Community Forum – What is your R&D resource allocation?
Does your company struggle with getting the correct allocation of resources across the portfolio? One aspect of portfolio management is how to spread your resource across the various R&D time horizons. Too much emphasis on the short term and you will mortgage your future; too much time on high risk long term projects will not enable you to pay the short term bills. What is the right allocation?
For the four following questions, respondents answered: What % of your company’s R&D time is spent on the four R&D time horizons?
5. Do you have any insights or best practices in the decision-making process on the allocation of resources across the horizons?
- We have annual goal alignment.
- Split long (research) and short term (development) into two teams which work together but are reinforced with different goals and targets, or say farewell to the Research part as it will always be dwarfed by short term development needs. Then Research can stay focused on Horizon further out 2 – 3 whilst development covers 1 – nearer in 2.
- This is not a best practice but we do applied research in the time we have left when we are not doing production or customer support.
- Only look at 3 horizons for all types of projects and the horizon is time to sustained $ flow: Horizon 1 0-2 yrs; Horizon 2 2-4 yrs; Horizon 3 4+ yrs. For us the target split is 40/40/20
- Based on the Corporate Strategy over the next few years.
- Allocate resources driven by the potential values of the project.
- Create 3, 5 and 10 year projections.
- We adapted tools like the Boston Matrix to allocate resources in these Incremental, New Products and Applied Research.
- Emergencies and customer support will always be the top priority and theses are hard to predict. Therefore, each resources should have a 70-80% utilization rate to leave room for unplanned issues otherwise it’s becoming impossible to execute the plan and answer emergencies. We use simple tools to monitor utilization rate of resources like Ganttic (www.ganttic.com).
- No, it’s a very qualitative judgment. Would be helpful to have data driven guidance on this.
- CEO has to drive allocation of long term resources. Read “The three box solution”
- Innovation committee every quarter with R&D, Marketing, Business, and Industrial leadership to build alignment.
- 24 months
- We have established a model of Core, Adjacent and Transformational R&D that guides decisions. We have substantive tech support and incremental development that happens outside the R&D organization.