Brenda Reichelderfer is a senior vice president and managing director at TriVista, an operations consulting firm focused on middle-market companies. She has more than 30 years of experience in general management, engineering and operations. In addition to her extensive P&L background, Reichelderfer gained operational expertise as plant manager, vice president of operations, director of engineering and chief technology officer.
Q. HOW CAN INNOVATION IN NEW PRODUCT DEVELOPMENT BE MEASURED BY PRIVATE EQUITY FIRMS?
Typically, a vitality metric is used to measure the amount of sales generated by product releases within a set period as a percentage of total sales. The trouble with this, and many other business outcome-related metrics, is that feedback is very latent. Development cycles can take months to years before you get even the first feedback point. A Corporate Executive Board study illuminates this point by separating the great organic growth firms from the rest of the pack and determining whether those firms tended to focus on a different set of metrics.
The results were clear—To get more from your R&D investments, the leadership team needs to look at the health of your portfolio of projects and ask:
- Do we have a balance of core and growth?
- Do we have a healthy balance across product lines?
- Are we treating great projects differently than mediocre ones?
- Do we have a product development roadmap to weed out projects that will waste our resources?