A performance-oriented risk management framework for innovative R&D projects

• Published in: Technovation Vol. 30; no. 11; pp. 601 - 611
• Main Authors: Wang, Juite, Lin, Willie, Huang, Yu-Hsiang
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier Ltd 01.11.2010; Elsevier Scientific Publishing Co; Elsevier Sequoia S.A
• Subjects: Assessments; Balanced Scorecard; Failure; Innovation; Markets; Monitors; Project management; Quality function deployment; R&D; R&D management; Research & development; Research and development; Risk; Risk management; Strategic planning; Strategy; Studies; Total quality; Uncertainty; R&D management; Quality function deployment; Risk management; Project management; Balanced scorecard
• ISSN: 0166-4972; 1879-2383
• DOI: 10.1016/j.technovation.2010.07.003

Uncertainty is one of the major inherent difficulties in developing innovative products, due to their highly dynamic markets and technologies. The presence of a large degree of uncertainty leads to high R&D risks, resulting in many R&D failures. Therefore, it is important to manage R&D risks through all R&D stages to improve R&D project success rates. This paper proposes a new risk management framework that aligns project risk management with corporate strategy and a performance measurement system to increase success rates of R&D projects and to accomplish corporate strategic goals. The balanced scorecard is used to identify major performance measures of an R&D organization based on the firm vision and strategy. Quality function deployment is adapted to transform organizational performance measures into project performance measures and a systematic procedure is developed for risk identification, assessment, response planning, and control. The proposed risk management framework enables an R&D project to be focused on achieving the corporate goals and provides a more effective way to identify, assess, analyze, and monitor R&D risks along the project cycle. The proposed methodology is illustrated with a drug development project.