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RandD performance measures that are linked to strategy

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Although most companies recognize the importance of RandD for future success, they often struggle to assess RandD performance. No widely accepted performance measurement system for RandD exists. Performance measurement is particularly difficult for the RandD function because the success of a new product or process can only be assessed with certainty after a long delay. Furthermore, success criteria are not always known because they are strategy dependant and because success drivers are subjects to factors outisde the control of the Rand D function. It is, therefore, difficult to formulate measures that are timely, connected to business goals, and fair. The authors show how the Research Group of the diamond producer GemStone developed a research performance measurement system that is appropriate for the risky projects typical in RandD, and which supports business strategy. The process derives operative measures for RandD from the comapny strategy. It starts top-down, but then facilitates bottom-up formulation of initiatives. In addition, a mixture of output-oriented and process-control measures ensures timeliness and fairness of the system.

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