T97 - "R&D Metrics For Manufacturers: Measuring Your Productivity"

Lorman� Education Services, Teleconferencing Division, Eau Claire, Wisconsin, USA
April 3, 2014 -- [29 Pages]

Description: Globalization, business alliances, open innovation, and improved improved organic innovation initiatives to gain strategic advantage in this era of global competition are driving significant changes in measurement practices for innovative functions. The depth of the recent recession augmented the rate of change.

GGI has been tracking the R&D and Product Development metrics used by industry for twenty-five years, and regularly for the past fifteen years. Our 2013 findings indicate that there is now a clear industry-wide focus for R&D metrics to address business results. That has not always been the case. "Business results" does not equate to conservative portfolios either. There are more risk monies being spent. But, a plethora of newly developed processes to oversee risky and exploratory activities now keeps a business focus on these early stage activities; and is causing a need for new metrics. The sand box definitely shrunk in the past five years. The entire pipeline portfolio is receiving increased scrutiny.

Shifts in the priority of a number of measures towards measuring business results have been on track since the 1990s at a slow pace. Our 2008 findings indicated some type of inflection point in real priorities was nearing. A comparison of the same twenty-five metrics between 2008 and 2013 shows a clear priority shift, that will likely be permanent.

Finally, intellectual property is increasingly being used as a revenue and profit generation tool; and as a revenue and profit protection tool.

In summary, R&D productivity improvements are being driven by a combination of "business environment" factors and the "maturation of the monetizable IP marketplace." Existing metrics are being elevated or demoted to support today's needs and opportunities. New metrics are being created to measure R&D areas that have not previously existed, or were not of a size or importance that warranted corporate measurement.

Section Titles:

I. R&D Management Evolution & Revolution
A. Timeline 1940-2025
B. Best Practice Process Execution
C. New Basic & Applied Research and Advanced & Product Development Practices
D. New Process-ware Preceding Stage-Gate Is Spreading Across Industry

II. Emergent Innovation-Age R&D Metrics
A. Vitality Index
B. A Metric For The Hockey Stick and The Chasm
C. Return-On-Innovation
D. Research & Development Effectiveness Index
E. Advanced Development Return-On-Innovation
F. Applied Research Return-On-Innovation
G. Case Study: A Top 10 Global Innovator
H. Return-On-Capital

III. State-Of-The-Industry Metrics Practices In 2013
A. Top Twenty-Five Corporate R&D Measures in 2013
B. Top-Twenty Five Comparison Pre-Recession 2008 to Post-Recession 2013
C. Continuing Commercialization Issues
D. R&D Metrics Penetration Changes 1998-2013
E. R&D Metrics Penetration In The Coming Decade

IV. Recommendations
A. Effectiveness Metrics Outperform Efficiency/Productivity Metrics In Value Generation
B. Sigma-Level Portfolio & Pipeline Control That Maximizes Business Value

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