GGI RapidNews R&D Product Development eZine: Volume 6, Issue 11- November 2, 2005
In This Issue
MANAGEMENT PRODUCTIVITY - Brains Beat Spending On R&D - Wall Street Journal
UPCOMING PUBLIC SEMINAR - Product Development Metrics Summit Dec 05
UPCOMING PUBLIC SEMINAR - Prod. Dev. Innovation Summit Jan 06 - Still Early Bird!!!
BOOK REVIEW - Thinking For A Living - Thomas H. Davenport
2004 METRICS SURVEY RESULTS - 2004 Survey Results Available
FEATURED iSTORE PRODUCTS - 2004 Survey Research Articles 6-Pak - Spans Survey!!!
CONFERENCES OF INTEREST - MRT 10th Metrics, Frost & Sullivan NPD Executive Summit
GATEWAYS TO KNOWLEDGE - A Monthly Feature
CALENDAR OF INDUSTRY EVENTS - A Monthly Feature
TELEVISION EVENTS - Alexander Haig's World Business Review
In the October 5 issue, RN Editors quoted a recent benchmark study [Cumin, Journal of Economic Growth, December 2004] indicating that a country's R&D spending has a significant impact on overall productivity. However, the key finding of the study lowered the long held estimate that R&D drives almost 70% of country productivity to a more moderate 10-20%. Even the critics agree that this study removed a lot of agreed errors of prior studies.
Maybe we have a metric for R&D's relation to country productivity that is somewhat reliable at this point! Now, how about company spending on R&D. What is its impact within an industry? Company spending and government spending together comprise country R&D spending. With the government piece of the puzzle, the makings of an initial road map to answer the elusive economic question as to "R&D's impact" would be near at hand. Finding metrics that are exactly adjacent is never easy, but this month's featured productivity finding is a step towards that end.
Brains Beat Spending On R&D
"In R&D, Brains Beat Spending In Boosting Profit", by Gary McWilliams, Wall Street Journal, October 11, pages A2 and A13.
On October 11, the Wall Street Journal cited a recent Booz Allen Hamilton, Inc. study that analyzed "six years of financial results by 1000 publicly traded companies that are responsible for the bulk of R&D spending" around the globe. These top 1000 global companies spent proportionately greater sums of money than their industry peers but did not enjoy greater revenue gains or better profits. In fact, 2004 operating profit was slightly less by the top 10% of spenders. The bottom 10% of spenders operating profit was significantly worse however, almost half.
"The finding flies in the face of academic studies and accepted wisdom on the value of corporate research. It also comes as researchers warn that U. S. companies need to increase spending or risk falling behind rivals in China and India, which are rapidly industrializing."
Conclusion: "once a minimum level of R&D spending is achieved, better oversight and culture were more significant factors in determining financial results"
Conclusion: "no statistically significant difference when comparing the financial results of middle-of-the-pack companies with those in the top 10% of their industry"
Conclusion: "result was the same when viewed within 10 industry groups or across all industries evaluated."
There was another finding that was of interest. From a management and a financial perspective, it is perhaps the most interesting finding. "R&D spending was positively associated with one performance measure: gross margins."
Conclusion: "Median gross margins of the top half of companies measured by R&D to sales spending were 40% higher than those in the bottom half."
The WSJ did not elaborate further. One might pontificate that the difference between gross margin and operating margin is a measure of a company's ability to efficiently manage the scale of its operation. This last finding does seem to indicate that there is a strong relation between R&D spending and bottom-line results, if only the scale of the operation is efficiently managed.
Our Sep 05 Metrics Summit resulted in five company teams of 3-4 people each drafting a proprietary set of R&D metrics for their company. Two additional teams, composed of individuals from a dozen companies, created sets of metrics believed suitable to cause "Innovative" versus "Balanced" R&D strategies and outcomes. Please join us in our Dec 05 Metrics Summit to realize these tangible and useful outcomes for your company.
There are three comprehensive and powerful metrics seminars - MPDII, PPRD, and PDMP - now all integrated into a single comprehensive offering in a 3-Day format, the Dec 05 Metrics Summit. On Tuesday, zero in on several specific key metrics subjects of management interest. On Wednesday, improve your dashboard with metrics that predict outcomes. Finish the week by creating a set of metrics for R&D in your company. This set of seminars launches you on the way to improve your performance through metrics.
The seminars offered are
All seminars feature case studies and examples from a range of industries and the practical tools you need to implement metrics in your organization.
Discounts are available for teams of three or more people attending from the same company.
If you are planning on attending, register for the Metrics Summit.
For more details on the Product Development Metrics Summit, go to GGI's web site.
To download a brochure containing more details, schedule and pricing, click on download brochure.
GGI will sponsor its first ever Product Development Innovation Summit on January 17-19, 2006 in Norwood, MA. Please join us for eight comprehensive modules that surround the subject of Innovation in R&D and Product Development.
The Innovation Modules that will be offered are:
All modules feature some level of case study discussion and examples from a range of industries. There will be at least three significant group exercises where attendees will "try out" well regarded innovation methodologies. As with all GGI Summits, we will pave the road for you to implement practical tools in your organization.
Discounts are available for teams of two or more people attending from the same company.
If RN readers are planning on attending, please register now for the Innovation Summit. The Early Bird Registration Period concludes November 21, 2005. Be an Early Bird and save up to $150 per person.
For more details on the Product Development Innovation Summit, please go to GGI's web site.
Thinking For A Living: How to Get Better Performance and Results from Knowledge Workers, by Thomas H. Davenport. Harvard Business School Press. 2005, first edition. TBD pages.
Tom Davenport's latest book offers more useful management tools and techniques for the 21st century. Since his early reengineering days at Index Group in Cambridge, Massachusetts where he, Michael Hammer, and Brad Goldense were members of the group of the team that pioneered process engineering and reengineering, Tom has gone on to write some of the most useful texts available for the knowledge economy. His first book, which was the first text that really dissected the subject of process reengineering, is the basis of most improvement activities in corporations for the past decade. His subsequent books addressed the issues of managing organizations that run by processes. His latest book offers spot on approaches and techniques for the ever more elusive ability to manage professionals that are truly knowledge workers. Certain categories of knowledge workers, Dr. Davenport offers, are processes in themselves.
Tom is methodical and structured in many of his writings. He again shows his ability to distinguish between fine lines in organization structure and behavior through his articulation of frameworks that can be applied analytically and managerially. Tom is out in front. He is about what is coming or should be already, and not about what has been. For anyone that is directing or leading professionals that are knowledge workers, this book is probably a must read.
Among several useful findings in this book, and the survey data that underlie the findings, was a list of ten attributes of that underlie one of the most important attributes of good knowledge workers -- they have mastered personal information management.
1. They avoid gadgets.
You can find more information about this book or purchase it through Amazon.
2004 Product Development Metrics Survey - Product Selection, IP Management, and Top Corporate Metrics: The Summary and Highlights Reports for GGI's 2004 Biennial Product Development Metrics Survey are now available for purchase by the public through GGI's Wisdom iStore. These reports are completely based on primary research performed by GGI researchers. The research includes 202 respondent companies. There was a 5% response rate.
McKinsey & Company, Texas Instruments, Rockwell, Kimberly Clark, JDS Uniphase, Shure, Curtiss Wright Flight Systems and Datacard are representative of companies that purchase market research from GGI.
The 2004 Survey focused on the following 5 areas of product selection and IP management:
Some additional complimentary information about the survey is available:
The 2 commercial versions of the survey results that we currently offer for public purchase are:
1. 2004 SURVEY HIGHLIGHTS: A text-only report (75 pages), including the full text of all the results and analysis of the survey population analyzed as a whole, and
2. 2004 SURVEY SUMMARY: A report of composite results, where the survey respondents are analyzed as a whole (149 pages, includes a full set of graphed answers for every survey question).
Individual sections of the research reports, as well as logical combinations of sections are also available. All reports are available in printed or electronic versions.
These reports are available in the Market Research section of GGI's Wisdom iStore.
Discounted Item: Each month, or every other month, GGI's iStore features one item that we discount 40%. The current Featured Item is "2004 Product Development Metrics Research Summary Article 6-PAK" (B001), a package of six one-page articles. All articles were published during the first six months of 2005 in the well regarded 2PLM ezine.
Page 1 gives an overview of the focus areas of GGI's 2004 Product Development Metrics Survey and acts as an introduction to five subsequent authored Articles corresponding to the five focus areas of the survey.
Page 2 presents results in the area of the product selection process. The rise in use of the more sophisticated multi-step process is explained and analyzed. The level of formality of product selection decisions and the most common decision-making group are detailed. Based on the results, conclusions are drawn regarding trends in the product selection process that can greatly benefit companies.
Page 3 presents results in the area of the product selection tools and techniques in use. Out of a list of 21 popular product selection tools, respondents chose their top tools used for product selection. Also discussed are the most common product selection tools that are believed to generate innovative thinking and intellectual property that can be legally protected through formal registration. Key opportunities are presented for companies to gain more value from their product selection process.
Page 4 presents results in the area of the intellectual property (IP) process. Learn about the growing importance of IP and the process companies use to make decisions regarding IP management. Results from GGI's 2004 research provide details on the number of steps in the process, the number of people involved in decisions, and the frequency of IP registration. The maturity of the IP management process is compared to the product selection process
Page 5 presents results in the area of intellectual property (IP) tools. In the context of the growing importance of IP, learn about the tools and systems companies use to protect and manage their IP. Results from GGI's 2004 research provide details on the most common forms of IP protection as well as the most commonly used systems to manage the inventory of IP. The significant barriers are also discussed, including the costs and lead times associated with IP registration.
Page 6 presents results in the area of corporate R&D metrics used in industry. Top corporate metrics currently in use are listed and compared to prior surveys to indicate trends. The rise in use of metrics used to measure R&D as a whole is explained and analyzed, and predictions for developments in the next twenty years are offered.
The price for this article package, "2004 Product Development Metrics Research Summary Article 6-PAK," has been dropped from $170.00 to $102.00, a deep discount of 40%. GGI's Featured Item changes approximately every other month and is always offered at a 40% discount.
For more information, or to order this material, please go to GGI's Featured Item.
Newly Released Item: While not a featured item, we want to make you aware of a newly released technical paper, "The CEO's View On Measuring R&D" (T55).
This paper describes several areas of interest to CEOs when measuring R&D. Metrics that are used to capture return-on-innovation, manage capacity, manage functional departments, and drive project outcomes are highlighted along with emerging intellectual property metrics. The paper contains the Top 60 R&D metrics used in industry today along with the research indicating the number of measures used by corporations and separately R&D organizations to measure themselves. The paper contains a significant amount of detailed results from GGI's most recent primary research, the 2004 Product Development Metrics Survey.
For more information, or to order this new technical paper, please go to GGI's Wisdom iStore.
CONFERENCES OF INTEREST
MRT 10th Annual Metrics Conference: Management Roundtable will hold its 10th annual conference, "Product Development Metrics: Achieving the Full Value of R&D," on November 7-9, 2005 in Chicago, IL. The conference will examine strategies, best practices, methods and tools leading companies are using to increase overall R&D performance. This year's program features an exceptional line-up of metrics gurus, thought leaders, advanced practitioners and folks in the trenches bridging theory with reality and making it work. This year's conference keynote speakers are GGI's Brad Goldense, Dr. Robert Cooper (author of "Winning at New Products"), Don Reinertsen (author of "Managing the Design Factory, Developing New Products in Half the Time"), Watts Humphrey (founder of Software Process Program at Carnegie Mellon University's Software Engineering Institute), and Robert Schur (Senior Vice President of STATS Inc.).
Brad Goldense will deliver the keynote address, "The Future of Product Development Metrics: Corporation, Projects, & Functions," to explore past, present and emerging trends in the evolution of product development metrics. Brad will also conduct a full-day, pre-conference workshop on Monday, November 7, 2005 on "Product Development Metrics Portfolios."
For more information or to register, go to MRT's web site.
Frost & Sullivan Executive Summit: Frost & Sullivan will hold its Executive Summit, "Innovations in New Product Development, Management & Marketing 2005," on November 6-10, 2005 in Miami, Florida. The summit will present new ideas and creative strategies for portfolio and product planning, management, and marketing vital to propelling product profitability and market performance.
Brad Goldense will deliver the keynote address, "Innovation Management: From Ideation to Commercialization," on Thursday, November 10, 2005. Thursday's program features a special focus on emerging technologies.
For more information, or to register for the Executive Summit, go to Frost & Sullivan's web site.
GATEWAYS TO KNOWLEDGE
GTK-Gateways To Knowledge is a DIRECTORY OF THOUSANDS OF LINKS to providers of engineering, purchasing, and manufacturing technologies and services. If you hit the right subjects, it is more useful than a search engine! The "main entrance" to GTK can be found at:
For those of you that do not want to risk going through the main entrance above, some of the Gateways that we believe you will find useful or entertaining are highlighted below.
CALENDAR OF INDUSTRY EVENTS
GGI's Calendar of Industry Events contains an up-to-date listing of links to Conferences, Seminars, Distance Learning Centers, Webinars, Colleges & Universities, Executive Education, and Corporate-Sponsored Universities. The calendar has just been updated with more conferences and seminars throughout 2005. The categories we follow are:
The categories of conferences, seminars, and distance learning are further organized into the following subject areas:
If you are looking for a conference or other learning opportunity, check out the Calendar. This free service for our readers is front and center on GGI's Home Page. Or, go directly to the Calendar of Industry Events MEGA Gateway.
Alexander Haig's World Business Review: Brad Goldense has made several appearances on Alexander Haig's World Business Review in the past year. Streaming video is available for all shows, which aired on August 4, September 29 and December 15, 2002 and on May 20, 2003. See below for details.
May 20, 2003 Broadcast of September 29th In-Studio with Alexander Haig (22.5 minutes): Streaming video for this segment is available on GGI's web site.
December 15, 2002 In-Studio with Alexander Haig (7.5 minutes) on CNBC paid programming: Streaming video for this segment is available on GGI's web site.
September 29, 2002 In-Studio with Alexander Haig (22.5 minutes): Streaming video for this segment (as well as the entire 30-minute show) is available on GGI's web site.
August 4, 2002 On-Location at GGI (3.5 minutes): This On-Location field report is available in streaming video on GGI's web site.
The web page includes links to download a streaming video player, if you do not currently have one installed on your computer.
For more information on any of Brad's appearances on television, go to:
GGI RapidNews is an e-mail publication from Goldense Group, Inc (GGI). Its subject matter includes survey findings, company news, book and article reviews, key industry conferences and R&D information of interest to clients and associates. Please send communications to rn(at)goldensegroupinc.com. Thank you.