Published: 10 October 2022
Traditional R&D project evaluation metrics often misdiagnose early-stage or transformational project value, causing many promising investments to be overlooked. R&D leaders must supplement financial metrics with nonfinancial criteria to understand the holistic value of projects in the R&D portfolio.
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Conventional R&D project evaluation scorecards often rely too much on financial metrics such as ROI and net present value (NPV). This reduces project assessment to simplistic evaluations of cause (that is, investment costs) and effect (that is, revenue), pushing organizations to make safer, homogeneous investment decisions.
Balanced scorecards are generally informed by historical successes which define the minimum thresholds an opportunity must meet to be considered. This generally excludes ideas for which the risk profile lies outside the organization’s previous experiences and yields ideas that are more similar than different.
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