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.
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
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