Smaller software companies tend to outperform their larger competitors in returns from R&D investments. How can software companies ensure the scaling of R&D even as they grow?
Our Approach to Product Innovation and Engineering
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 product-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 spend correctly, or mismanage product development. The costs can be high—they include missed opportunities for growth and a weakened competitive position.
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.
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 spend correctly, or mismanage product development. The costs can be high—they include missed opportunities for growth and a weakened competitive position.
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.
Product and portfolio strategy
- Product strategy and planning rhythm
- Portfolio investment framework
- Platform product interlock
R&D spending optimization
- Return on R&D investment
- R&D spending allocation
- R&D spending transparency
Product management and execution processes
- Data-driven product management
- Consumer-centric product execution
- Robust stage gate process
Technology and Tooling
- Core product and delivery architecture
- Metrics and KPIs
- Digital reporting infrastructure
Organization and operating model
- Organization structure, including hybrid platform organizations, operating model, and culture
Our Client Work in Product Innovation and Engineering
Part of our product innovation consulting services includes an R&D index to gauge the effectiveness of a company’s R&D investments on revenue growth. BCG used this method to help a technology company transform an improperly weighted R&D portfolio. The client lacked insights and guidelines for R&D spending, leading it to over-invest in innovations for slow-growing markets and spend too little on product development for faster-growing ones.
Our team worked with the company to create a new R&D spending allocation framework with tracking and review guidelines, and helped them establish KPIs and OKRs to keep product management in line with strategy. The transformation freed up 25% of low-return R&D spending, which was leveraged to expand into new capabilities, markets, and clients.
Our team worked with the company to create a new R&D spending allocation framework with tracking and review guidelines, and helped them establish KPIs and OKRs to keep product management in line with strategy. The transformation freed up 25% of low-return R&D spending, which was leveraged to expand into new capabilities, markets, and clients.
Our Insights on Product Innovation and Engineering
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Meet BCG’s Product Innovation and Engineering Experts
BCG specialists understand the ins and outs of product discovery, product budgeting and planning, and engineering:
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