Performance monitoring in R&D projects

Project Management Systems can use a variety of tools to model and visualise project status. This paper discusses the application of an integrated approach for project modeling and proposes a new graphic tool called PACT for evaluation of project status. An integrated performance monitoring system comprising many tools, including PACT, was used successfully with multiple advanced technology projects within the Indian Guided Missiles Development Programme. The approach provided a better insight into the status and problems of projects, and enabled management to initiate the most appropriate actions towards better performance.     

R&D: Its Relationship to Company Performance

Decisions made by management today on investment in research and development can influence the viability and growth of a corporation into the 21st century. Graham Morbey reports on results of this study of R&D spending of major US companies for the ten-year period 1976 to 1985, including possibly controversial inferences concerning the relationship between R&D and company performance. He finds a strong association between R&D spending and subsequent growth in sales. However, he detects a threshold R&D funding level which must be exceeded if R&D is to contribute to future sales growth. The study shows little correlation between R&D intensity and growth in profitability. Also, it is apparent that sales growth and increasing profitability do not lead to increased allocations for R&D in most industries.     

Creative Thinking Ability, Cognitive Type and R&D Performance

The purpose of this study was to investigate the contributions of creative thinking ability and cognitive type to research and development (R&D) performance. One hundred and six researchers in an R&D institute of a petroleum company in Taiwan were given the Circle Test of the Torrance Test of Creative Thinking and Myers-Briggs Type Indicator . Their R&D performance was measured in terms of assigned technical reports, completed service projects, published papers, and a supervisor's performance rating. Results showed that there was a low but positive correlation between creativity and the first-authored paper and the technical report. The cognitive type was on the other hand associated with the performance rating and the first-authored service project assignment. Implications for R&D management are discussed.     

R&D 'programmes-competencies' matrix: analyzing R&D expertise within the firm

The author suggests that the systematic identification of a firm's technologies opens up the possibility of evaluating, protecting, optimizing, enriching and exploiting these technologies to the full. A firm's technologies fall into two parts: those embodied and exploited in current operations and those evolving from the collective competencies of its R&D staff. The author's aim is to evaluate and describe the firm's R&D competencies.
The identification of R&D competencies proceeds in three steps: tracing the background of the current and past programmes, constructing a programmes/competencies matrix, and deriving an expertise profile. The construction of the matrix is the key activity and requires much care in its execution, if competencies are to be properly defined and truly existing, and if it is to be exhaustive. The author sketches a procedure for constructing a matrix and discusses problems of implementation and draws attention to some of its limitations.
The author claims that such an inventory of expertise could improve the efficiency of the use of the R&D resource, identify a laboratory's strengths and weaknesses, direct R&D into hitherto neglected channels, assist individuals to identify and evaluate their own expertise, justify obtaining funding for building expertise in shortage areas. The method should be considered as a starting point to formulate appropriate strategies to gain access to technology.     

The R&D Effectiveness Index: A Metric for Product Development Performance

Measuring the overall success of product development efforts has been frustrating because there is no generally recognized metric to measure effectiveness. The R&D Effectiveness Index is introduced to address this need. It measures effectiveness by comparing the profit from new products to the investment in new product development. The article provides the details for calculating the index along with alternative interpretations. Michael McGrath and Michael Romeri report that this index was validated through a study of 45 electronic systems companies. They found a strong relationship between the R&D Effectiveness Index and other performance factors and believe that the R&D Effectiveness Index can be used to compare performance, measure improvement, and evaluate business units. Its application is illustrated in a case study.     

Capital Budgeting Practices for R&D: A Survey and Analysis of Business Week's R&D Scoreboard

This paper discusses results of a survey of U.S. Corporations regarding the extent of the utilization of standard capital budgeting measures of investment worth to evaluate R&D projects. This study analyzes responses by three types of R&D activity: Basic, Applied and Development research. The results indicate that discounted cash flow methods are widely utilized in the evaluation of Development projects, and the analysis of Development projects is as sophisticated as the evaluation of non-R&D projects. The use of discounted cash flow analysis techniques for Applied projects is considerably less widespread than for Development projects. However, the utilization of Net Present Value and Internal Rate of Return increases with firm size. Basic research projects are much less likely to be subjected to a formal economic analysis and are generally thought of as being “strategic” investments. This research also indicates that post-audits of Applied and Development projects are based on economic measures, whereas Basic research projects focus on physical or operational goals. Lastly, this research indicates that most R&D projects are terminated because R&D priorities have changed rather than because they are not technically feasible.     

R&D competition versus R&D cooperation in oligopolistic markets with evolving structure

This paper considers investment behavior of duopolistic firms subject to technological progress. It is assumed that initially both firms offer a homogeneous product, but after a stochastic waiting time they are able to implement a product innovation. Production capacities of both firms are product specific. It is shown that firms anticipate a future product innovation by under-investing (if the new product is a substitute to the established product) and higher profits, and over-investing (in case of complements) and lower profits, compared to the corresponding standard capital accumulation game. This anticipation effect is stronger in the case of R&D cooperation. Furthermore, since due to R&D cooperation firms introduce the new product at the same time, this leads to intensified competition and lower firm profits right after the new product has been introduced. In addition, we show that under R&D competition the firm that innovates first, overshoots in new-product capacity buildup in order to exploit its temporary monopoly position. Taking into account all these effects, the result is that, if the new product is neither a close substitute nor a strong complement of the established product, positive synergy effects in R&D cooperation are necessary to make it more profitable for firms than R&D competition.     

Multinationals and the globalization of R&D

In this paper we consider how the location, organization and output of knowledge production evolve within domestic firms following acquisition-FDI in order to understand the aggregate effect on an index of domestically produced innovations. We find strong differences according to how close the acquiring MNE is to the technologically frontier. Frontier MNEs are more likely to close R&D activities in acquired affiliates, but when they are retained they expand employment of high-skilled R&D workers and transfer R&D knowledge. Non-frontier MNEs make fewer changes to R&D. Overall the effect of acquisition-FDI on the domestic innovation index is positive.     

Marketing/R&D Interaction in New Product Development: Implications for New Product Success Rates

A growing body of literature has evolved which deals with the interaction between marketing and R&D in new product development. Much of this research, unfortunately, fails to associate various variables with new product success levels. Thus, it cannot suggest consensus guidelines for marketing's involvement to increase the performance levels of new products in the market place. Richard Hise, Larry O'Neal, A. Parasuraman and James McNeal report results of their analysis of the new product development procedures of 252 large manufacturing companies. The authors conclude that collaborative efforts between marketing and R&D during the actual designing of new products appear to be a key factor in explaining the success levels of new products, that management effort should focus on the design stage of the new product development process rather than on the earlier and later stages and that R&D's contributions cannot be ignored while decisions are made about marketing's role in developing new consumer and industrial products.     

The importance of internal and external R&D network linkages for R&D organisations: evidence from Singapore

This paper examines the importance of internal and external R&D networks for R&D organisations of multinational firms (MNCs) in Singapore and investigates corresponding R&D management requirements in this context, namely a late-industrialising country in Asia. A unique feature of Singapore is its ability to attract 'high quality' foreign direct investment, involving activities of higher value added and more complex technology without having developed full-fledged R&D activities among its business organisations, thus creating a challenging situation for subsidiary R&D managers, both in the internal R&D organisation as well as in the external research environment. This paper analyses these issues.
Based on in-depth interviews with 53 R&D subsidiaries of MNCs operating in Singapore, this paper identifies internal and external R&D management needs. Through our analysis of data gleaned from these interviews, we found that subsidiary R&D managers need to increase and/or maintain the strategic importance of their R&D site internally within their global corporate R&D organisation. This requires constant upgrading of the technological level at the R&D subsidiary and intense communication with headquarters as well as other R&D subsidiaries. Furthermore, our findings indicate that in the external research environment, subsidiary R&D managers need to create an efficient local network of external players. If these internal and external issues are properly addressed, the R&D subsidiary can effectively contribute to the corporate R&D organisation and be a critical partner in the local research network. Lessons learned from the Singapore experience include the need to develop sufficient local expertise as well as to change the mindset of managers to focus on creativity rather than precise execution.     

System modeling of the R&D domain through the object–process methodology: a practical tool to help R&D satisfy its customers' needs

Research and Development is an intricate process involving a host of challenging technological frontiers. This paper presents a practical tool to help R&D personnel satisfy the needs of customers by a systematic evaluation of R&D performance. To establish a sound methodology for R&D performance evaluation, we employ the object-process analysis (OPA) part of the object–process methodology. Using OPA, we gradually expose the constituents of the R&D system, its environment and the interaction between them. Through this systematic top-down refinement, we provide a comprehensive generic view of the R&D domain. The framework presented in the paper allows the user to describe, order, and inter-relate the issues that R&D managers should consider when managing, evaluating and planning R&D. As the approach addresses structure and behaviour in a unified, integrated manner, the analysis provides insights into both the static and dynamic aspects of the R&D domain and establishes a solid basis for its enterprise modeling.     

In-house R&D management development — strategy and implementation in a major government R&D agency

Abstract
The paper describes the experiences of CSIR in developing an in-house capability and implementation process of R&D management development programmes. The conceptual approach of the laboratory-based R&D management development programmes is described. Different phases in the process of implementation are presented along with the case studies of recent training programmes in two different laboratories. Some of the key aspects of the training programmes —- successful implementation, relationship with policy-making, and improving R&D performance have been examined. The role of international co-operation in R&D management development is suggested. The paper also discusses the future prospects of R&D management development programmes in the country.     

Research and development (R&D) beyond manufacturing: the strange case of services R&D

The share of business research and development (R&D) expenditure stemming from the services sector of the economy has been growing rapidly in many (though not all) OECD countries, according to official statistics. The same data sources also indicate, however, that services contribute less to R&D than would be expected given their large shares of employment and output in national economies. In part, incomplete sampling of services in R&D surveys may lead to some underestimation of their R&D activity, but this is unlikely to account for their apparently poor performance. This paper draws on an analysis of existing statistical sources, and on interviews and workshops with service firms' managers. It finds difficulties associated with the ways in which R&D has been operationalised in survey questions. Examination of survey questionnaires suggests that the formulation of these questions, focusing on technological R&D and ruling out much social scientific R&D, disproportionately reduces the reporting of R&D by service firms. But beyond this, the R&D concept itself has some problematic features where it comes to documenting innovation in service firms. This was investigated through a programme of interviews and workshops with service firms, where a lack of familiarity with the R&D concept and R&D management practices was found to be commonplace. R&D performance and innovation activities vary across services of different sorts, even though most service subsectors appear to be low R&D investors. It is thus important to examine services' innovation patterns and processes, to establish what types of R&D‐like activity are underway in these subsectors. While some modification in R&D measurement would be desirable to capture services' activities, effort to understand the non‐R&D elements of services innovation is also important – for management and for policy (given that governments are seeking to create R&D incentives and targets for services and other sectors). There are grounds for expecting (a) services' share of business R&D to continue to grow; (b) this share to continue to be well below what would be expected from the prevalence of services in economic activity, and (c) for many services' innovation to continue to rely heavily on sources that are not directly associated with R&D.     

A Role for Knowledge Engineering in R&D

The author distinguishes information from knowledge: information is notes, details, evidence, etc., knowledge is general laws, theories, understanding. Information Engineering (IE) is the provision of knowledge in usable form. Artificial Intelligence (Al) is the construction of computer systems that exhibit signs of intelligence. He asserts that Al has already provided methodologies that have advanced both IE and KE. The result is that IE and KE are now in the position to act as the pencil, paper and report material for R&D.
Working knowledge of the languages is easily acquired and some useful empty shells are available, though the latter need more variety. Existing systems tend to be crude and may not address the right issues, e.g. emphasising probability rather than the risks associated with actions. Nevertheless the available tools are good enough to build useful expert systems for R&D.
The potential of KE in education is being missed. In the author's opinion all university students should be taught to use the basic tools of knowledge engineering and apply them to their own disciplines.     

The budgeting process for R&D laboratories

The author had been associated with the writing of a short series of case studies into the process by which companies allocate their R&D budgets to individual departments or projects. A key question became the location of responsibility for determining the objectives of work under-taken in R&D, and also responsibility for the allocation of resources in R&D.
The cases revealed that decisions were taken by senior R&D managers at one extreme, and by marketing or production managers at the other, but also most often jointly between the functions with different weightings of authority. The parameter most clearly differentiating between the loci of responsibility was the project duration. This led to the development of a two dimensional diagram correlating the expected remaining duration of the project, with the locus of responsibility for its management.
It is expected that this model which fits current practice into a normative framework will enable organizations to review and adjust their present methods of coping with the complexities of R&D budgeting.