From the business perspective of a semiconductor company, Numetrics’ solutions are about making substantial improvements in chip development productivity and schedule predictability. But just what is productivity, and how do you first characterize it and then improve it? What’s the outcome?
Productivity drives development throughput in your R&D organization – the higher the productivity, the greater the throughput. And throughput is a measure of how much product the engineering organization churns out during a given period of time.
There are three ways to boost R&D throughput:
- Add headcount
- Increase work-hours per week
- Raise utilization and productivity
The first two have downside: Raising R&D headcount increases cost, and more hours lead to workforce burnout and high turnover.
The only viable long-term strategies for sustaining high throughput are to increase engineering utilization and productivity.
Utilization
Increasing R&D utilization—the percentage of the engineering workforce’s effort spent on revenue-generating activities—is among the quickest and most effective ways to boost throughput. That’s because it essentially increases R&D resources without incurring additional cost.
Organizations struggling with low utilization find their engineers spend more than half their time on non-revenue-generating activities, such as sales, customer support, and product support – all of which should be handled by different groups. In large companies, that means millions of dollars a year are being squandered.
Engineering organizations in best-in-class companies, however, spend 73 percent of their engineering time on activities that generate revenue and create persistent value. By shrinking the amount of time engineers spend on projects that get cancelled, non-core research, myriad internal initiatives, and so forth, companies can significantly raise their utilization rates and, in the process, reduce R&D spending and/or develop new revenue-generating products.
Productivity
Productivity – the second factor driving throughput – is the amount of engineering output per unit of labor expended to create that output. Productivity is a function of efficiency. Only by improving efficiency will productivity rise. Analysis of R&D efficiency compares the effort a particular set of engineering tasks should consume to what they actually consume. Reducing the effort needed to complete a set of tasks raises efficiency, which increases productivity, and this gives rise to higher throughput.
Boosting productivity requires a reliable measurement system–one yielding accurate baselines and fair comparisons. Additionally, a robust measurement system paves the way for managers to determine the absolute minimum staffing projects need to finish on time. At that point, the projects are “optimally understaffed,” which means the projects can be staffed to levels that assume the teams will meet an improved productivity level.
And there’s where best-in-class companies are pushing the productivity envelope.
Originally published in EE Times http://www.eetimes.com/discussion/other/4201131/How-productive-is-your-R-D-organization-
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Hi Ron,
Good post on assessing/measuring productivity. Without knowledge of where an organization is at from a productivity standpoint there is limited motivation to invest in opportunities for improving.
I would also add that best-in-class organizations are always questioning in nature. They will be the ones to want to know where they are at in terms of productivity and will also drill into understanding the “why” of reasons they are there. The productivity improvement seed only sprouts where there is an underlying motivation to improve, and that is lacking in many organizations.