Building market-winning products and services requires a rigorous approach to innovating and engineering. BCG helps companies transform R&D and improve product excellence so that they can bring the right products to the right customers at the right time.
Technology companies have a lot riding on how they prioritize markets, structure their innovation and product development processes, allocate R&D spending, and design their operating models. Whether they make enterprise software, semiconductors, or Software-as-a-Service applications, they depend on product innovation and engineering to meet their strategic objectives, navigate increasing complexity in technology and customer expectations, and stay ahead of the competition.
At a time when innovation and disruption happen so fast, getting product development right is a must. When product development is in sync with a company’s overall strategy, it can reduce R&D costs, drive products’ market fit, and speed new products to market. It can also improve customer satisfaction and help employees feel more engaged.
But getting there is not without its challenges. Problems with product innovation and engineering can crop up if companies don’t have a clear vision or business plan, don’t allocate R&D spending correctly, or mismanage product development. The costs—including missed opportunities for growth and a weakened competitive position—can be high.
Our comprehensive method for improving R&D includes enhancing product and portfolio strategy, R&D spending, product management, technology and tooling, and the function’s organization and operating model.
Our product innovation consulting services include using an R&D index to gauge the effect of a company’s R&D investments on revenue growth relative to companies with top-performing R&D functions.
BCG used this method with one technology company that needed to transform an improperly weighted R&D portfolio. The client lacked insights and guidelines for R&D spending, leading it to overinvest in innovations for slow-growing markets and spend too little on product development for faster-growing ones. BCG helped the company create an R&D spending allocation framework with tracking and review guidelines. Our product innovation consultants also worked with the company to create KPIs and OKRs to keep product management in line with strategy.
The transformation freed up 25% of low-return R&D spending, which the company moved into an innovation fund to expand into new capabilities, markets, and clients.
R&D spending can be a black hole—money goes in without a clear idea of what the outcomes could be. By adopting a rigorous product development decision process and framework for measuring outcomes, companies can align spending with strategy and maximize their R&D ROI.
Software and technology providers face increased complexities, including accelerated adoption of cloud technologies, AI, and blockchain, as well as growing expectations that products will have better interfaces, will be easier to use, and can be deployed faster. No wonder the pressure’s on R&D to deliver.
Semiconductor manufacturers must redesign product development to keep up with a changing market. To do that, they need to identify the products that customers want most and then use that information to shape their portfolio and product execution.
BCG specialists understand the ins and outs of product discovery, product budgeting and planning, and engineering:
