GGI RapidNews R&D Product Development eZine: Volume 1, Issue 3 - October 20, 2000
GGI RapidNews is published monthly

Preliminary results of Goldense Group, Inc.'s (GGI) 2000 R&D Metrics Survey are now available. The 2000 R&D Metrics Survey consisted of twenty-eight questions focused on R&D portfolio management and measurement. The survey questionnaire was targeted at advanced R&D practitioners. As a result, survey respondents were, in part, a self-selected sample of advanced R&D practitioners. Two-thirds were from public companies, the rest private. Four out of five respondents replied from a company profit center, one out of five from a cost center. Fifty-five percent came from companies with less than $250 million in annual sales, and 1000 or fewer employees, while the rest were from large companies.

Most companies sell, develop, and manufacture their products in North America. Two out of three sell globally, while one out of three develops and/or manufactures globally. Over 90% of survey respondents were from general or R&D management positions. Over one-half were from the aerospace, automotive, consumer products, durable goods, electronics, industrial and medical products industries.

• … 36% of respondent companies have a clearly defined set of corporate metrics that are used to manage the company. For those companies, the average set of corporate metrics is 16. However, 50% of respondent companies do not have a clearly defined set of corporate metrics, but estimated that 30 metrics were used to manage the company. 14% could not identify their corporate measures.
  
  
• … 37% of respondent companies have a clearly defined set of R&D metrics that are used to manage the R&D function. For those companies, the average set of R&D metrics is 6. However, 38% of respondent companies do not have a clearly defined set of R&D metrics, but estimated that 12 metrics were used to manage R&D. 25% could not identify their R&D measures.
  
  
• … There is no predominant industry product "counting method" used to determine the size of the "released/active" or "backlog" product portfolios. There are at least 6 counting methods in common use. Company practices range from counting every SKU to counting only product families.
  
  
• … 32% of respondent companies do not track their product life cycles. This impedes a company's ability to dynamically manage its product portfolios.
  
  
• … 59% of respondent companies that track product life cycles, only report decreasing product life cycles; i.e. no increasing product life cycles. Only 4% of respondent companies report increasing life cycles only! Life cycles for remaining respondent's products are stable, or are both increasing and decreasing.
  
  
• … Respondent companies report a 50% increase during the last five years in the percent of company sales due to new products, as measured by the "CYS/PDTPRITPNY" metric. This metric was initially popularized by 3M in 1988, and is calculated by about half the respondents. In 1995, these companies reported approximately 20% of their revenues coming from new products developed in the prior 3-4 years. In 1999, the same companies reported about 30% of revenues coming from new products developed in the prior 3-4 years.

These preliminary metric survey findings will be made public, supplemented and discussed at Management Roundtable's (MRT) Portfolio Metrics Conference "Linking Product Development to Corporate Profitability" in Chicago on November 1-3, 2000.

Bradford L. Goldense, President of Goldense Group, Inc. will present survey findings. Robert G. Cooper will keynote the presentation on new product portfolio management, while MIT's John R. Hauser will demonstrate his "Metrics Thermostat" at the conference. Prospective attendees can register for this conference at http://www.managementroundtable.com. Attendees will receive a copy of the metric survey "Executive Summary" together with their conference proceedings. This Winter, GGI will prepare several analyses of metric survey findings, which can be purchased from the GGI web site, located at http://www.goldensegroupinc.com.

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RapidNews is an e-mail publication from Goldense Group, Inc (GGI). Its subject matter includes survey findings, company news, book reviews, key industry conferences and R&D information of interest to clients and associates. Please send communications to rn(at)goldensegroupinc.com. Thank you.
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