How Can You Measure R&D Productivity In Your Business? (Metrics Reviewed)

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Measuring R&D productivity is not a straightforward task. There are different ways to measure how productive R&D is.

Measuring R&D productivity is not a straightforward task. There are different ways to measure how productive R&D is.Measuring R&D productivity is not a straightforward task. There are different ways to measure how productive R&D is.

Measuring R&D productivity is not a straightforward task.

There are different ways to measure how productive R&D is. You can look at the results (such as the number of new products or services created, or the amount of revenue generated from those products), or you can look at how much effort was put into it (usually measured by how much was spent on research and development activities or by staff numbers). Whichever way you measure it, it's important to do so in order to see if your R&D is effective and efficient.

There are various ways to calculate it, and different factors can be included or excluded depending on the purpose of the assessment. However, in general, there are two main ways to measure R&D productivity: by output or by input. Output measures the results of R&D activity, such as the number of new products or services that have been created, the amount of revenue generated from those products, or the number of patents filed. Input measures how much effort has gone into R&D, usually measured in terms of expenditure on research and development activities or staff numbers.

This article will explore both methods for measuring R&D productivity so you can understand which is most appropriate for your business.

Output

An example of an output measure is the number of new products or services created as a result of R&D. This could be measured in terms of the total number of products or the number of new products that have been commercialized (i.e. brought to market). Output measures can also be expressed in terms of revenue generated from those products, for example, by calculating the total revenue generated from products that were developed as a result of R&D or the average revenue per product.

Another example of an output measure is the number of patents filed. This could be measured in terms of the total number of patents filed or the number of patents granted.

Input

An example of an input measure is expenditure on research and development activities. This could be measured in terms of the total amount spent on research and development or the average amount spent per product. Input measures can also be expressed as a percentage of revenue. For example, you could calculate how much of your total revenue is generated from products that were developed as a result of R&D.

Another example of an input measure is the number of staff working on R&D. This could be measured in terms of the total number of staff or the number of new staff hires.

Which measure is most appropriate?

The measures you use will often depend on the type of business you are in. For example, a technology company might be more interested in output measures such as the number of patents filed or the amount of revenue generated from products developed as a result of R&D, while a pharmaceutical company might be more interested in input measures such as expenditure on research and development or the number of staff working on R&D.

Whichever measure you choose, it's important to track it over time so you can see how your R&D productivity is changing. This can help you to identify any trends, good or bad, and make changes as needed.

If you don't track how productive your R&D is, you won't know if it is effective or not. You might not be able to improve it if it's not working well. And you might not be able to replicate what has worked in the past if you don't know what it is.

Key Takeways

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