How do we measure of r & d (research and development) in companies

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Information about How do we measure of r & d (research and development) in companies

Published on February 18, 2014

Author: BhavanaRohidekar



RESEARCH AND DEVELOPMENT Discovering new knowledge about products, processes, and services, and then applying that knowledge to create new and improved products, processes, and services that fill market needs. Research and development is an investment in a company's future

IMPORTANCE OF R & D Leaps in Market Participation Cost Management Benefits Trend Matching Marketing Abilities

NEED FOR MEASURING R & D CASE presentation methodology • One of the most critical motives for measuring R&D performance at the firm level has recently been the validation of the chosen investment level on R&D. • R&D function has to prove its productivity and significance for the whole company. • R&D investments must often compete with the other investments in the company.


R&D AS A PROCESS: • As suggested in several studies , innovation and R&D should be managed as a process.

Some important criteria for measuring R&D effectiveness: SYSTEM PHASE 1) Input 2) Throughput EVALUATION CRITERIA Enough R & D investment Enough R & D productivity Degree of professionalism Skill level of R & D personnel Feasibility of R & D plan Adequate education and training Validation of selected R & D topics Collaboration between R & D and Production/Marketing Expansion and Diversification of research areas 3) Output Degree of goal achievement Usefulness of developed technology 4) Outcome Expected profit increment Effects on general management improvement

1) CONCEPT GENERATION: • Number of new product ideas, product enhancement ideas evaluated in the last year • Number of new product-based business areas/ventures started in the past 5 years • Customer satisfaction • Product planning horizon • Average product life cycle length

2) PRODUCT DEVELOPMENT • Time to market :     Average concept-to-launch time Time for each phase Average time of product enhancement Average time of redesign • Product performance:  Cost  Technical performance  Quality • Design performance:     Manufacturing cost Manufacturability Testability Number of product redesigns

COMPANY VISITED GUIDED BY: Mr. Nandakumar (Senior DGM, Tech planning) Mr. R.C. Nautiyal (General Manager, HR)

PRODUCTS OF BEL: • • • • • • • • • • • • Electronic Voting Machines Radars Telecommunications Sound and Vision Broadcasting Opto-electronics Information Technology Semiconductors Missile Fire-control system Electronic Warfare Systems Simulators Tank electronics

THREE LEVELS OF RESEARCH AT BEL Central Research Laboratory Technology module developers (central/core R & D) Strategic business units

METHODS USED FOR MEASURING R & D IN BEL 1) The number of In-house projects developed The strategic business units are involved in developing a lot of projects . These projects can be: • In- house • In collaboration with DRDO • In collaboration with foreign bodies

For the SBU’s , BEL keeps a note of the number successful projects carried out in-house (without any collaboration with DRDO of Foreign bodies.) IN HOUSE WITH DRDO WITH FOREIGN BODIES

• Enterprise resource planning system is the statistical tool used for recording this. • ERP system records all the data needed • A weighted average of all the in-house research is taken • The efficiency of the in-house research projects is obtained • This hence becomes a criteria for R & D measurement.

2. Patents obtained and Papers published: This is applicable to the Central Research Laboratory and the Core R & D department. The effectiveness of R&D is measured by the number of patents obtained and the number of technical papers published by the research teams in various international forums. BEL now plans to consider even the research conducted by strategic business units for patenting.

3. VALUE ADDITION:  If any kind of software is designed to support the research activity, BEL considers it as a value addition done.  Any kind of additional input given by the people working in research team.

4. Knowledge Management: Every R & D engineer is to contribute to the knowledge management database.  The difficulties faced during the project  How they solved the problems  New techniques learnt during the project  New technologies adopted At the end of the year, knowledge officers award the R & D engineers for their contribution.

5. R & D Awards: The best projects are awarded at the end of the year depending on how successfully the research was carried out. Any patents obtained by the research group, or any papers published by them are also considered for the awards.

CHALLENGES • One of the most problematic aspects is the selection of a suitable set of appropriate measures for the right subjects of measurement • There is also the problem of determining the right norms with which to make comparisons. • Other substantial problems are the definition of the contribution of R&D and the time lag between the initial stage of the process and the outputs or the outcomes.

IMPORTANCE: • Performance measures have only limited or no utility in evaluating the outcomes of R&D activities. • However, Performance measures can provide useful information on the operational or functional health of an R&D organization. • Measures such as maintenance backlog, workforce diversity, procurement cycle-time, papers published, patents received are just some examples by which performance measures can be used in the R&D environment.

REASONS FOR FAILURE Several reasons that cause R&D evaluation or measurement systems to fail: • Too much emphasis on internal measurement • Too much focus on behavior • The measurement system is too complicated • The measurement system is too subjective • The acceptance of performance measurement in R&D


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