How do you measure your product development effectiveness in the aggregate? Today, with companies spending large sums on development process improvement, a new metric is needed, one that shows what you're getting for your investment. In this article Michael McGrath and Mark Deck, of consulting firm Pittiglio Rabin Todd & McGrath, present The R&D Effectiveness Index. The Index is an aggregate measure of the overall success of a company's product development efforts. It serves as an overall metric at a level above individual products and development projects, and provides management with a tool to measure the effectiveness of its product development process. The R&D Effectiveness Index uses a simple formula to compare profit from new products to investment in new product development. It provides insight into product development process dynamics and how it affects profitability.
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