Academic journal article Research-Technology Management

Managing Technology Development Projects: Because These Growth Engines Provide the Platforms for the Next Generation of Products and Processes, Companies Have to Manage Them Better!

Academic journal article Research-Technology Management

Managing Technology Development Projects: Because These Growth Engines Provide the Platforms for the Next Generation of Products and Processes, Companies Have to Manage Them Better!

Article excerpt

The term "technology development" refers to a special class of development projects where the deliverable is new knowledge, new technology, a technical capability, or a technological platform. These projects, which include fundamental research projects, science projects, basic research, and often technology platform projects, often lead to multiple commercial projects--new product or new process development.

Technology development projects are a special breed: although they represent a small proportion of effort in the typical company's development portfolio, they are vital to the company's long-term growth, prosperity and sometimes even survival. These projects also stand out because they are often mismanaged or mishandled, resulting in few benefits to the company. The chronicles of many, if not most, large corporations are replete with horrific stories about huge technology projects that led to nothing after spending millions of dollars, or worse yet, were cancelled prematurely, thus forgoing millions in potential profits.

This article outlines proven approaches to selecting and managing such venturesome projects--approaches that recognize that traditional management techniques, such as phase-review, Stage-Gate[R] or PACE[R] with their elaborate checklists, scorecards, deliverables lists, and financially-based Go/Kill criteria, are inappropriate for such projects (1-3).

What's So Special?

Technology development (TD) projects are indeed a very different type of development project. First, they are increasingly rare--the average business's R&D portfolio has shifted dramatically to smaller, shorter-term projects such as product updates, modifications and fixes over the last 15 years (4). With the exception of a handful of best-practice companies, gone are the days when portfolios were replete with advanced technology, technology breakthrough and true innovation development projects (5).

This dearth of innovative projects is in part due to management's preoccupation with the short term and immediate financial results, which usually precludes undertaking venturesome development projects (6). When resources are tight, managers take few chances--they elect the "sure bets," which are typically the smaller, closer-to-home projects. Here's a typical comment (7):

My business has a limited R&D budget. I can't afford to risk a major percentage of that budget on a handful of big projects. I've got to hedge my bets here, and pick the smaller and lower risk ones. If I had a larger R&D budget, then I might tackle some more venturesome projects.... Senior R&D executive in a $300 million business unit of a major manufacturing conglomerate.

Additionally, the business's inability to handle these projects effectively also contributes to a reluctance to undertake more of them. In short, because these projects are mismanaged, the results are often negative, which creates a real fear of ever undertaking such a project again! Management becomes risk averse.

A second factor that makes these TD projects so special is that they are often the foundation or platform for a new product line or an entirely new business. In short, TD projects are important to profitability in that they help to de-commoditize the business's product offerings. They are the breakthroughs, disruptive technologies and radical innovations that create the huge growth opportunities and superlative profits (8).

Exxon Chemical's Metallocene project is a classic example. Here, a fundamental research study into a new polymerization catalyst yielded some early but "interesting research results, "namely polyolefin materials" with unusual technical properties. What started out as a early-stage research project in the 1980s ultimately resulted in an entirely new class of polymers with engineering properties and a billion-dollar business for Exxon Chemical.

Don't Use Traditional Methods for Non-Traditional Projects

A final reason that TD projects are so special is that they are fragile. …

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