Strategy: Research Portfolio Planning and Management

Strategy: Research Portfolio Planning and Management

Competitiveness in the market is dependent on exploiting new technology opportunities. Identifying and developing new technology requires effective investment in long-term research and development. Yet at the same time, there is the perception that research investments are not producing sufficient market returns.

Corporations need to maximize market return on investment in research efforts through effective research portfolio planning. This requires optimizing the balance between short-term and long-term research effort, incremental and breakthrough research results, risk and reward. Effective research portfolio planning can deliver optimum research results and maximum return on investment in research efforts.

Challenges of Research Portfolio Planning

Effective research portfolio planning goes well beyond simply balancing risk and uncertainty against technical opportunity and potential market reward. For a research portfolio to be effective it must meet the business needs of the sponsoring company and produce results that are able to be transferred into the company’s product lines once mature. The research organization and its associated business units must overcome the following challenges:

  1. Asynchrony between the corporation’s business strategies and research strategies

    1. Business strategies lacking the potential vision of research direction

    2. Research strategies not aligned with business direction

    3. Ineffective communication between business units and research

    4. Research project selection not informed by long-term business direction

    5. Out-of-touch “ivory tower” negative perception of research within business units

  2. Short-term research pressure from business units

    1. Assembly-line research mentality

    2. Resistance to investing in risky, uncertain, long-term research

  3. Balancing long-term and short-term research

    1. Breakthrough technology potential

    2. Developing foundation for short-term research

    3. Embracing failure as a useful research result

  4. Technology transfer challenges

    1. New technology disruptive to existing product lines

    2. Incomplete amortization of previous research through existing product lines

    3. Markets not ready for new research directions

    4. Research results out-of-sync with product line strategies

    5. Lack of product engineers’ experience with new technology

  5. Research management challenges

  1. Lack of communication and collaboration between business units and research organizations

  2. Technology transfer management challenges

  3. Marketing the research organization within the corporation

  4. Developing pre-product market development campaigns for forthcoming research results

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Strategy: Early Market Development and “The Rubber-Chicken Circuit”

On his blog “The Post Money Value“, Rick Segal has some excellent advice for early-stage entreprenuers that find themselves in the spot-light of The Rubber Chicken Circuit. Few startups have the people resources to be able to afford to galavant around the rubber-chicken circuit during their pre-product phase. Even if they have the capital resources for such adventures, the opportunity costs associated with having their senior executive distracted from their primary duties is far too high.

That said, there is also some value in strategically (i.e. selectively) exploiting the spot-light, if you find yourself so blessed.

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Strategy: Competitive Standards Strategy

While competitors and customers believe in standards that are fair, impartial and open, a company’s competitive interests are often met by seeking unfair, proprietary and closely controlled advantage. Yet the open standards process is valuable to a company in broadening the potential market, building a positive market reputation and building a community of potential customers. The challenge is to participate in and drive standards in a fair, impartial and open manner while internally pursuing an aggressive competitive product, market and standards strategy. This article will discuss:

  • Value of the Standards Process;
  • Ethics and the Standards Process;
  • Challenges of the Standards Process;
  • Competitive Strategy and the Standards Process.

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Strategy: Lessons from Texas Hold’em

I don’t play cards, but I enjoy watching Texas Hold’em poker on TV. One might think that watching other people play cards would be boring. On the contrary. Poker games present a microcosm of strategy, tactics, personality traits and clues. I’ve learned a few important lessons about corporate strategy while watching these games.

  1. If you’re going to play a hand, bet based on the effect you want to have around the table (market) rather than betting based on the actual strength of your hand.
  2. Use your position at the table to lure your competition into an uncompetitive position.
  3. When you believe you have the best hand, play it for the long haul rather than just using it to grab a quick win.
  4. All you need is a chip and a chair to play. Many players have rebounded from near zero to win the tournament.
  5. Two or three solid wins will turn an also ran back into a chip leader.
  6. Play a tight game early in a tournament while evaluating the competition.
  7. Play an aggressive game once you understand the other players.
  8. When playing head-to-head with a competitor, take no prisoners.

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Business Planning: Software Patents

Up until the last few years I have not been a fan of software patents. My rationale for my disdain of software patents was purely pragmatic.

  1. Developing approvable patent applications takes significant time from senior engineers which distracts them from their critical responsibility – getting products out the door with which to compete in the market.
  2. Securing market-share is what drives revenues, value to the customer drives sales to gain market-share. Patents do not contribute to success in the market.
  3. Patents do not significantly positively contribute to the valuation of a company with private or public investors.
  4. Software technology changes so quickly and the patent process takes so long, that often the patent is irrelevant by the time it is awarded.
  5. Because software was largely distributed as binary executables, monitoring for and identifying patent violations was impractical.
  6. Many, if not most, “new” ideas in software are not new, just rediscovered by younger engineers with a poor understanding of computing history. Significant prior art should be a barrier to receiving a patent on an idea.
  7. Many of the ideas that could be patented are ideas that your company needs to make ubiquitous in the market so that you can sell value-added solutions across the entire market, not just to a niche proprietary market.

I have had a change of heart. Each of the points above is still true. But reality in the software world is that if you don’t patent your idea, someone else will. Then where will you be?

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Strategy: The Palladium Print System

In 1986, within a few weeks of joining Digital Equipment Corporation as an Enterprise Management Architect, I was tossed a “simple” assignment of resolving a distributed queuing problem between VMS, Ultrix and the new line of LPS networked laser print servers. Customers were complaining that print jobs were not being printed in exact time-stamp order, with suspicion that one operating system was being given precedence over the other operating system. Since there was a bit of contention between the VMS proponents and the Ultrix proponents, the problem needed to be corrected to avoid internecine fighting within the customer-base. The real problem was with the lack of a coherent distributed queuing strategy between multiple print servers (each of which pre-queued a small number of jobs at a time) and multiple client OS printer queues. As anyone with experience standing in line at the bank knows, it can be a crap shoot who gets to a teller first when there are multiple lines to multiple tellers.

Solving the problem required more than a simple fix to the LPS and OS queuing systems. The solution was a new model for distributed printing across the networked printer and software product lines. So, I joined Tom Hastings from the Printer Division and colleagues from across engineering, program management and marketing to define a common Print Systems Model for the corporation.

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Business Planning: Mission, Vision, Goals, Strategies, Objectives and Tactics

In the Autumn of 2000 I was invited to present a course on business planning for erstwhile entrepreneurs. Investment was booming. Entrepreneurs were passionate. The future looked rosy. On the day of the first presentation came the initial rumbles of the coming Dot Com Crash.The investment community has slowly recovered from the crash and is once again enthusiastically investing high tech. So, this is an ideal time to dust off the old course for the new generation of entrepreneurs, as well as strategic planners at established companies.

Part I of the course lays the foundation of strategic thinking required to create a successful business plan:

  • Mission: The overall purpose or charter of an organization or business
  • Vision: A very broad scheme for satisfying the mission of a business
  • Goal: A broad desired result or purpose to be achieved
  • Strategy: The plan or scheme designed to achieve a goal
  • Objective: The specific deliverable that implements part of a strategy
  • Tactic: A scheme or plan intended to meet a specific objective

For each of these definitions I provide an example based on the military tactics of Genghis Khan. I recommend sticking to less gruesome, though not necessarily less aggressive, strategies and tactics in your business plans.

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