Volume 5, Issue 10- November 4, 2004
GGI RapidNews is published approximately once a month.

---------------------------------------------------------------------

In This Issue

MANAGEMENT PRODUCTIVITY - U.S. R&D Strength

2004 METRICS SURVEY - 2004 Survey Results Now Available

BOOK REVIEW - Seeing What's Next

FEATURED iSTORE PRODUCT - Proactive and Predictive R&D Metrics Expert Clinic [Presentation Slides]

NEW iSTORE PRODUCTS - New Technical Paper

NEW WEB CONTENT - Updated Calendar

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

MANAGEMENT PRODUCTIVITY - APQC R&D Productivity Benchmarking Study

2002 BIENNIAL SURVEY - 2002 RD&E Survey Results available

TELEVISION EVENTS - Alexander Haig's World Business Review

---------------------------------------------------------------------

MANAGEMENT PRODUCTIVITY

U.S. R&D Strength

Any worries about the U.S losing technological strength because of outsourcing or other global factors are unfounded, according to a recent Kiplinger Letter (Vol. 81, No. 27, July 2, 2004). The U.S. spent $276 billion on R&D in 2002, three times more than Japan, and R&D spending was predicted to rise to $291 billion this year. American companies are also much faster at bringing technology advances into the market and making innovations pay off.

Advances in technology produce half of U.S. economic growth, which in turn funds new developments. U.S. technology is especially strong in the areas of molecular biology, IT and nanoscience. The Battelle/R&D Magazine report on R&D Funding from January, 2004 confirms this point by mentioning the significant shift in funding toward nanotechnology and biotechnology. American technological strength is further boosted by the 75% of worldwide PhD graduates who spend two to three years in postdoc programs at U.S. R&D centers.

2004 BIENNIAL METRICS SURVEY

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 have just been published and is now available for purchase by the public through GGI's iStore. The composite results of this year's survey were first presented to the public by Brad Goldense at Management Roundtable's Metrics Conference on September 30, 2004 in Chicago.

Why would this report be of value to you? The first two sections cover the product selection process and tools used. The companies that add rigor to their process make better decisions, leading ultimately to more successful products. The statistically accurate survey illustrates the current industry practice for selecting products, the degree of usage of 15 different tools, and the believed ability of these tools to generate innovation and/or generate registerable IP. The third and fourth sections of the survey are groundbreaking research in the processes and tools companies use to manage intellectual property. It is believed that the importance of IP in the next 2 decades will go from 10% of a company's valuation to perhaps as much as 90% of a company's valuation on Wall Street. This report, to our knowledge, is the first definitive survey of the processes, tools, and systems used for IP. The final section of the report specifically lists the metrics that are used by industry to measure the overall performance of R&D in pareto order. If you are trying to find the few metrics that your company should choose to measure overall R&D performance, you cannot be without this last section.

The 2004 Survey focused on the following 5 areas of product selection and IP management:

• Product Selection Process
• Product Selection Tools
• IP Management Process
• IP Management Tools
• Top Corporate Metrics Used in Industry RD&E

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

2. 2004 SURVEY SUMMARY: A report of composite results, where the survey respondents are analyzed as a whole (149 pages, including a full set of graphics), and

3. 2004 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 (TBD pages).

Please note that the 3rd report, Survey Results, is expected to be available in January, 2005.

These reports are available in the Market Research section of GGI's iStore (http://www.goldensegroupinc.com/iStore/store.html).

Each survey participant received a complimentary copy of the Summary Report. All participants should have already received an email letter regarding the complimentary copy of the Summary Report. Any survey respondents who did not receive this email letter from us should contact Richard James at rjj@goldensegroupinc.com or 781-444-5400, x202.

BOOK REVIEW

Seeing What's Next: Using Theories of Innovation to Predict Industry Change, by Clayton Christensen, Scott D. Anthony, and Erik A. Roth. Harvard Business School Press. 2004, 1st edition. 352 pages.

In his latest book, Harvard Business School professor and author Clayton Christensen explains how to apply his theories of innovation described in his earlier books, The Innovator's Dilemma and The Innovator's Solution (reviewed here in December, 2003: http://www.goldensegroupinc.com/GGI_RapidNews/RapidNewsVol4Iss12.shtml). The theories of disruptive innovation, RPV (resources, process, values) and VCE (value chain evolution) can be used to predict industry change and to drive better decisions today for future success. The authors propose a three-part process: identify the signals of change, evaluate competitive battles, and identify strategic choices.

The signals of change point to opportunities to provide different types of innovations. To analyze the signals of change, you must understand three different customer groups: non-consumers, "undershot" customers, and "overshot" customers. Non-consumers lack the money or skills to get important jobs done, so this group needs new-market disruptive innovations, which generally lead to long-term industry change. Think about the introduction of wireless mobile phones as a prime example. Undershot customers are frustrated with the limitations of current products and will pay premium prices for enhancements, or up-market sustaining innovations. Sustaining innovations might be radical (complex) or incremental; they deliver improvements to existing products and services, for example improvements to the telephone's range and reliability. Overshot customers stop paying for product improvements once the product becomes "too good." In this case, low-end disruptive innovations can create new-growth companies by taking a part of an incumbent's market, typically the low-end. Examples of this case are Dell and MCI.

Evaluating competitive battles will help you understand a company's strengths and vulnerabilities, and predict who will win the battle. When evaluating a firm, look beyond the obvious by examining resources (tangible and intangible), processes and skills, and values (motivation for making priority decisions and strategic decisions). Then identify where there are asymmetries between incumbents and attackers. The asymmetries allow an attacker to enter a market with a disruptive innovation in a segment often overlooked by incumbents, perhaps at the fringe. Finally the strategic choices companies make can predict success with disruptive innovation. Those firms with a strategy process that emerges from the bottom up, and with flexible, adaptable processes can adjust to emergent market forces. Leaders of disruptive innovations should be resourceful, feel comfortable in environments with lots of uncertainty, and have experience in experimentation leading to discovery of unanticipated customers. The authors provide examples and in-depth case studies of this three-step process in industries such as aviation, semiconductors, healthcare and telecommunications. Application of the innovation theories and this three-step process can help give you a framework to understand current market forces and a roadmap to predict future changes.

FEATURED GGI iSTORE PRODUCT

Featured Item: Each month, or every other month, GGI's iStore features one item that we discount 40%. The current Featured Item is "Proactive & Predictive R&D Metrics Expert Clinic [Presentation Slides]" (T41)

Learn how to identify and take advantage of proactive and predictive metrics that can help you see what's ahead. Use of high-level predictive metrics early in the R&D process can help avoid surprises, extra costs and being late to market. If Dell is a day late to market, they lose 2% of gross margin, as reported in the public media. Time to market is especially critical for short cycle time industries such as computers with 12-18 month cycles, so if these metrics can keep you from being late by even one day, it could save you millions. Other proactive and predictive metrics could help you avoid wasting R&D investment on products that never launch. GGI's 2002 Metrics Survey found that the average project results in 3 saleable SKUs, but only 2 typically launch. Predictive metrics can help avoid wasting the hundreds of thousands of dollars spent developing this one third fallout that never launches, by killing less promising projects earlier or by ensuring that all developed projects do get launched. If use of these metrics saves you even one engineering change order (ECO), you will have gained back the cost of this presentation tenfold, since even the least expensive ECOs cost approximately $1500 to $3000.

This Expert Clinic presentation, first presented at Management Roundtable's 2003 R&D Metrics Conference last fall, provides a definition of metrics frameworks and how they are used through the R&D process. An overview of GGI's Linked Metrics Portfolio Method (TM) is provided as a framework to measure performance. Numerous case studies are presented for proactive and predictive metrics, with examples in industries such as semiconductors, computers, and diagnostic instrumentation.

This presentation will help you understand and master this emerging category of measures, which can put your company in a position to manage out the variation in R&D investments and outcomes in advance. This can in turn lead to

• faster time to market,
• higher revenue and profits,
• cost savings, and
• ultimately greater success.

The price for the presentation, "Proactive & Predictive R&D Metrics Expert Clinic," has been dropped from $425.00 to $255.00 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 purchase this valuable report, go to

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

NEW iSTORE PRODUCTS

New Item: GGI's iStore has now been updated with 1 new Technical Paper & Presentation. See details below, or go directly to GGI's iStore storefront:

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

New Technical Papers & Presentations

T51 "Linked Metrics Portfolio(TM) Method ... 4 Teams Measuring 3 Strategies [Presentation Slides]", 9th Annual Metrics Conference: Product Development and R&D Metrics: From Ideation to Commercialization, Management Roundtable, Inc., October 6, 2004 [38 Pages]

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

Calendar of Industry Events MEGA Gateway is one of our top 3 MEGA Gateways. It contains a listing of links to Conferences, Seminars, Distance Learning Centers, Webinars, Colleges & Universities, Executive Education, and Corporate-Sponsored Universities. The calendar has recently been updated with many of the events being held in fall/winter 2004 and early 2005. If you are looking for a conference or other learning opportunity, check out the Calendar first. This free service for our readers is now front and center on GGI's Home Page. Or, go directly to the Calendar of Industry Events MEGA Gateway at:

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

WEBINARS OF INTEREST

Winning Practices for Product Development: This free, online seminar series is sponsored by Sopheon. 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 is currently one webinar scheduled.

16 November - (8:30 am Pacific/11:30 am Eastern/16:30 UK) - Product Champions: Crossing the Valley of Death, presented by Stephen K. Markham PhD, Director of the Center for Innovation Management Studies at North Carolina State University

For more information on these webinars, or to look at the archive of past webinars, go to http://www.sopheon.com/events_onlineseminars.asp.

MANAGEMENT PRODUCTIVITY

APQC R&D Productivity Benchmarking Study

The American Productivity & Quality Center (APQC) is conducting a consortium research and benchmarking study, entitled "Measuring R&D Productivity." Goldense Group, Inc. [GGI] is Subject Matter Expert for this study. This study breaks new ground in understanding the drivers of R&D productivity. Fifteen global sponsors from four continents will benchmark five best practice companies on two continents after a rigorous screening process.

The APQC consortium benchmarking study addresses the following three areas:

1. Identify the areas where improved attention, knowledge, and education would lead to higher R&D productivity. [What are the key areas for best practice?]

2. Use measurement to increase visibility and awareness, which in turn will facilitate enhanced performance in R&D. [What are the measures for these areas?]

3. Determine effective change management activities to support the realization of improved R&D productivity. [How did the best practice companies achieve their practices?]

The kickoff meeting took place on July 20, 2004, and the study was conducted with site visits during October, 2004. The Knowledge Transfer Session occurs in early December. Results remain confidential for 3 to 4 months and then will be available for purchase in February 2005 through the APQC web site.

For information about this study, go to http://www.goldensegroupinc.com/apqc.shtml. For general information about APQC, go to http://www.apqc.org. For general information about Goldense Group, Inc., go to http://www.goldensegroupinc.com.

2002 BIENNIAL SURVEY

2002 RD&E Survey - Resource & Capacity Management: Complete results from our 2002 Product Development Metrics Survey are available, including our most detailed "RESULTS" report. The RESULTS report is the only version published that contains cross-population cuts of the data, in addition to analysis of the survey population as a whole.

The 2002 Survey focused 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 2002 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 Survey Information page at http://www.goldensegroupinc.com/biennial.shtml or in the Market Research Reading Room at http://www.goldensegroupinc.com/readmarket.shtml.

McKinsey & Company, Texas Instruments, Rockwell, and Datacard are representative of companies that purchase market research from GGI.

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

---------------------------------------------------------------------

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.