As companies invest much on developing new products, an effective R&D operation and evaluation is a major source of competitive advantage in today's rapidly changing competitive environment. Many R&D performance measurement techniques have been developed in response to these needs. But many managers continue to be disappointed with them. This may be in part due to the relative newness of the field and the lack of well-defined and tested methods.
This study focuses on the performance measures of the development organization in business unit, which are dynamically linked to product life cycle(PLC) of the products it serves. For this, the research questions are:
1) How are the innovation strategies of the development organization affected by the PLC?
2) How should the performance measures of the development organization be differentiated according to the innovation strategies in the PLC?
The major contributions of this study are as follows: First, based on the review of related literature, the innovation strategies of the development organization and the useful performance measures are identified. Second, using the balanced scorecard introduced in the early 1990s, the performance measures of the development organization are classified into four perspectives and dynamically systemized according to the PLC and the innovation strategy. Third, we analyze the performance measurement system (PMS) characteristics and their measures of three case firms according to the suggested PLC framework.
In the case study, it is found that many companies use the performance measures similar to those identified in this study but they are not systemized and do not have integrated measures to evaluate their development organizations. We proposed some specific improvement directions for each case company and discuss the general implications of the case study for future research.
