Gateway includes

With the growing prospect of layoffs and slow-downs, these links have assumed ever greater importance to many professionals. Have a look, and please let us know of any links that you would like to see added.

Technology and Service Provider Links: If you've visited the Gateways to Knowledge (GTK) part of our web site and seen the numbers of links there, you can appreciate the resource it represents for product development professionals. Visit http://www.goldensegroupinc.com/gateway/index.shtml and have a look. It keeps on growing. Despite the thousands of links, we have undoubtedly missed many. If you know of a site which you believe falls into one or more of the major GTK categories, for example, Benchmarking, Calendar, Service Providers, and Technology Providers, please let us know. We will have a look and put it up.

 

FUTURE TRENDS
Intellectual Property Metrics: Companies like AT&T and 3M are both pursuing strategic innovation, but the former has increased patent applications by approximately 700% while the latter has decreased applications almost 25% (1999 data). Why? AT&T is entering areas of rapidly changing technology and seeks to protect its Intellectual Property (IP) while 3M seeks to focus on better commercialization of its existing core technologies. Protection of innovation requires different strategies for different companies in different phases on the business development cycle. However, both these companies have the same need to respond to global competitive change with its resulting pressure to continuously innovate.

In an effort to determine America's most innovative and competitive companies, CHI Research together with Technology Review Magazine developed the five metrics below to create a Patent Scorecard of the 150 "most innovative" companies. Those companies represent eight different industries: aerospace, automotive, biotech/pharmaceuticals, chemicals, semiconductors, computers, telecommunications, and electrical/electronics. The metrics that CHI Research and TR Magazine used to determine company rankings were:

  • Technological Strength: The number of U.S. patents multiplied by the Current Impact Index (see below).

  • Number Of Patents: The total number of U.S. patents awarded, excluding design and other special-case inventions.

  • Current Impact Index: The number of times a company's patents for the previous five years are cited in the current year, relative to all patents in the U.S. system. A value of 1.0 indicates average citation frequency.

  • Science Linkage: The average number of science references cited in a company's U.S. patents. "Science linkage" tracks the scientific papers cited in each patent to evaluate the closeness of a company's portfolio to cutting-edge research.

  • Technology Cycle Time: The median age in years of the U.S. patent references listed on a company's patents. "Technology cycle time" assesses how rapidly firms are turning technology - their own and others' - into inventions. By combining "Science Linkage" and "Technology Cycle Time," the scorecard provides a unique way to spot changes in a firm's intellectual property strategy and strength before they are otherwise apparent.

What seems to emerge from a review of changing company rankings over the five year period analyzed is that a company's Technological Strength over time varies, sometimes appreciably. For example, the top firms have changed position in seven of the eight industry groupings. Technological Strength requires that "leading edge" companies remain dynamic. The need to remain dynamic may mean patent volume (breadth) or patent focus in hot growth areas (depth). How close a company works to a technology cutting-edge may reflect the strength of its future market competitiveness. We are currently witnessing a relentless worldwide effort to create, optimize and control Intellectual Property, one of the major historical transitions affecting business this century.

[The above data comes from MIT Technology Review Magazine's Special Report on Intellectual Property in the March/April 2000 issue. See especially "Companies Squeeze The Patent Pipeline" by Robert Buderi and the CHI Patent Scorecard: http://www.techreview.com/magazine.]

 

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RapidNews is a brief e-mail publication from Goldense Group, Inc (GGI). Its subject matter includes survey findings, company news, book reviews, key industry conferences, and other R&D information of potential interest to clients and associates. Please send your communications to rn(at)goldensegroupinc.com. Thank you.
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