R&D: PORTFOLIO-BASED STRATEGY DEVELOPMENT

Overview of client and problem

The Ferdinand-Braun-Institut für Höchstfrequenztechnik (FBH) is a recognised research centre in the field of microwave technology and optoelectronics (OE). The Institute specialises in technology transfers by means of research and development activities, providing high-frequency devices and circuits for communication and sensor technology. Additional high-power diode laser applications include materials processing, medical technology, and high precision metrology.

In the first phase of this project, a MARA team supported FBH staff to evaluate 13 potential research areas in a sub-area of optoelectronics. This decision problem is of significant importance to the Institute as it will result in a strategic commitment of resources to a specific area of technology for the next three years. In addition, it is inevitably difficult to foresee the evolution of such highly advanced technology both in terms of intrinsic technical complexity and uncertain market conditions.

In the second phase, the Institute desired to determine the most efficient allocation of its funding resources among 21 program groups in all of its four research areas. This analysis placed new projects analysed in project phase one in the context of FBH's overall research portfolio. This unprecedented process enabled FBH decision makers to compare potential benefits and costs of all their R&D activities. The results obtained aided the decision makers in the analysis of the Institute's research direction in order to achieve the highest possible, sustainable success in both scientific and commercial arenas.

Objectives of the project

The primary objectives of this project focused on how to best construct a systematic, consistent, and transparent decision making process in a non-profit research-oriented organisation. FBH decision makers are highly qualified scientists who value not only the accurate results from such appraisal and portfolio analyses, but also the efficient and effective methodology in attaining such results. With no doubt, the Institute anticipates solutions of the most promising research direction in OE and the optimal allocation of basic funding to its program groups. However, they also recognise the necessity to obtain the commitment from all involved stakeholders by actively sharing information and insights to obtain a collective understanding.

Modelling approach

In each of the two analysis phases, the MARA team employed a socio-technical approach, combining the decision analytic methodologies of value-focused thinking (VFT), multi-criteria decision analysis (MCDA), and decision conferencing (DC). Progressive group and individual interactions with FBH's prominent scientists at management levels facilitated the structuring of a common fundamental objectives hierarchy. The adopted MCDA model compared preference values of all options across the relevant criteria. More specifically, the appraisal analysis in Phase I consolidated 12 benefits and cost judgements for each option into a single weighted score. In comparison, Phase II portfolio analysis judged each option with respect to the aggregation from four higher level criteria against its effective cost. Criteria and option definitions were iteratively refined with FBH staff, and the DC was instrumental in aligning their beliefs on all scores and weights. Such process allows stakeholders with differing knowledge and expertise to contribute appropriately.

Results, impact, and conclusion

The appraisal analysis of prospective research directions in OE permits FBH decision makers not only to identify the best research options, but also to examine factors which contribute positively and negatively to the performance of these options. This systematic and transparent process facilitates discussions that yield deeper understandings and greater insights into characteristics of this highly advanced technological field. The methodology also incorporates potential returns and risks on various dimensions that are of concern to FBH decision makers.

The portfolio analysis offers FBH a strategic plan to steer its future research activities. Programs are compared and ranked, permitting the Institute to examine the performance of each group in the overall portfolio. Such analysis provides profound insights, particularly into new research activities in the context of existing ones. The results enabled the decision makers to recognise that the best research options need to be either ones that bestow the most benefits scientifically and commercially or impose the least cost on the Institute.