In Response to R&D Productivity Metrics

It’s been 2-years since I thought about and responded to the question posed in this blog entry about R&D productivity metrics. The fundamental problem I had with the metrics is that they measured research and development productivity in terms of money in a forward looking manner.  I still maintain this is an easy way for decision makers to fool themselves into making silly decisions and leads to all sorts of  trouble when these prognostications get folded into the financial outlook a company feeds to Wall Street.

But what if we look at R&D in a way that’s more predictable for the nature of R&D, then maybe we can get a more straight forward answer about what R&D to invest in. I think research and development that has the potential to lead to more R&D and more products is the best kind of R&D.  In a way it’s an indirect way to look at money. Put another way, it would be better to do R&D that will lead to more R&D and that can be leveraged into a greater number of products than doing R&D that dead ends when the effort is completed.

Let’s go back for a little bit to think about why a company or a person might do research and development.

1.  A problem needs solving to enable a product

2.  A company wants to enter an existing market

3.  A company wants to create a new market

Problem solving on the fly is basically incidental R&D — a problem comes up, the problem gets solved and life goes on.

The next two reasons for doing R&D require some forethought.  Entering an existing market is difficult because in order to be successful you have to offer a product that is better than the existing products and you have to be able to see into the future to predict whether this market has life left in it.  For instance, I pity the companies that invested heavily in variable printing only to see things get suddenly flipped over by the Internet, e-readers, electronic displays, and the Sustainability Movement.  As for creating a new market, that’s even trickier.  In that case it’s R&D by dumb luck or your company employs some visionaries who can create a vision of the future that appeals to customers.  Dumb luck and visionaries who actually predict correctly are hard to come by.  I think, though, the thing that binds these two reason to do R&D is the need for excellent vintage charts.  And I don’t mean vintage charts with products that have more features as time go by.  What I mean are vintage charts that take technology development and connect them with the trajectory of the markets they are entering.  This of course means linking it to future customer needs and not necessarily some made up vision of the market in terms of dollars.  A good example of some good products that probably came from a good vintage charting are Apple’s iPod to iPod Touch to iPhone and Magic Mouse and eventually to iPad.  These all took the idea of “touch” and expanded it into a technology development that built upon itself to create a string of products with excellent sales.

In thinking about vintage charting, you have start with a vision of the ultimate product or products and then move backward to unlock what technology developments have to happen.  In that process, you can move forward and to the sides to see product adjacencies.  I think if you happen upon a base technology development effort that spawns a grand tree of potential products and other R&D efforts, then you’ve got yourself something to pursue.  Your initial R&D effort will be rewarded with a future filled with products and growth.

I think, though, such activities should be done with scientists, engineers, and marketing.  Too often vintage charts are left only to marketing or engineering managers alone in cones of isolation.  You need the scientists and engineers to isolate the fundamental technology development components and you need the marketing folks to provide insight about customers.  Most importantly, though, an organization needs to have people who can look at matters across engineering and marketing and also have a compelling vision of the future.  And no, I don’t mean a vision of 10% growth year over year until we’re huge.  That’s not a vision of the future.  Those are goals for Wall Street and such goals can only be met by money and financial math manipulation.  What I mean is a technology and product vision and perhaps a 20 – 40-year outlook on society (For example, in 20-years we will create a mechanical suit that will result in a super soldier, or in 10 years all forms of entertainment will be on-demand).  This is difficult in times when companies choose put themselves at the mercy of Wall Street.  However, at some point if a company truly wants to be successful, then they have to concentrate on making something real rather than running a scam to create money from nothing.  Also, in the end, strong sales and excitement about new products always pleases Wall Street…So…well…’nuff said, right? Now get out there and invent!

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s