Product development process is often regarded as unreliable black box, which rarely produces results that exceed the expectations of business. Traditional financial models have limited success exposing numerous product development risks, which form the basis of assumptions are typically business. Applying the same rules to development, as research managers often take unpredictable performance, as usual. Most companies review and approval processes are accounted for on the basis of indicators such as discounted cash flow or net present value (NPV), which makes the understanding of the main risks of difficult for decision-makers. When the risk is discussed in the case of business, technology, uncertainty is often confused with the product risk and narrative discussion of risk is more to persuade than to inform. In this environment, decision-makers are often hard-pressed to evaluate the potential commercial success of a new investment product development. With the approach is called the "net present value of the risk-adjusted" by Craig Davis, chief financial officer of product development consulting firm Product Genesis, provides an operational framework that provides decision makers quantitative tools to assess the relative risks of the project. It shows how to integrate these tools into the existing stage-gate methodology to create a risk-adjusted NPV, which examines the impact of product portfolio, user requirements, technical and marketing risks. The system also gives an idea of the importance of further research in anticipation of full commitment to development. Framework provides a vocabulary for complex technology products for medical, commercial and industrial products, but it is easy to adapt to the unique terminology, techniques and measures for each area of risk assessment. "Hide
by Craig R. Davis Source: MIT Sloan Management Review 9 pages. Publication Date: July 1, 2002. Prod. #: SMR088-PDF-ENG
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