Making R&D More Effective at Westinghouse

Abstract

Assessment by the businesses of R&D's performance against ambitious, quantifiable and mutually set objectives is key. But the most important effectiveness measure is what business presidents tell the CEO. OVERVIEW: The principal output of corporate R&D-the creation of new business or competitive advantage-is the most difficult to measure because the process involves years of work with the business units. For that reason, Westinghouse also uses more immediate and concrete measures, such as business unit assessment of performance against ambitious quantifiable objectives, customer satisfaction surveys, and financial results such as outside orders, sales and operating cost variances. It links the incentive pay of its department managers to these measures to increase emphasis on results. It also provides specialized project management training for everyone involved in project management, from the department manager to the principal investigator. Project objectives are tied closely to business unit objectives through close communication and by analysis of payoff and competitive position, using an approach similar to the methodology described in Third Generation R&D. The mission of the Westinghouse Science and Technology Center is to identify, develop and transfer innovative technologies to the Westinghouse business units in a cost-effective and timely manner to create new businesses or provide competitive advantage in existing ones, with the ultimate objective of profitably growing the corporation. Even though we perform other functions, such as providing technical assistance, I believe that only the creation of new businesses or competitive advantage for quantum business growth justifies the existence of a corporate R&D center, especially in these days of close scrutiny from corporate headquarters. Measures of R&D Effectiveness In light of this mission statement, the best measure of R&D effectiveness would seem to be the value of new businesses, competitive advantage, or product sales that our technology created. However, there are real difficulties in measuring the impact of R&D on business. When RD transfers technology, the business unit must invest a great deal of its own time and resources to get the product to market. By the time the product makes an impact in the marketplace, the people in the business unit may have forgotten or lost sight of the R&D contribution. On the other hand, the research scientist may believe RD's contribution was crucial. As a result of the negative reaction we received from our business units when we tried to retroactively quantify our contributions to their business, we look to the future instead. We have established a relationship with the businesses that allows us to work together on projects and share in the credit for future contributions. We have also been seeking more timely measures of R&D effectiveness, such as the number of technologies transferred or in transit to the business units. However, there are also difficulties with this approach: * Does a project employing 100 people count the same as one employing one or two? * How do you count continuing support of a technology that was transferred in the past? Or course, one can define rules to precisely count the number of technologies in transit. However, I believe the percentage of projects that are relevant and transferable at the appropriate time is a better measure of RD effectiveness, especially the effectiveness of project selection. There are other concrete measures of RD effectiveness, such as the number of papers published, or the patent impact index. But we have found that relatively few of our patents produce a large business impact. Many of them are never used. And, although some papers are landmarks, others have marginal value. Even though we measure patents and papers, we believe these are only partial measures of R&D effectiveness. …