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A consistent theme with a number of our clients is how to make decisions about the
various projects or programmes that they could potentially run with. Many businesses
have a long list of good ideas, but resources are limited and a good process is needed
for deciding which one(s) to continue, start, or stop.
A good process usually involves an analysis of "fit" with the businesses
strategy, an analysis of technical success and the financial returns. These can be
evaluated in a number of ways with varying degrees of complexity and
sophistication.
One of the more succinct and balanced summaries of how to do this is provided by Dr
Arno Penzias, chief scientist at AT&T Bell Laboratories, astrophysicist, research
scientist and Nobel Prize-winner. According to Penzias:
Scientists ask me, "How do you know you're working on a good project?" I
say, "Simple: Imagine that what you're going to do will be 100 percent successful;
find out how much money it's going to be worth; multiply by the probability of success,
divide by the cost, and look at the figure of merit."
When I originally said this, everybody became hysterical. Everybody got mad, saying,
"How would we know the probability? How would we know what it's worth? What if we
don't know who the customer is?"
But if you don't know who needs something, why are you doing it? If you don't know
what the chances are of success, why are you doing it? If you don't know how much it's
going to cost - not just in resources but in years of your life - why are you doing it?
You ought to know all three things!
We like the simplicity and discipline of this logic. Our experience is that significant
value is added to business through using robust tools for identifying good projects.
Last week the Foundation for
Research, Science and Technology announced the reinvestment of more
than $100m in some new research proposals with particular emphasis
on biotechnology, and information and communications technology as
well as some major initiatives in the social and environmental
areas.
In a statement on the reinvestment
Foundation Chief Executive Gowan Pickering, says that the new
research investments will result in some significant changes in the
New Zealand innovation landscape.
In particular:
- Investments are designed to build
a world-class biotechnology sector in New Zealand based on our
primary biological industries;
- There are some significant
investments in the area of global change which are designed to
focus on issues that directly impact on New Zealand's
environment
- Investment in some important
social research relating to New Zealand communities and Maori is
also included in the new investments
Details of the research projects will
become available as contracts with the research organisations are
finalised over the next two months.
In 2002/03, sustainable development,
energy, advanced biologics and social portfolios will be reviewed
and applications for funding will be sought.
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