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GGI RapidNews R&D Product Development eZine: Volume
2, Issue 5 - June 27, 2001
GGI RapidNews is published monthly
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.]
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.
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
- 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.
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.
Job Search Gateway: GGI has recently introduced another mega
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
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.
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
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
- 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.
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
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.]
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.