Portfolio management of R&D projects: implications for innovation management

Globalization of markets and new business practices are prompting high-tech firms to reconsider their competitive strategy. The increasing complexity of technologies in addition to shorter product life cycles are also forcing firms to rely on R&D as a source of strategy. More importantly, firms are inclined to evaluate their technologies from a portfolio's perspective in w hich a set or a sub-set of R&D projects is evaluated together, in relation to each other. Portfolio techniques can help strategic managers in evaluati ng whether a portfolio of products is adequate from the perspective of long -term corporate growth and profitability. Obviously, when R&D projects are evaluated relative to one another, technical capability management of such projects must be carried out concur rently. In this paper, R&D Project Port folio Matrix is used as a tool for analyzing a portfolio of R&D projects by linking competitive advantages of a firm to benefits these projects may pr ovide to customers. Examples of batteries for electric vehicles (EV) and hy brid electric vehicles (HEV) are provided to illustrate how such a matrix i s used, and some of the implications for innovation management of such proj ects. (C) 2001 Elsevier Science Ltd. All rights reserved.