Indirect Benefits of R&D – Chrysler Example

The article Heritage: Prowler was a vehicle ahead of its time. | driveSRT has some interesting data points about R&D portfolio executives. New technologies can have benefit far beyond the product for which they were developed. 

“Magnesium instrument panels, aluminum hoods and aluminum suspensions, vital crash safety design. All are key traits featured on new SRT vehicles that originated on the Prowler.”

Focusing solely or primarily on NPV for financial metrics to prioritize portfolios will lead us away from long-term discriminators. It is possible to compute financial return on sustaining product development or on products that are close to getting to market. However, it is difficult, if not impossible to accurately compute the return on investment for technologies that apply to multiple products (it requires estimating the part of the products NPV is generated by the technology). In fact, focusing solely on financial metrics will likely scuttle innovation.

What are some solutions:

• Use financial metrics as one of many criteria for prioritization.
• Set aside a fraction of the overall R&D budget for innovation and do not use financial metrics for innovation projects.
• Demonstrate R&D value by tracking insertion of technologies across product lines (InspiRD can help)
• Design off-ramps and integration of technologies along the path to full productization. This is what Chrysler SRT appears to have done successfully in case of Prowler.