Archive for the ‘Governance’ Category

Two Interesting Resources

Tuesday, December 7th, 2010

You might want to take a look at some online content from two interesting conferences I attended recently.

Pipeline 2010 was an online conference with some interesting sessions about managing product development. The archives should be available until early February.  You have to register (free) to see the archives.  Look under the Agenda tab to assess the seminars.

The 2010 Rocky Mountain ProductCamp was a PDMA event with several interesting sessions on product development and product management.  Look for the sessions I presented on

  • Adapting agile software principles to projects outside the software domain with Flexible Product Development.
  • Making projects predictable in an unpredictable world with Dynamic Resource Management, and
  • Building consensus on where to improve product development using some simple group tools.  Look for the title “So you Want to Improve Product Development.”  The session slides aren’t very descriptive, so use the contact me link in the right sidebar of this blog if you’d like to know more.

Avoid the Short Term Treadmill in R&D Investments

Tuesday, November 9th, 2010

Reading a recent article published by Harvard Business School, it occurred to me that executives allocating R&D funding could take a lesson from financial institutions’ experience in 2008.

One factor in accelerating the economic collapse was that financial firms had put themselves on a treadmill of short term debt.   The attraction of short term debt was low interest, but short term financing requires firms to “roll” their debt, continuously selling new bonds to repay maturing ones.  When the crisis hit, bond investors bolted for the exits, so firms could no longer sell new bonds, forcing them to sell assets to repay maturing debt.  Suddenly everyone was trying to sell assets at the same time, and asset prices plummeted, quickly pushing firms toward insolvency or government bailouts.

What does this have to do with new product strategy?  Executives balancing R&D funding among product lines should avoid putting their companies on a treadmill of short term returns.

The temptation to invest in short lifecycle products is that they can produce faster revenue growth for a given level of R&D productivity (new revenue per R&D dollar).  However, over-investment in short life products puts the new product program on a treadmill.  As revenue from one product generation matures and declines, it must quickly be replaced with even more new revenue to sustain growth:  A decline in R&D productivity can lead to a frightening drop in revenue growth.

Among other strategic considerations, executives should carefully consider the treadmill effect when allocating R&D funding among product lines and avoid the risks of over reliance on short term returns.