R&D productivity means productively working on the right projects - those that create shareholder value. To work on the right projects, a company requires a strategy of creating shareholder value and an R&D portfolio that supports that strategy. In an era of limited resources, R&D portfolio management must concentrate on aligning resources with strategic goals. Simply eliminating low-value white elephant projects is not enough. The best R&D portfolio management practices focus on explicit consideration of project alternatives, including different goals and resources, to meet corporate strategic needs. The key in examining R&D project alternatives is to examine alternative technical and product goals for the projects, acceleration or delay of projects, and resource alternatives.

• measure and forecast R&D productivity
• account for uncertainties in both technical & commercial success of R&D projects
• produce real, actionable project alternatives
• relate R&D expenditures to the creation of shareholder value
• clearly align resources with strategy, identify gaps and fill them.

ABOUT MICHAEL ALLEN
Mr. Allen, managing director with Strategic Decisions Group, specializes in developing and managing R&D and corporate strategies. He is the author of Business Portfolio Management, published in 2000 by John Wiley & Sons. Mr. Allen is a leader in effectively applying the techniques of strategy development to create new business and R&D strategies for his clients. He also has a substantial background in research, manufacturing, and distribution operations consulting.

Allocating scarce talent and sufficient resources to your most important initiatives has always been one of the most significant challenges of R&D portfolio management.  Resource allocations and reallocations can be viewed as the implementation of portfolio decisions.   They enable the right skills to be engaged in the right work and collaborative problem solving.  In short, the failure of many well designed product development and portfolio management processes can be attributed an inability  to match deployed resources to agreed upon priorities.

This presentation will examine resource allocation as a core business process that is  subject to performance expectations.  Through industry examples, Mr. Elton will highlight an approach that will identify the most critical performance cells (e.g., management decision boards, project teams), their contributions to performance, the critical decisions they make, and approaches to resource allocation in different operating environments that successfully align allocation of talent to priorities.

ABOUT JEFF ELTON
Jeff Elton, Ph.D. is a principal in McKinsey & Company's Boston Office.  Dr. Elton focuses on technology-intensive industries, including biotechnology, pharmaceuticals, health and bioinfomatics and medical devices.   He is a leader of the Firm's Product Development and Pharmaceutical and Medical Products Practices.