Avoiding R&D Portfolio Management Jeopardy
Here is an uncomfortable reality in all but the smallest firms during their R&D portfolio management processes: Between the staff running each R&D initiative and the executives making project and portfolio decisions, there’s usually a division. Maybe it’s the gap between headquarters and lab, upstairs/downstairs, east coast/west coast, London/Singapore, or even a generation gap. At the very least, it’s an information gap, and one that can transform a portfolio review into a detailed project Q&A session.
At one firm we worked with, it played out like this: Each executive arrived at the portfolio review meeting with 3-5 questions about various projects:
- “Please explain the market segmentation.”
- “Why did the NPV of this project double since the last meeting?”
- “How does the introduction of XYZ by our competitor affect our market share for ABC?”
These questions, in turn, led to additional questions and extended discussion. With more than a dozen executives in the room, the questions easily filled all the available time (hours and hours). At the end of the meeting, a few projects had been canceled because the science or the market seemed insubstantial, but most projects passed through the executives’ gauntlet. However, with all the attention paid to individual projects, there was no opportunity to consider the portfolio as a whole.
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