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The most important R&D performance metrics

Ron Collett
1/11/2011 00:57 AM EST

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RCollett
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re: The most important R&D performance metrics
RCollett   1/20/2011 3:20:23 AM
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Hello Peter, Yes, vacation counts in the utilization percentage. (But it has a material impact on utilzation only when the amount taken deviates from the industry norm. For example, overly generous accrual policies can result in employees accruing excessive vacation days, which can have a noticeable impact on utilization figures.) Wrt R&D managers and project managers, the relevant question is not the job title, but rather whether the specific activity of the individual (e.g. manager) is directly contributing to the creation of a product or service that is forecasted to generate revenue. For example, time spent by a project manager truly managing the project (that is going to result in a revenue-generating product) is time spent on revenue-generating activity. Thanks for your comment. Rgds, Ron

petermonsson
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re: The most important R&D performance metrics
petermonsson   1/19/2011 11:03:01 AM
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Hi Ron, I enjoy your articles very much. It's always interesting to see how one's own organization stacks up. Does vacation count against the utilization percentage? How do R&D managers or project manager count in the utilization? Best Regards Peter

RCollett
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re: The most important R&D performance metrics
RCollett   1/17/2011 5:34:59 PM
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Prabhaker, Wouldn't you agree that keeping track of the revenue-generating vs. non-revenue R&D spending is important? If your R&D organization's Utilization is consistly low, it is unsustainable business model. Naturally, some development projects can take a very long time, but what if that amount of time crosses a threshold in which it is no longer sustainable -- and there are no metrics in place to flag it? Likewise, one of the reasons why best-in-class companies have Utilization rates of only 70% to 75% is because they are devoting resources to longterm research and longterm development projects, so the Utilization metric is useful to ensure that companies' Utilization levels remain within the target defined by their business strategies. Thanks for your comment. Ron

prabhakar_deosthali
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re: The most important R&D performance metrics
prabhakar_deosthali   1/17/2011 6:46:48 AM
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In my opinion such performance metrics may not apply to certain R & D organizations which have long term goals to achieve and cannot generate revenue in the near term. The organizations who work on futuristic technologies cannot have any intermediate deliverables which can be marketed as products.For example organizations working on new drugs for cancer or AIDs , or working on say quantum memories. If such organizations are forced to concentrate on some immediate product delivery then they will fail to develop new technologies and products.

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