R&D portfolio management framework for sustained competitive advantage

Abstract

Sustained competitive advantage requires a portfolio of R&D (research and development) projects which is balanced in terms of certain qualitative factors especially competitiveness category (i.e., capacity, competency), phase (i.e., basic research, applied research, development), and novelty category (i.e., evolutionary, revolutionary) because they help ensure that a firm has a continuous stream of both short and long range sources of profitability. Another factor by which to balance a set of projects is the category of the source of the R&D idea (e.g., internal, external) because customer generated ideas can be powerful in the marketplace and should be guaranteed inclusion in a portfolio. The proposed decision making framework for R&D portfolio project selection guides decision makers through the processes of identifying qualitative attributes of projects, determining which attributes to include in the analysis, assessing projects in terms of those attributes, dividing candidate projects into balancing groups, ranking projects within those groups, and selecting the optimum projects within each group. Strategic analysis that includes multiple dimensions of technology (i.e., technoware, humanware, inforware, orgaware) and multiple perspectives (i.e., technical, organizational, political, and environmental) helps analysts identify the full value and weaknesses of projects. The knowledge gained from this analysis can reduce false negative and false positive errors in project selection. Validation of the framework through a Delphi process as well as a case study are planned.