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The R&D Effectiveness Index: A Metric for Product Development Performance

Michael E. McGrath (Founding Director of Pittiglio Rabin Todd & McGrath (PRTM), an internationally recognized management consulting firm to technology‐based companies. He is based in the firm′s Weston, MA office. Seven years ago, Michael initiated the firm′s product‐development consulting practice referred to as PACE (Product and Cycle‐time Excellence). Michael has written numerous articles on product development, operations management, manufacturing strategy, and international manufacturing and is co‐author of the book Product Development: Success Through Product and Cycle‐time Excellence and author of the book Product Strategy for High‐Technology Companies to be published by Irwin Professional Publishing. Prior to founding PRTM, Michael worked for Texas Instruments, Computervision, Price Waterhouse & Co., and McCormack & Dodge. He graduated magna cum laude from Boston College with a BSc in Computer Science and Management Science and received an MBA from Harvard Busine ss School. He is also a CPA and CMA.)
Michael N. Romeri (Director in PRTM′s Weston, MA office. He works extensively in the firm′s product development consulting practice, directing large international projects. Mike has worked extensively within the electronics industry since 1979. Prior to joining PRTM, he worked with AMD and Flextronics. Mike′s academic experience includes a BA from Harvard College and an MBA from Harvard Business School.)

World Class Design to Manufacture

ISSN: 1352-3074

Article publication date: 1 August 1994

Abstract

Measuring the overall success of product development efforts has been frustrating because there is no generally recognized metric to measure effectiveness. The R&D Effectiveness Index is introduced to address this need. It measures effectiveness by comparing the profit from new products to the investment in new product development. Provides the details for calculating the index along with alternative interpretations. Finds a strong relationship between the R&D Effectiveness Index and other performance factors and argues that the R&D Effectiveness Index can be used to compare performance, measure improvement, and evalute business units. Illustrates its application in a case study.

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Citation

McGrath, M.E. and Romeri, M.N. (1994), "The R&D Effectiveness Index: A Metric for Product Development Performance", World Class Design to Manufacture, Vol. 1 No. 4, pp. 24-31. https://doi.org/10.1108/09642369210063063

Publisher

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MCB UP Ltd

Copyright © 1994, MCB UP Limited