Value-Based Engineering (VBE) in Tech

Getting the most value out of R&D in today’s competitive tech industry

Over the last decade, technology companies have collectively asserted their influence. Now, the five most valuable companies in the world all hail from the tech industry. Yet more than ever, tech companies face market turbulence: positional advantage is less durable and disruption is occurring at an increasing pace.

In response, many companies have invested heavily in R&D, which is a key driver of TSR and consumes more than $250B in capital per year. However, as R&D budgets grow, CEOs and technology leaders wonder if their R&D spend is focused on the right areas and if their efforts are as efficient as they need to be.

Based on extensive work with our clients, BCG has developed a battle-proven approach to quickly diagnose R&D effectiveness and support the large-scale R&D transformations needed to succeed. Our Value Based Engineering approach tackles all aspects of R&D value creation to ensure our clients "do the right things" and "do things right.”

VBE can quickly address a range of R&D challenges including:

  1. Long time to market. R&D project cycle times and budgets typically run over by 20-50%, largely due to feature creep and incorrect scoping up front.
  2. R&D misalignment. R&D projects and resource allocations often fail to align with the strategic roadmap and top-down portfolio direction.
  3. Excess R&D costs. R&D waste can be created due to bloated support for legacy products, feature-level customizations, and custom platforms.
  4. Lack of product scalability. R&D designs not following modular design principles aren’t able to scale across product tiers and multiple product use cases.

Typically, a VBE engagement begins with a 10-12 week diagnostic to measure the baseline of R&D structure, costs, and processes; and to quickly identify opportunities for value creation. BCG leverages proprietary benchmarks to measure our client’s lag compared to the competition. 
Following our initial diagnostic, BCG typically works with the client’s executive team to develop a transformation roadmap to enhance R&D effectiveness. VBE transformations consistently deliver 15-20% in R&D efficiency and ~15% reduction in R&D cycle times, while also contributing to revenue growth by ensuring alignment between product features and customer needs.

Experts in Value-Based Engineering

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