A Value Creation Model for Measuring and Managing the R&D Portfolio

Abstract

This article describes how one firm has developed a system for managing high-technology R&D. We describe a portfolio approach for measuring and managing the technology commercialization process developed by the Advanced Technology Division of Lucent Bell Laboratories. The model consists of a set of four quantitative financial factors condensed into two metrics, plus six qualitative attributes taken from four categories—strategic initiatives, market categories, intellectual property classes, and business unit designations. The interrelationships among these attributes are visually displayed. The integration of all attribute information leads to better-informed management decisions for value creation. The value created derives from the balanced scorecard of the attributes rather than an emphasis on any one attribute, e.g., financial performance.