A Balanced Scorecard Approach for Measuring a R&D Organization - A case study in collaboration with the R&D intensive company Swegon

Abstract

In today’s rapidly and ever-changing competitive landscape, companies are racing to develop and commercialize innovative products and services. Successful organizations have realized that Research & Development (R&D) can be leveraged to achieve sustainable competitive advantage. However, there are several problems associated with measuring R&D: difficulties in identifying a tangible output, the high degree of uncertainty of the activities and its lagging outcome. Moreover, it is also challenging to get buy-in from the organization and it is not possible to measure the overall performance through a single metric, in fact, you need several ones to get an overall picture. However, prior studies have shown that the Balanced Scorecard (BSC) is an appropriate model for measuring R&D performance in an organization in order to get a comprehensive overview. Additionally, firms can tailor the model for their specific needs which facilitate an alignment between the strategy and the measurement. In this paper, the authors discover how the R&D intensive case company Swegon currently is measuring their R&D organization and which obstacles they face in doing this. Furthermore, the study aims to develop a BSC customized for Swegon’s needs, in order to steer their R&D organization towards their strategic goals. The research builds on an extensive literature review about the BSC and the difficulties of measuring R&D, resulting in a solid foundation to build upon. Additionally, a qualitative research strategy was adopted where semi-structured interviews were conducted with respondents involved in the R&D at Swegon. This was done in order to construct a status quo analysis of the R&D organization. Moreover, a self-completion questionnaire was sent out to respondents at Swegon working in different departments to rank appropriate KPIs to measure their R&D organization. One of the main finding is that Swegon is only measuring time, budget and project objectives related to their R&D organization. However, the study shows that there is a clear need and desire to improve and extend the current measurement framework. There are several obstacles that needs to be overcome in order to succeed with this. First, there is a lack of communication throughout the organization. Second, there is no clear alignment between strategy and the R&D activities. Third, it does not exist a standardized feedback culture in the R&D organization. Forth, it is difficult to measure the R&D organization due to its complex character. Furthermore, the study resulted in a customized BSC including 34 KPIs which were perceived as relatively more important. Conclusively, a recommended final BSC is provided with 12 selected KPIs which are argued to be relevant and feasible to implement. The final BSC can be utilized to steer the R&D organization towards the strategic goals, taking different perspectives into account. Although all KPIs may not be directly linked to each strategic goal, they provide the R&D organization with the prerequisites necessary to fulfill their part.