What are the most effective R&D performance metrics for sustainability goals?

Research and development (R&D) is a vital source of innovation and competitive advantage for many organizations. However, measuring the impact and value of R&D activities is not always straightforward, especially when it comes to sustainability goals. Sustainability goals are long-term, multidimensional, and often intangible, making them hard to quantify and compare. In this article, you will learn about some of the most effective R&D performance metrics for sustainability goals, and how to apply them in your organization.

1 Input-output metrics

Input-output metrics are the simplest and most common way of assessing R&D performance. They measure the amount and quality of inputs (such as resources, time, and talent) and outputs (such as patents, publications, and products) of R&D projects. Input-output metrics can help you track the efficiency, productivity, and return on investment of your R&D efforts. However, they have some limitations when it comes to sustainability goals. Input-output metrics do not capture the social and environmental impacts of R&D outputs, nor do they account for the uncertainty and complexity of R&D processes. Therefore, input-output metrics should be complemented by other types of metrics that reflect the sustainability dimensions of R&D.

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Robert Huettner (6-Sigma Blackbelt)

Vice President Technology Portfolio
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The question is two questions in real. The first regarding performance measures in R&D is quite important - but total independent on what are sustainable goals at all. Last question I will skip. First is an ongoing battle in R&D control and R&D lead. In my experience time for successful product introduction and development failure rate (stopped developments, overtime and overbudget dev. are failed once -how much depends on the individual scales). The scales everbody can set freely but they need to get monitored over a longer period. Soon effects will get visible- even without other company crosscheck - just insight about internal historical "development"-development. Finally, add key figures of patent appl./a + fluctuation of engineers ;-)

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2 Outcome-impact metrics

Outcome-impact metrics are more advanced and nuanced ways of measuring R&D performance. They focus on the results and effects of R&D outputs on the stakeholders, markets, and society. Outcome-impact metrics can help you evaluate the relevance, value, and contribution of your R&D projects to your sustainability goals. For example, you can use outcome-impact metrics to measure how your R&D outputs improve customer satisfaction, reduce environmental footprint, or enhance social welfare. However, outcome-impact metrics are also more challenging and costly to collect and analyze. They require clear definitions of outcomes and impacts, reliable data sources, and robust methods of attribution and evaluation. Therefore, outcome-impact metrics should be used selectively and strategically for your most important and influential R&D projects.

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Andrea Bonfanti

Global R&D Leader - Driving Data-Powered Innovation and Agility | Data & AI Business Value & Innovation | Transformational Leader | Robotics | Digital Reality | Autonomous Technologies | Industrial & Geospatial Metaverse
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The utilization of outcome-impact metrics demands a meticulous approach. While they offer a profound understanding of how product innovations affect customer satisfaction, environmental sustainability, and societal well-being, their complexity and resource-intensive nature necessitate selective and strategic application. Clear definitions of outcomes, reliable data sources, and robust evaluation methods are pivotal in harnessing the true potential of these metrics.

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3 Process-behavior metrics

Process-behavior metrics are another way of assessing R&D performance. They focus on the activities and practices of R&D teams and individuals. Process-behavior metrics can help you monitor and improve the quality, effectiveness, and creativity of your R&D processes. For example, you can use process-behavior metrics to measure how your R&D teams collaborate, communicate, learn, and innovate. Process-behavior metrics can also help you align your R&D processes with your sustainability goals. For example, you can use process-behavior metrics to encourage your R&D teams to adopt sustainable design principles, ethical standards, and stakeholder engagement practices. However, process-behavior metrics are also subjective and sensitive. They require trust, transparency, and feedback among your R&D teams and managers. Therefore, process-behavior metrics should be used carefully and respectfully for your R&D processes.

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4 Balanced scorecard

Balanced scorecard is a comprehensive and integrated framework for measuring R&D performance. It combines different types of metrics into four perspectives: financial, customer, internal, and learning and growth. Balanced scorecard can help you balance and align your R&D objectives, strategies, and actions with your sustainability goals. For example, you can use balanced scorecard to link your R&D inputs, outputs, outcomes, and impacts with your financial, social, and environmental performance. Balanced scorecard can also help you communicate and visualize your R&D performance and progress to your stakeholders. However, balanced scorecard is also complex and dynamic. It requires a clear vision, a coherent strategy, and a flexible adaptation of your R&D performance metrics to your changing sustainability goals. Therefore, balanced scorecard should be used wisely and systematically for your R&D performance management.

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5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Michael Pivovaroff

Associate Deputy Director for Science and Technology
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No matter the type of metrics you use for the assessment, it is essential to do benchmarking against similar businesses or organizations in your sector. There is rich literature for the types of metrics (e.g., publications, IP, invited talks, retention of top talent) best used to gauge the impact of R&D performed in academia and federal laboratories. While not all are relevant for every situation, spend the time to understand the underlying rationale for collecting, say, bibliometric information. If that resonates for your business, gather those facts or a close proxy. Whatever the challenges in obtaining meaningful data, you will be rewarded with an irrefutable and independent measure of how you compare with other high-performing players.

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Maria Hahn

Digital Health ‎| CEO & Founder of Nutrix AG ‎| Forbes Women to Watch ‎| Switzerland Digital Shapers ‎| MIT | IE Business School
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At Nutrix, we focus our R&D activities on creating digital health solutions with a positive social impact. We measure our impact through metrics such as improved access to healthcare, reduced health disparities, and contributions to public health initiatives. Our goal is to make a measurable difference in people's lives and contribute to overall public health outcomes through our innovative products.

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What are the most effective R&D performance metrics for sustainability goals?

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1 Input-output metrics

2 Outcome-impact metrics

3 Process-behavior metrics

4 Balanced scorecard

5 Here’s what else to consider

Research and Development (R&D)

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