7.1 Learning Outcomes:
Familiarize with the wide variety of methods available (both quantitative and qualitative) to evaluate innovation projects.
Highlight the important role played by managerial assumptions in the accuracy and utility of any measure used.
Emphasize the importance of a balanced R&D project portfolio (i.e. advanced R&D, breakthrough, platform, and derivative).
7.2 Action Required:
Watch the short video in the following link
7.3 Test your Knowledge (Question):
Q. Discusses how managers should select and balance their R&D portfolio, as well as the advantages and disadvantages of some of the most often used tools for project evaluation.
7.4 Instructions
Post your answer in the discussion board using the discussion link below (Week6: Interactive learning Discussion)
Your answers should not exceed word limit of 100-120
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Managers should select and balance their R&D portfolio based on their company’s goals and priorities. This includes considering the type of innovation projects that align with their goals, such as advanced R&D, breakthrough, platform, and derivative projects. Additionally, managers should also consider the resources and capabilities of their company when selecting and balancing their R&D portfolio.
Tools that are commonly used for project evaluation include return on investment (ROI), net present value (NPV), and internal rate of return (IRR). These quantitative tools are useful for evaluating financial aspects of projects, but they do not take into account other important factors such as strategic fit and market potential.
Qualitative tools, such as the stage-gate model and the innovation ambition matrix, can also be used to evaluate projects. These tools take into account various factors such as market potential, strategic fit, and technological feasibility. However, it is important to note that these tools are based on managerial assumptions and may not always provide accurate and useful results.
It is important for managers to use a combination of both quantitative and qualitative methods to evaluate innovation projects and to be aware of the assumptions that underlie each method used. This can help managers to make more informed decisions about their R&D portfolio and ensure a balanced portfolio that aligns with their company’s goals and priorities.
