R

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RD ManagementWeek 4 (Lecture 5)

• RD Strategy (III) Plan of action
• RD Indicators

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Lecture outline

• PART I RD Strategy (III) Plan of Action
• RD budget
• RD project definition
• RD project evaluation
• PART II RD Indicators
• National Survey of RD
• Bibliometric study report
• National Survey of Innovation
• Malaysian ST Indicators Report

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RD STRATEGY (III) Plan of Action
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PART I RD STRATEGY (III) Plan of Action
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Plan of ActionIntroduction

• Once the broad and long term strategy is
  formulated (i) the technological areas which are
  critical to the firms competitiveness (ii) The
  time by when the technologies need to be
  introduced (iii) The mode of acquisition more
  detailed plans of actions i.e. the RD project
  portfolio have to be defined.
• The RD portfolio is composed into several steps
  
• (1) Fixing the RD budget
• (2) RD Project definition
• (3) RD project evaluation
• (4) RD project selection
• (5) RD project portfolio analysis

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Plan of Action(1) Fixing the RD Budget

• the phase when the amount of expenses in RD for
  the current year is fixed
• The setting of the RD budget is usually the
  result of negotiations between the top management
  and the RD managers. In the past, negotiation
  was essentially all about the amount devoted to
  the RD activities and top management was not
  involved in considering the content of the
  activities and the projects carried out.
• More recently, especially in technology- or
  research intensive industries, top management
  directly participates to the strategic technology
  planning process and is often involved in the
  definition of the RD projects content and in
  technology management. Therefore, increasingly,
  the budget fixed is on the basis of the real
  content of activities to be done in a year!

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Plan of Action(1) Fixing the RD Budget

• However, traditionally there is a number of
  allocations bases/methods which are commonly used
  to fix the budget and which are usually accepted
  by all parties as starting points. They are
• Inter-firm comparison takes into account the
  RD expenditure as the reference point to
  determine the RD budget
• A fixed relationship to turnover relates the
  RD budget to turnover as a fixed percentage.
• A fixed relationship to profit relates the RD
  budget to profit.
• Reference to previous level of allocation
  relates the RD budget according to the
  investment of the previous year
• Nonetheless, as mentioned before, budgets are
  increasingly based on definition of the RD
  projects content i.e. informed by specific
  funding programmes of specific RD projects that
  top management has to give its consensus. This
  method is called the costing of an agreed
  programme and is becoming largely used in
  technology-intensive firms.

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Plan of Action(1) Fixing the RD Budget

• Other than specific methods, there are also some
  general principles which should be taken into
  account in setting the RD expenditure
• The RD investment level has to be consistent
  with the firms long term objectives and plans
• The RD activity requires stability to be
  fruitful. Both rapid decreases or increases in
  the amount of RD investments are likely to
  generate difficulties as the RD activity is
  labour- and especially brain-extensive. The
  organisational and managerial impact of rapid and
  sharp changes can be relevant
• The distortion inroduced by large projects
  should be considered. Cuts or adds to the RD
  budget can be justified when large projects have
  been carried out in the past or are to be
  undertaken in the future respectively.
• Generally, managers (both RD and top) agree that
  budgets are better fixed when all these
  principles are considered. They recognise that
  the budget has to be the result of a joint
  analysis (involving the main firm functions
  concerned) of the firms technology program
  rather than only negotiation for money.

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Plan of Action(2) RD project definition

• ? generation of RD projects and the definitions
  of the characteristics of RD projects (e.g.
  objectives, resources, time, organisation)
  submitted to the evaluation phase.
• The project definition defines and describes the
  key characteristics of the project. Its aim is to
  clearly state the objectives and provide the
  information necessary to evaluate the feasibility
  of the project. Three project variables should be
  in particular estimated and defined
• The duration of the project How long?
• The resources (types and amount) required by the
  project
• The output of the project
• The three characteristics (duration, resources
  and outputs) are related to each other.
• Note See the UM Research Grant (UMRG)
  application form

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Plan of Action(2) RD project definition
The type of output differs if the project is in
the development phase or in the research phase.
The outputs of a research project can be
described as knowledge improvements in a certain
disciplinary area. The outputs of a development
project is a new product produced with the
innovative production process in use. Its measure
is the estimation of the product market
potential. The estimation of the output can be
quantitative and qualitative evaluation of what
the project is able to produce e.g. quality of
people trained or acknowledge in certain
discipline, quantity and quality of publications
produced, quantity and quality of patents filed,
ability in the use of certain equipments,
performance of a certain prototype or pilot
plant. It should also be added that the project
definition phase should also provide a definition
of the project organisation, identifying the
project manager and/or project champion and some
early organisational aspects!
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Plan of Action(3) RD project evaluation

• ? The process in which the various projects are
  evaluated
• Once defined, the project is then subject to a
  formal evaluation procedure. There are several
  principles to consider in the evaluation process
  
• (1) Impact The evaluation process should
  consider the impact to the overall business i.e.
  on the firm as a whole (including RD and other
  functions) as well as the potential return from
  the market. This means that the value of the
  project can significantly vary from firm to firm.
  A project can be fully exploited by a firm where
  the resources downstream (distribution
  capabilities, logistics, marketing channels) are
  available, is of minor value (or even
  unsuccessful) in another firm, which lacks the
  required resources (or should invest a large
  amount of money to acquire them).

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Plan of Action(3) RD project evaluation

• (2) Effect on other RD project The output of a
  certain project can be the pre-requisite to
  undertake another project in other words, the
  knowledge developed provides the basis to
  generate and develop new projects in a certain
  technological discipline. Two concepts are
  related to this approach
• Absorptive capacity a concept that emphasises
  that the capacity of a firm to value and utilise
  outside knowledge is largely the function of the
  level of prior related knowledge i.e. of the
  skills available within the firm. This means the
  project can be undertaken to create or enrich a
  firms knowledge in cerain area, in order to
  increase the capacity to value the external
  knowledge in the area
• Option theory a concept largely applied to the
  case of RD projects is that of seeing them as
  options for future technical knowledge.

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Plan of Action(3) RD project evaluation

• (3) Risk Usually, the risk of technological
  project relates to the probability that the
  project reveals to be not feasible technically
  (technical risk) or in terms of the market
  (commercial risk)
• (4) Evaluation stage The project subject to
  evaluation are both new projects and projects in
  progress whose potential has to be evaluated at
  each stage e.g. every year if its a a yearly
  review.
• (5) Sunk cost Costs already incurred, in theory,
  should not influence the evaluation of the
  project. The evaluation of the project has to be
  based only on costs and benefits the project will
  generate from now on. Therefore, usually although
  the project has so far required a large amount of
  expenses, the project has to be killed. The fact
  that a relevant amount of money has already been
  spent is not a justification to go on. On the
  contrary, if a project has so far required large
  expenses, this is not a justification to stop the
  project. If the project from now on reveals to
  have positive financial results it has to be
  carried on.

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Plan of Action(4) RD Project Selection

• There different techniques in which RD projects
  can be evaluated but I will not cover this in the
  lecture. Please read Chiesa (2007) p. 120 -137 if
  you are interested.

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Plan of ActionExercise Observing a research
grant funding scheme

• (1) Science Fund (or Fundamental Research Grant
  Scheme)
• (2) Techno Fund
• (3) Technopreneur/Enterpreneur Investment Grant
  Scheme
• (4) Peruntukan penyelidikan pascasiswazah (PPP)

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Plan of ActionExercise Observing a research
grant funding scheme Science Fund

ScienceFund is a grant provided by Government to
eligible entities to carry out RD projects that
can acquire and generate new knowledge in
strategic basic and applied sciences. The
objectives of ScienceFund are as follows - to
support RD projects that can develop new
products or processes necessary for further
development and commercialisation in specific
research clusters (RC) and - to generate
science-based knowledge through research and
enhance skills as well as expertise among
researchers in Malaysia. ScienceFund focuses on
five (5) main clusters which include Information
and Communication Technology (ICT)
Biotechnology Industry Sea to Space and
Science Technology Core.
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Plan of ActionExercise Observing a research
grant funding scheme Science Fund

• Science-Fund supports the following types of
  research
• (1) Strategic Basic Research
• Experimental and theoretical research undertaken
  to acquire new knowledge which is directed into
  specified broad areas for useful discoveries.
  Strategic Basic Research provides broad-based
  knowledge to address identified problems and
  suggests practical solutions.
• (2) Applied Research
• Original work undertaken primarily to acquire new
  knowledge in view of specific application. It is
  undertaken either to determine possible use for
  the findings of basic research or to determine
  new ways of achieving some specific and
  predetermined objectives.
• The following entities are eligible for
  ScienceFund
• Public RIs and IHLs
• IHLs and RIs in the private sector
• Government Science, Technology and Innovation
  (STI) Agencies
• Expatriats working under contract with any of the
  above institutions.

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Plan of ActionExercise Observing a research
grant funding scheme Techno Fund

• Realising the importance of RD and innovation,
  the Government initiated a competitive funding to
  undertake pre-commercialisation of cutting-edge
  technologies in ICT, Advanced Materials, Advanced
  Manufacturing, Biotechnology, Renewable Energy
  and Nanotechnology named TechnoFund in the Ninth
  Malaysia Plan (2006 2010).
• The fund aims to
• Stimulate the growth and successful innovation of
  Malaysian medium and large entities by increasing
  the level of RD and its commercialisation
• Increase capability and capacity of Malaysian
  IHL and RI to undertake market driven RD and to
  commercialise RD outputs
• Enhance global competitiveness and RD culture
  among Malaysian entities
• Increase contribution to Malaysian GDP through
  economic wealth creation and exports and
• Foster greater collaboration between Malaysian
  private entities and government RIs/IHL
• ScienceFund focuses on five (6) main clusters
  which include ICT, Biotechnology, Advanced
  materials, Advanced manufacturing, Nanotechnology
  and Renewable Energy.

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Plan of ActionExercise Observing a research
grant funding scheme Techno Fund

• The grant is meant for two types of funding
• Pre-commercialisation
• Pre-commercialisation activities comprise
  developmet of commercial prototypes/pilot
  plants/clinical trials/up-scaling demonstration
  and testing purposes but not commercial
  exploitation.
• (2) IP Acquisition
• Acquisition of intellectual property (laboratory
  scale prototype) from overseas or local sources
  for further development up to pre-commercialisatio
  n stage.
• The following entities are eligible for
  ScienceFund
• Medium and large Malaysian companies, including
  GLCs
• Malaysian government RIs and IHLs
• Collaboration
• Industry applicants are encourage to collaborate
  with one or more GRI/IHL
• GRI/IHLs must collaborate with one or more
  industry partners who should contribute financial
  or non-financial resources equivalent to 50 of
  the total project cost.

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Plan of ActionExercise Observing a research
grant funding scheme Technopreneur/Enterpreneur
Investment Grant Scheme

Grants of RM5, 000 to RM50, 000 are available to
all non-final year students (undergraduate and
postgraduate), lecturers, societies, associations
or other bodies in the university.
Technopreneur/ Entrepreneur Grant can cover
projects in most academic, professional, arts,
cultural and educational fields. New innovation
and technology are encouraged to apply.
Entrepreneur Grants cannot be used for a)
general appeals b) capital expenditure (e.g,
building refurbishment, equipment acquisition,
etc) c) consumables (e.g, stationery, scientific
supplies, etc) d) school, college or university
fees e) salary costs or professional fees f)
commissions for works of art g) replacement of
statutory funding
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Plan of ActionExercise Observing a research
grant funding scheme Postgraduate Research Fund
(PPP)

Postgraduate Research Grant (PPP) was founded to
provide funding to help University of Malaya's
postgraduate to covered their research cost. The
sourse of dana came from 50 of research fees
which is collect from all postgraduate candidate.
The grant is provided by IPPP and will be fully
managed by PTJ itself.
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PART II RD Indicators
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RD Indicators Introduction
Browse the Malaysian Science Technology
Information Centre (MASTIC) Website and each
group are required to read and analyse a specific
ST indicator report Group 1 Survey of
Research Development Group 4 Bibliometric
Study Group 3 Survey of Innovation Group 2
Malaysian ST Indicators Report

• As a result of this exercise, you need to make a
  10 -15 minutes presentation to the class on the
  following areas
• What is report all about?
• What are the indicators being analyzed and what
  do they indicate? Give suitable examples.

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Group Assignment
Group 1 Institute of Ocean Earth Sciences
(IOES) Director Prof. Phang Siew Moi Group 4
Centre for Biotechnology in Agriculture Research
(CEBAR) Director Prof. Dr. Rofina Yasmin
Othman Group 3 Centre for Natural Product and
Drug Discovery (CENAR) Director Prof. Dr. A.
Hamid A. Hadi Group 2 Photonics Research
Centre Director Prof. Dr. Harith
Ahmad