Top 50 Product Development Metrics Now Include Profit, R&D Productivity, and IP Measures
NEEDHAM, Mass. — (BUSINESS WIRE) — May 15, 2012 — After two decades of fairly consistent metrics used by corporations for R&D and Product Development, the "Innovation Era" is now having an effect on measurement practices. Primary research conducted over a decade-long period indicates several distinct changes taking place.
The "innovation-effect" is causing an increase in the measurement of profit from new products, no longer just the revenues. Comparative Price and Unit Gross Margin are emerging as true indicators of product innovation. Companies now look at both revenue and profit change as new products age and are using both to drive portfolio augmentation decisions. "New To X" measures now further categorize product offerings and portfolio composition.
Corporations are placing more risky bets and are selectively shifting funds to earlier-stage Applied Research and Advanced Development. Increases are causing the development of innovation processes and metrics appropriate for the front-end activities that precede Product Development. Seventy-five percent of companies now have one or more defined approaches and are applying new or adapted measures.
The ability to monetize Intellectual Property, and its associated bread-boards and brass-boards that are not yet in product form, is growing geometrically. IP is being shown to have a direct correlation with product price and unit gross margin. Licensing revenue and profit has now cracked the Top 50. Many also keep track of the percent of a product and then their overall portfolio that is "IP-protected." The recent changes in patent law now coming on line will further amplify this ongoing trend.
Technical and Functional Competency, once a verboten measurement topic, is becoming mainstream. The changing nature and quality of education, combined with the importance of having differentiable innovative products regularly coming out of the pipeline, is moving competency assessment from an entry interview process to an annual check-up. Some of these measures will break into the Top 50 in the next few years.
The 14th R&D-Product Development Metrics Summit, consisting of three seminars and a workshop, will get you current. Participants will exit this Summit with a dashboard of metrics suitable for managing overall R&D strategy and productivity, projects, and technical and functional disciplines. Notable Companies and Senior Executives have already implemented their dashboards. The Summit will be led by Bradford L. Goldense NPDP, CMfgE, CPIM, CCP.
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