Volume 4, Issue 12 - December 1, 2003
GGI RapidNews is published approximately once a month.

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In This Issue

2002 METRICS SURVEY RESULTS

2004 METRICS SURVEY

NEWS & NOTES - Complimentary Articles

BOOK REVIEW - The Innovator's Solution

MANAGEMENT PRODUCTIVITY - Corporate R&D Scorecard

NEW BIENNIAL SURVEY - 2002 RD&E Survey Results available now

NEW iSTORE PRODUCTS - New Quotation, Article and Technical Papers

NEW WEB CONTENT - Updated GTKs: Calendar, Accounting, Advertising, Law Firms and Public Relations

FEATURED iSTORE PRODUCT - 2000 Product Development Metrics Research Summary

CONFERENCES OF INTEREST - MRT Improving R&D Productivity

WEBINARS OF INTEREST - Sopheon's Winning Practices for Product Development

TELEVISION EVENTS - Alexander Haig's World Business Review

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2002 METRICS SURVEY RESULTS

GGI's 2002 Product Development Metrics Survey, which focused on resource and capacity management practices and metrics, was published earlier this year. From April through August, GGI shared with RapidNews readers selected results from each section of the survey, with the survey population considered as a whole. We have also analyzed the data in "Special Cuts" by segmenting the population into the following five groups: Public vs. Private, Smaller vs. Larger, Process vs. Repetitive/Discrete vs. Job Shop Operations, Higher Technology vs. Lower Technology, and More vs. Fewer Employees. Over five months, we will share selected results from each of these segment analyses. This month, we present the third segment, selected results from the "Process vs. Repetitive/Discrete vs. Job Shop Operations" segment.

- Process companies tended to have separate and more formal processes for selecting Advanced R&D projects than did the other types of manufacturers.

- Job Shops were most likely to view sustaining engineering as a profitable revenue business (47% vs. 39% of both the other 2 groups).

- Job Shops tended to have less of a "clearly defined set" of metrics than other types of manufacturers. 39% of Job Shops reported that they did not have a clearly defined set of metrics and could not derive one.

- Process manufacturers used more of the listed metrics, as a rule, than the other types of manufacturers.

Next month, look for the fourth segment, "Higher Technology vs. Lower Technology."

To view selected results of the survey population as a whole, look in the GGI RapidNews archives: http://www.goldensegroupinc.com/GGI_RapidNews/Rnews.shtml

The original survey questionnaire can be downloaded at http://www.goldensegroupinc.com/biennial/surveys/2002MetricsSurvey.pdf. Complete survey results are available for purchase at http://www.goldensegroupinc.com/cgi/catalog.cgi?display_p355.

2004 METRICS SURVEY

GGI's next Product Development Metrics Survey will be conducted in 2004. We are now in the initial planning stages. Please contact me at ars@goldensegroupinc.com if you wish to participate, and please note if you wish to be part of our Beta-Test group to proof the survey. All participants receive a complimentary copy of the detailed Executive Summary of the Survey results.

NEWS & NOTES

Complimentary Articles: GGI has just made two dozen of our articles, that were published prior to 1998 and previously sold in our iStore, available for free download from our web site. These articles cover a range of topics, including concurrent product development, metrics, rapid time-to-market, and computer-aided design. To view the list of complimentary articles, and to download them, go to http://www.goldensegroupinc.com/comppublist.shtml. For our most recent publications, visit the iStore at http://www.goldensegroupinc.com/cgi/catalog.cgi.

BOOK REVIEW

The Innovator's Solution: Creating and Sustaining Successful Growth, by Clayton Christensen and Michael Raynor. Harvard Business School Press. 2003, 1st edition. 288 pages.

Harvard B-school professor Clayton Christensen is back with his follow-on to The Innovator's Dilemma (1997). In the first book, the author describes how strong companies lose their leadership positions because "many of the same practices that are essential to a company's success can also cause failure." This includes focusing too much on the most profitable customers and businesses, leaving themselves open to disruptive innovations. The latest book offers frameworks for managers to make the best decisions leading to sustainable growth through successful innovations. Topics include three approaches for creating new-growth businesses, and advice on strategy for driving innovation.

The different approaches to innovation described target different levels of product performance and different customers or markets, with very different results. Sustaining innovations are incremental or breakthrough product improvements focused on the attributes valued by the most demanding and profitable customers. Sustaining innovations can grow existing businesses. Disruptive innovations, by contrast, focus on new-growth businesses with two different approaches: low-end and new-market disruptions. Low-end disruptions target an established firm's least valuable and overserved customers at the low end of a mainstream market. An example of a low-end disruption occurred in the American steel industry beginning in the 1960s, with minimills producing rebar (the low end of the steel market). Through successive improvements, the minimills moved up-market to better steel and eventually drove nearly all of the large integrated steel mills out of business. A new-market disruption, on the other hand, targets non-consumption, typically with a product that is simpler, cheaper and more convenient that attracts new consumers that had not owned or used the prior generation product. Examples of new-market disruptions include the personal computer and the entry of Japanese automakers into the US market. With the new lower-cost products, suddenly people could afford to own these previously out-of-budget items. Rather than being attacked by disruption, companies should establish strategies to create disruptions that beat the competition.

In disruptive businesses the process to develop strategy is as important as strategy itself, and there are two approaches, deliberate and emergent. The deliberate approach is conscious and analytical, data-based, top-down and generally used when the path is clear. This is typically more suitable for sustaining innovations and some low-end disruptions. An emergent strategy is based on experience, bottom-up and should be used when the future is unclear, as in the case of disruptive innovations. Once a winning strategy becomes clear, however, a deliberate strategy should dominate. A company should match its strategy to the current stage of business development, shifting back and forth from emergent to deliberate. Both strategies will be present within a company -- deliberate for sustaining innovation of mainstream business and emergent for disruptive new-growth business innovations -- and companies must remain aware of changing circumstances and respond quickly to create disruptive new growth before the competition does.

MANAGEMENT PRODUCTIVITY

R&D Spending: Corporate R&D Scorecard

"Corporate R&D Scorecard: 2003", Technology Review, Massachusetts Institute of Technology: Volume 106, Number 10, December 2003/January 2004, pages 59-62.

Technology Review has just published its 2003 Corporate R&D Scorecard in the December 2003/January 2004 issue, reporting annual R&D spending of the world's top 150 technology companies for fiscal years ending between June 1, 2002 and May 31, 2003. Companies were assigned to one of 11 sectors, based on their primary business: Aerospace, Automotive, Biotech, Chemicals, Computers (Hardware), Computers (Software), Drugs/Medical, Electrical/Electronics, Tech Conglomerates, Semiconductors, and Telecommunications. Although there have been many R&D cuts, especially in electronics and telecommunications, there have been strong increases in the biotech and automotive sectors. Selected results are presented here.

The overall top spender for R&D was Ford with $7.7 billion, followed by DaimlerChrysler (also Automotive) at $6.4 billion, and Siemens (in the Electrical/Electronics sector) at $6.2 billion. In general, the automotive industry spends the highest dollar amount on R&D, with an average of $3.3 billion for the 14 firms listed, but this sector is the among the lowest business sectors for spending as a percent of revenue and per employee. The lowest-spending sector, dollar-wise, was Chemicals, which averaged just over $1 billion for the 10 companies listed.

When the results are examined in terms of R&D spending as a percent of revenue, Biotech ranked number one. Human Genome Sciences spent an amazing 5,357.7% of its revenue on R&D, while OSI Pharmaceuticals spent 1,065.3% and Millenium Pharmaceuticals spent 213.4% of revenue on R&D. As a sector, Biotech averaged 639% of revenue spent on R&D for the 11 firms listed. The lowest-spending sector, percentage-wise, was Automotive with an average of 4.5% of revenue spent on R&D for the 14 companies listed.

The Biotech sector again ranked at the top in terms of R&D spending per employee. MedImmune spent $824,592 per employee, OSI Pharmaceuticals spent $541,730, and Amgen spent $406,772 per employee on R&D. In the Biotech sector, the average amount spent for R&D was $260,945 per employee for the 11 companies listed. The Aerospace sector spent the least amount per employee on average, $12,489, for the 9 companies listed.

The complete scorecard can be found at this link: http://www.technologyreview.com/scorecards/.

NEW BIENNIAL SURVEY

2002 RD&E Survey - Resource & Capacity Management: Complete results from our 2002 Product Development Metrics Survey are now available, including our most detailed "RESULTS" report.

The survey focused this year on the following 5 areas of resource and capacity management:
- Loading the RD&E capacity pipeline,
- Providing capacity for RD&E activities,
- Balancing cross-functional resources (staffing ratios),
- Using systems, tools, & metrics to manage capacity, and
- RD&E metrics used in industry.

The 3 versions of the survey results reports that we offer for sale to the public are

1. 2002 SURVEY HIGHLIGHTS: A text-only report (65 pages),including the full text of all the results and analysis of the survey population analyzed as a whole,
2. 2002 SURVEY SUMMARY: A report of composite results, where the survey respondents are analyzed as a whole (116 pages, including a full set of graphics), and
3. 2002 SURVEY RESULTS: The most detailed report, complete with the composite results and "special cuts," where the survey population is segmented and analyzed in the following groups: Public vs. Private, Smaller vs. Larger, Process vs. Repetitive/Discrete vs. Job Shop, Higher Technology vs. Lower Technology, and More vs. Fewer Employees (223 pages).

These reports are available in the Market Research section of GGI's iStore (http://www.goldensegroupinc.com/iStore/store.html). The original survey questionnaire as well as a description of the survey (including survey focus and demographics, tables of contents for the 3 reports, and examples of key findings) can be found at the Market Research Reading Room at http://www.goldensegroupinc.com/readmarket.shtml.

NEW iSTORE PRODUCTS

New Items: GGI's iStore has now been updated with 1 new Quotation, 1 new Article, and 3 new Technical Papers & Presentations. See details below, or go directly to GGI's iStore storefront:

http://www.goldensegroupinc.com/cgi/catalog.cgi

New Published Quotation

Q21 - "R&D Outsourcing Provides Key Alternative" Inside Supply Management, Institute for Supply Management, November 2003 [1 page]

New Published Article

A49 - "Developing Successful Products Efficiently" Time-compression Technologies, Communication Technologies, Inc., October/November 2003 [3 pages]

New Technical Papers & Presentations

T41 - "Proactive & Predictive Metrics: Expert Clinic [Presentation Slides]" 8th Annual Metrics Conference: Product Development and R&D Metrics: Quantifying Innovation, Portfolio Value and Resource Capacity, Management Roundtable, Inc., November 4, 2003 [85 pages]

T40 - "Linked Metrics Portfolio(TM) Method … A Primer [Presentation Slides]" 8th Annual Metrics Conference: Product Development and R&D Metrics: Quantifying Innovation, Portfolio Value and Resource Capacity, Management Roundtable, Inc., November 3, 2003 [21 pages]

T39 - "Linked Metrics Portfolio(TM) Method … Applied to Four R&D Strategies [Presentation Slides]" 7th Annual Conference on Metrics for Portfolio and Resource Management: Driving Priorities, Achieving Results, Management Roundtable, Inc., October 28, 2003 [25 pages]

For detailed descriptions of each item and information on how to order them, go to GGI's iStore:

http://www.goldensegroupinc.com/cgi/catalog.cgi

NEW WEB CONTENT

GTK-Gateways To Knowledge: Your resource for industry and product development related information and contacts offers thousands of links to providers of technologies and services for line management functions. The main entrance to GTK can be found at:

http://www.goldensegroupinc.com/gateway/index.shtml

One of our top 3 MEGA Gateways is the Calendar of Industry Events MEGA Gateway, a listing of links to Conferences, Seminars, Distance learning opportunities, Webinars, Colleges & Universities, Executive Education, and Corporate-Sponsored Universities. The calendar has just been updated with 45 new seminars and 40 new conferences. If you are planning next year's training, check out the Calendar first. This free service for our readers will soon be front and center on GGI's Home Page. For the next few months, please find the Calendar of Industry Events MEGA Gateway at:

http://www.goldensegroupinc.com/gateway/calendar2.shtml

Another one of our top 3 MEGA Gateways is the Service Providers MEGA Gateway, a listing of hundreds of links to firms that provide services ranging from Accounting or Advertising to CAD, Market Research or Venture Capital. The Service Providers MEGA Gateway is located at:

http://www.goldensegroupinc.com/gateway/serv.shtml

Accounting: Find it in the Service Providers MEGA Gateway. This UPDATED Gateway offers links to companies that provide accounting services. The URL is located at:

http://www.goldensegroupinc.com/gateway/serv_accounting.shtml

Advertising: Find it in the Service Providers MEGA Gateway. This UPDATED Gateway offers links to companies that provide advertising and media services. The URL is located at:

http://www.goldensegroupinc.com/gateway/serv_advertmedia.shtml

Law Firms: Find it in the Service Providers MEGA Gateway. This UPDATED Gateway provides links to 20 firms that provide legal services. The URL is located at:

http://www.goldensegroupinc.com/gateway/serv_law.shtml

Public Relations: Find it in the Service Providers MEGA Gateway. This UPDATED Gateway provides links to over a dozen firms that provide public relations services. The URL is located at:

http://www.goldensegroupinc.com/gateway/serv_pr.shtml

FEATURED GGI iSTORE PRODUCTS

Featured Item: GGI's iStore features one deeply discounted offering, which changes periodically. The current Featured Item is the "2000 Product Development Metrics Research Summary" (MR12).

This 96-page report presents the detailed results of GGI's 2000 Product Development Metrics Survey, which focused on metrics systems in use in industry as well as portfolio management. The report is organized in 5 sections, each of which contains factual observations, management analysis and a full set of graphics. This report, which analyzes the survey population of 122 respondents as a whole, will provide you with detailed information on

1. R&D linkages to corporate strategy,
2. Portfolio management metrics,
3. Product selection metrics,
4. Product success metrics, and
5. Actual metrics in use in industry.

This research is still valid, given the fact that the economy has not been in a state of high growth for the past few years. We have found consistency between the 2000 and 2002 surveys in areas where we could compare.

The price for the report has been dropped from $1920.00 to $1152.00, a deep discount of 40%. For more information or to purchase this valuable report, go to

http://www.goldensegroupinc.com/cgi/catalog.cgi?display_promo.

CONFERENCES OF INTEREST

MRT Improving R&D Productivity Conference: Management Roundtable will hold its conference, "Improving R&D Productivity: How to Link Resource Management to Portfolio Process," on March 29-31, 2004 in Atlanta, GA. The conference focuses on how to leverage increasingly limited resources and ensure that priority projects are properly resourced. The conference features a full day of pre-conference workshops plus two days of presentations and case studies aimed at providing you with strategies and tools to assess and allocate resource capacity to boost productivity.

Brad Goldense will be giving a featured presentation, "Key Pipeline Practices Drive Effective Capacity" on Tuesday, March 30, 2004. The presentation focuses on seven practical best practices for pipeline management that improve capacity utilization and improve yield.

More information can be found at MRT's web site: http://www.managementroundtable.com/Event_Center/PPM04/PPM04.html

WEBINARS OF INTEREST

Winning Practices for Product Development: This free, online seminar series is co-sponsored by Sopheon and the Society of Concurrent Product Development [SCPD]. These one-hour, online events feature experts and leading practitioners who will share process knowledge and practical advice about ways to improve your product development performance and results.

There are currently no scheduled webinars, but more are under development. Check back here next month for more information.

Past Webinars have been archived and are available online at http://www.sopheon.com/events_onlineseminars.asp.

TELEVISION EVENTS

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 at: http://www.goldensegroupinc.com/ggiontv.shtml#wbr5

December 15, 2002 In-Studio with Alexander Haig (7.5 minutes) on CNBC paid programming: Streaming video for this segment is available at: http://www.goldensegroupinc.com/ggiontv.shtml#wbr3

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 at: http://www.goldensegroupinc.com/ggiontv.shtml#wbr2

August 4, 2002 On-Location at GGI (3.5 minutes): This On-Location field report is available in streaming video on GGI's website. To see the program, go to: http://www.goldensegroupinc.com/ggiontv.shtml#wbr1

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:

http://www.goldensegroupinc.com/ggiontv.shtml.

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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.