How SmithKline Beecham. Makes Better Resource -. Allocation Decisions by Paul Sharpe and Tom Keelin. Reprint Harvard Business Review. “How SmithKline Beecham Makes Better Resource Allocation Decisions”. by Paul Sharpe and Tom Keelin. In this paper, former SDG consultant Tom Keelin and. R11 Sharpe & Keelin, , “How SmithKline Beecham Makes Better Resource- Allocation Decisions,” Harvard Business Review, Vol. 76, No. 2, pp.
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That is typi- cally what happens as a result of good backroom analysis, however well intentioned and well executed it is. Valuations were produced using decision trees and resulting in an upper and a lower valuation for each project rather than a single-point valuation. The improved approach had three phases: But solving the organizational problem alone is just as bad.
TRIZ the theory of inventive problem solving provides a logical approach to developing creativity Project teams were required–and helped–to create meaningful alternatives to current development plans.
In another important departure from common practice, SB separated the discussion of project alternatives from their financial evaluations. It used a variety of valuation techniques, including pro- jections of peak-year sales and five- year net present values. Frugal innovation – competitive advantage when resources are limited.
One involved long, intensive ses- sions of interrogating project cham- pions and, in the end, cecisions priori- ties by a show of hands. Learning from the past: For a company like SB, the problem is this: Further posting, copying or distributing is copyright infringement. Next Post Transferring new ideas from research to pract If we solved the technical problem alone, we might find the right direction, but we would fail to get anyone to follow.
Tom Keelin is worldwide managing director maeks the Strategic Decisions Group, an international manage- ment-consulting firm based in Menlo Park, California.
The process is reported to be very successful.
How SmithKline Beecham makes better resource-allocation decisions.
What would they do with more money? In doing so, SB was able to avoid the premature evaluations that kill both creativity and the opportunity to improve decision making. Major resource-allocation deci- sions are never easy. Related Posts Portfolio Management techniques.
Open discussion may lead to agreement, enabling a company to move for- ward.
In the second phase a common set of information was compiled about each project with the help of consultants and colleagues inside and outside the project. The easy part of our task was agreeing on the ultimate goal. The patent on its blockbuster drug Taga- met was about to expire, and the company was preparing for the im- pending squeeze: But without a technically sound compass, will it be moving in the right direction?
In most resource-allocation processes, project advocates develop a single plan of action and present it as the only viable approach. In the past, SB had tried a variety of approaches. In the third phase the portfolio was selected by an independent internal consultancy group who then presented it to the selection panel for review. Inthe company experimented with ways of depoliticizing the process and improving the quality of decision making.
Some within the company thought that SB needed a directive, top-down ap- proach.
Portfolio management at GlaxoSmithKline
Respurce-allocation careful and open valuation process was accepted as fair and the new portfolio projected a 3-fold improvement in return on assets. What was the solution?
Would an analogy help? How do you make good decisions in a high-risk, technically complex business when the information you need to make those decisions comes largely from the project champions who are competing against one another for resources?
I This article is made available compliments of Strategic Decisions Group. There was no transparency to the valuation process, no way of knowing whether the quality of thinking behind the valuations was at all consistent. In SB’s new process, the company found an effective way to get around the all-or-nothing thinking that only reinforces the project-champion culture. An often-quoted paper by Sharpe and Keelin, back inreported how managers at GlaxoSmithKline redesigned their portfolio selection process.
With more projects smithkliine reaching late-stage development, where the resource requirements are greatest, the demands for funding were growing.
With none at all? Previous Post The other side of innovation. A critical company process can become politicized when strong-willed, charismatic project leaders beat out their less competitive colleagues for re- sources. Frugal innovation allows a company with a quality product to compete effectively with cheaper For a pharmaceuticals company like SmithKline Beecham, the problem is this: Content is the essence of roadmapping.
Those who were more dis- tant — leaders of other project teams and therapy areas, regional and func- tional executives, and top manage- ment — would require transparency and consistency.
The improved approach had three phases:. Resources Portfolio Management techniques. The resource-allocatikn was seen as neither efficient nor objective. The challenge of applying TRIZ smiithkline kit for ideation.
But our experience told us that no single executive could possi- bly know enough about the dozens of highly complex projects being de- veloped on three dmithkline to call the shots effectively. That in turn leads to the cynical view that your project is as good as the performance you can put on at funding time. Major resource-allocation decisions are never easy.
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