by K.-H. Rutsch*, P.J. Viljoen*, and H. Steyn* The need for systematic project portfolio selection

Transcription

1 An investigtion into the cuent pctice of poject potfolio selection in esech nd development division of the South Aficn minels nd enegy industy by K.-H. Rutsch*, P.J. Viljoen*, nd H. Steyn* J o u n l Synopsis Poject selection nd the development of potfolio of pojects in line with copote sttegy is n impotnt tsk of mnges of esech units. The pojects selected hve to meet the ppopite time fme fo completion nd delivey, suitble isk pofile nd othe distinct fctos in ode to pusue copote objectives successfully. The uthos believe tht R&D poject potfolio selection ppoches equied o pplied in the pocess industy diffe fom the ppoches used fo selecting new poduct development pojects, on which most litetue is focused. A cse study ppoch ws used to investigte the cuent pctice of poject potfolio selection in South Aficn R&D divisions within the minels nd enegy industy. It ws found tht ll compnies inteviewed duing this study employ semi-foml ppoch to select thei R&D poject potfolio. A foml pocess is followed fo decision mking, but no foml tools e pplied to select the R&D potfolios, such s suggested by litetue. Bckgound The need fo systemtic poject potfolio selection Compnies usully hve the oppotunity to choose fom numbe of diffeent poject poposls. Since finncil nd pesonnel esouces e often limited, mngement hs to decide which pojects to pusue nd which ones to teminte. Compnies seek to mintin thei position in thei mkets nd even to gin competitive dvntge though R&D. Accoding to Twiss1, poject selection nd poject temintion e the two most citicl nd difficult decision es in R&D mngement. The min diffeence between poject selection nd deciding whethe to continue o teminte poject lies in the qulity of infomtion vilble. Fo R&D poject selection, the infomtion will consist minly of eltively inccute estimtions of something tht needs to be eseched. This is consistent with the notion tht R&D is consideed to be n investment to educe uncetinty1. On the othe hnd, when poject is ledy undewy nd the decision to continue o to teminte the poject needs to be mde, some infomtion on the technicl fesibility nd commecil cceptnce is nomlly vilble. In mny compnies esech poject potfolios e not focused. This could esult in the execution of some pojects tht do not necessily futhe compny gols nd sttegy. Othe pojects, which might dd moe vlue e, theefoe, eithe not pusued o not enough esouces e mde vilble fo these pojects. This could led to pooly blnced poject potfolio tht is not well ligned to business sttegy. Fo compny to opete successfully in mket, it needs to offe the ight poducts t the ight time fo the ppopite pice nd with the expected qulity. To be ble to fulfil these citei, technology-bsed compnies need to hve thei R&D poject potfolios ligned to these citei s well s to thei compny sttegy. Although pojects lso need to be executed efficiently, it seems obvious tht eveything elly begins by choosing the ight pojects fist time in ode to sve vluble time nd esouces. The South Aficn minels nd enegy industy The pocess industy could be viewed s subset of the mnufctuing industy nd includes viety of industil sectos such s the mining nd minel industy, food nd bevege industy, pulp nd ppe industy, s well s the oil industy. Accoding to Lge2, the pocess industy could be defined s: A poduction industy using (w) mteils to mnufctue non-ssembled poducts in poduction pocess whee the (w) mteils e pocessed in poduction plnt whee diffeent unit opetions tke plce nd the diffeent pocesses e connected in continuous flow. * Deptment of Engineeing nd Technology Mngement, Univesity of Petoi. The Southen Aficn Institute of Mining nd Metllugy, SA ISSN X/ Ppe eceived, M. 2006; evised ppe eceived Aug P p e The Jounl of The Southen Aficn Institute of Mining nd Metllugy VOLUME 106 NON-REFEREED PAPER OCTOBER

2 An investigtion into the cuent pctice of poject potfolio selection in esech The minels industy, lgely suppoted by gold, dimond, col nd pltinum poduction, is n impotnt element of the economy of South Afic. The lgest eseves of pltinum goup metls, mngnese, chomium, vndium, gold nd luminium in the wold occu in South Afic3. Fo moe thn centuy the minels industy plyed n impotnt ole in the South Aficn economy. This industy ws mjo dive fo the development of n extensive nd cpble physicl infstuctue within South Afic nd hs contibuted to get extent towds the estblishment of secondy industies in the county. The South Aficn minels industy is ecognized woldwide s leding nd elible supplie of lge viety of minels nd minel poducts of consistently high qulity3. The expot-oientted South Aficn minels industy is deep-ooted nd esouceful segment of the ntionl economy nd hs high level of technicl expetise, s well s the cpbility of mobilizing cpitl fo new development. This lgest industy secto of the county, followed by mnufctuing, employed 6.7 pe cent of ll wokes in the non-gicultul foml sectos of the ntionl economy duing 2003 nd contibuted 7.1 pe cent towds the goss domestic poduct (GDP) of South Afic. At tht time, this ws equivlent to ZAR 78.5 billion o US$ 10.4 billion. Howeve, to be ble to get pictue of the impct of the minels industy on the South Aficn economy, one needs to conside the full mifictions. The bove-mentioned contibution towds the ntionl GDP does not include compnies tht specilize in minel pocessing, since these belong to the mnufctuing industy. Futhemoe, vst numbe of South Aficn compnies e supplying the minels industy with w mteils nd equipment, tnspottion sevices nd so foth. Thus, mny millions of people in South Afic ely on the minels industy s thei souce of income3. A numbe of mjo South Aficn mining compnies hve dopted ggessive explotion sttegies beyond the bodes of the county, which esulted in the intentionliztion of lge South Aficn mining compnies3. Resech poblem Since R&D poject potfolio selection is complex tsk, it is necessy fo compnies to follow systemtic pocess. Thee e only vey smll numbe of publictions deling with R&D poject potfolio selection in the pocess industy. These include the wok by Lge2 nd by Kvdis, Loch nd Tppe4. Othe litetue tht dels with pocess R&D sttegy5 8 sees this type of poject s supplement to optiml poduct development. This esech ws intended to povide some insight into how South Aficn compnies of the minels nd enegy industy del with this topic. Choosing the ight pojects helps compnies to become nd sty competitive, in ode to outpefom thei competitos. Oppotunities e lost if the wong pojects e chosen nd esouces e not concentted on wht the compny needs to seve its mkets in the best possible wy, with the most ppopite poduct of the best possible qulity. If sttegiclly less impotnt pojects e not excluded ely enough fom the poject pipeline, mngement nd esouce lloction of the R&D poject potfolio become moe complex thn is necessy. Futhemoe, it pevents impotnt pojects fom being executed with the highest possible efficiency. It is believed tht this would esult in loss of focus nd theefoe potentil shotcomings in the mketplce9. Two mnges inteviewed noted tht the selection of the ight R&D pojects mounts to pobbly 50% of the wok tht needs to be conducted. Accoding to Stmboulis, Admides nd Mlkis8, pocess development is egded s simply being stge in poduct development in most of the litetue on R&D potfolio mngement. Hence, this study exmined the R&D poject potfolio selection pctised t compnies in the pocess industy, whose R&D is mostly diven to cete nd impove pocesses. The diffeences in the pticul popeties of pocess R&D comped to poduct development pobbly led to the use of diffeent ppoches in R&D poject potfolio selection. Duing the litetue study it becme evident tht the tools suggested fo use in R&D poject potfolio selection do not tke scce esouces into ccount othe thn money nd time to completion o implementtion. Pesonnel esouces e cucil fcto to be consideed in deciding on the R&D poject potfolio, since they e vey common bottleneck. The cpbility of esech stff is cucil fcto tht detemines wht type of esech could be conducted. Fo exmple, without extensive tining in chemisty, peson highly qulified in electicl engineeing might stuggle to do esech imed t developing chemicl substnces with new popeties. Due to this, humn esouces often detemine the dution of R&D pojects. Futhemoe, the stff cquisition pocess, especilly in the highly qulified esech field, is vey time consuming s well s costly10. The esech objectives nd esech questions The esech ws imed t getting epesenttive oveview of common pctice of R&D poject potfolio mngement conducted in the South Aficn minels nd enegy industy. It ims t poviding point of deptue fo South Aficn compnies in the pocess industy to develop nd/o impove thei decision mking concening R&D poject potfolios. The following esech questions wee ddessed in ode to ccomplish the bove-mentioned objectives: Question 1 Wht methods e used fo R&D potfolio selection in South Aficn compnies within the minels nd enegy industy? Question 2 Why e the pticul methods used? Question 3 Is systemtic ppoch used to tke the vilbility of pesonnel esouces into ccount in R&D potfolio selection? Litetue on poject selection In el life R&D envionment, esouces e scce. Selection methods should be esy to undestnd nd to use. Moeove the use of methods fo poject selection should be tnspent to business stkeholdes. Exmples of popul methods fo R&D poject potfolio selection could be divided into diffeent ctegoies, e.g. (1) tditionl finncil nlysis, (2) decision tees s simple method to del with uncetinty in R&D, (3) potfolio nlysis nd (4) simplified models fo options vlution. 666 OCTOBER 2006 VOLUME 106 NON-REFEREED PAPER The Jounl of The Southen Aficn Institute of Mining nd Metllugy

3 An investigtion into the cuent pctice of poject potfolio selection in esech The tditionl ppoch to cpitl budgeting encompsses thee steps, nmely (1) estimting the elevnt csh flows of plnned poject o investment, (2) the ppliction of n ppopite decision technique to these csh flows nd (3) ecognizing nd djusting the decision technique fo isk11. The most common tditionl decision techniques e the net pesent vlue (NPV) nd the intenl te of etun (IRR) technique11,12. As R&D genelly involves high levels of uncetinty, litetue suggests the use of stochstic models fo poject vlution s well s poject potfolio selection. R&D mnges fce uncetinty not only in pyoffs, but lso fom mny othe souces. Huchzemeie nd Loch13 pesent models to del with five types of R&D uncetinty: in mket pyoffs, poject budgets, poduct pefomnce, mket equiements, nd poject schedules. Howeve, the uthos do not peceive thei model to be esy to use in pctice. Decision tees14,15 pesent vey simple nd pcticl wy to incopote stochstic considetions into poject vlution. As with the net pesent vlue methodology, the citeion fo decision mking is to select pojects tht hve the highest vlues. which e equied to be gete thn zeo. A vey impotnt dvntge of decision tees, especilly when comped with the NPV, is the elistic ecognition of the isk pofile of poject. Decision tees e esy to use, to undestnd nd hence to implement. They lso conside ll possible options duing the poject. In decision tee, the option to chnge o bndon poject could be implemented, which mkes it possible to chieve poject vlution, depending on the specific cse, tht is close to the vlue deived by the el options method15. Potfolio mps, lso clled potfolio mtices, e twodimensionl mtices, depicting the poject potfolio of compny o deptment within compny. The position of poject within the mtix suggests the pusuit of cetin, stnddized, sttegy. One dimension of the potfolio mtix consides intenl citei, i.e. vibles tht could be influenced diectly by the compny though ction. The othe dimension of the mtix is n extenl vible, on which the compny hs no influence16. Coope, Edgett nd Kleinschmidt9 suggest simil type of potfolio mp, simply clled bubble digm. In this ppoch, it is not necessy tht the xes on the mtix expess intenl nd extenl dimensions within one digm. An exmple of bubble digm is povided lte on in this ppe. A moden view of vlution consides el options, the thn finncil options, which e oppotunities tht e embedded in pojects. An option involves the ight to buy something; but it does not include the obligtion to execise it17. This enbles mnges to lte thei csh flows nd isk in wy tht often esults in poject cceptbility tht is diffeent fom tht mesued by the use of NPV. Rel options e likely to exist in lge cpitl budgeting pojects11. By explicitly ecognizing the vlue of embedded options, mnges cn mke impoved, moe sttegic decisions tht conside the economic impct of cetin contingent ctions on poject csh flow nd isk in dvnce. The explicit ecognition of el options embedded in cpitl budgeting pojects will cuse the sttegic NPV of poject to diffe fom its tditionl NPV. The sttegic NPV is defined s the sum of the tditionl NPV plus the vlue of el options11. Options theoy ws developed by Blck nd Scholes nd published in They wee wded the Nobel Pize fo thei wok. Luehmn18 sttes tht dvice on using el options fo poject vlution in pctice is e nd minly intended fo highly qulified specilists in this field. As esult, it would be vey expensive nd complicted fo compnies to pply el options vlution on el life pojects. He pesents fmewok to bidge the gp between the pcticlities of el wold cpitl pojects nd the highe mthemtics ssocited with foml option picing theoy. His fmewok leds to quntittive esults, cn be used on diffeent pojects, nd uses s min souce of infomtion, the dt tht is ledy collected within spedsheets tht e used fo discounted csh flow clcultions. Nevetheless, this fmewok povides ese of use but t the expense of pecision. Luehmn18 suggests tht if vey pecise vlutions e essentil, it is necessy to consult expets in the field of el options. Howeve, the fmewok is pecise enough fo the vlution of mny pojects nd considebly bette thn tditionl isk-djusted nlysis bsed on discounted csh flows18. Resech methodology Fo this study, theoy-bsed empiicl esech ppoch hs been followed. A qulittive esech design using the multiple cse study sttegy s suggested by Yin19 ws used. Yin sttes, tht: cse studies e the pefeed sttegy when how o why questions e being posed, when the investigto hs little contol ove events, nd when the focus is on contempoy phenomenon within some el-life context. Leedy nd Omod20 mention tht cse study is: type of qulittive esech in which in-depth dt e gtheed eltive to single individul, pogm, o event, fo the pupose of lening moe bout n unknown o pooly undestood sitution. Leedy nd Omod20 lso expess tht cse study is the ppopite method fo investigtion if the unit of nlysis of the esech hs unique o exceptionl qulities. The cse study is likely to pomote undestnding o to infom pctice fo simil situtions. This esech poject, investigting common pctice of R&D poject potfolio selection in the pocess industy, pesents such n exceptionl cse. Thus, the cse study is the ppopite esech sttegy. The study pesented hee constitutes piece of explotoy nd desciptive esech. Eight R&D divisions within the minels nd enegy industy exist in South Afic. Inteviews with R&D mnges of thee South Aficn compnies of the minels nd enegy industy s well s one compny of the pulp nd ppe pocessing industy wee conducted to gthe the necessy dt. It is ssumed tht R&D poject potfolio mngement pinciples pplied in these two industies do not diffe. Intenl compny documenttion seved s souce fo dditionl infomtion to gin complete pictue of how the potfolio selection ws executed t the compnies. To guide the inteviews, questionnie ws designed s pt of the cse study potocol. The questions wee deived systemticlly by nlysing the diffeent spects of R&D poject potfolio selection elting to the esech questions nd popositions. The dt obtined ws nlysed though clssifiction techniques nd though content nlysis. To ensue equivlence mong the diffeent discussions J o u n l P p e The Jounl of The Southen Aficn Institute of Mining nd Metllugy VOLUME 106 NON-REFEREED PAPER OCTOBER

4 An investigtion into the cuent pctice of poject potfolio selection in esech undetken, the eseche conducted the inteviews pesonlly. The inteviews commenced with bod discussion of the business. Inteviewees geed to the use of voice ecode duing the inteviews nd bief notes wee tken s well. A list of open-ended questions ws used to guide the inteviews to ensue tht ll spects of the esech questions wee coveed duing the discussions. Whee pplicble, dt collected duing inteviews wee suppoted by infomtion published on compny websites nd in compny documents. These documents include, fo exmple, pocess digms nd documents depicting o listing the R&D poject potfolio of the compny. The compiled summy of the inteview esults ws sent to the inteviewees with the equest to confim coectness of the document witten by the eseche. Infomtion collected ws stoed fo eview by extenl pties. To incese the vlidity nd elibility of dt collected in cse study esech, Yin19 ecommends ppliction of thee qulity-contol pinciples, nmely (1) the use of multiple souces of evidence, (2) the cetion of cse study dtbse, nd (3) mintining chin of evidence. These thee pinciples wee pplied thoughout the esech. Yin19 suggests consulttion on numbe of diffeent ctegoies s souces of evidence fo dt collection in cse studies. Howeve, s ccess to intenl dt nd communiction within South Aficn R&D compnies ws limited, this study did not mke extensive use of intenl ecods nd stictly confidentil mteil. Rthe, dt collection ws bsed mostly on discussions with senio mnges of ogniztions, intenl documents compiled fo meetings, nd publicly vilble mteil. Dt collection nd nlysis The R&D poject potfolio selection ppoches used t fou diffeent compnies, wee exmined. A cle ptten ws found mong the compnies inteviewed; ll compnies employ semi-foml ppoch to select thei R&D poject potfolio. A foml pocess is followed fo decision mking, but no foml tools e pplied to fcilitte the potfolio selection. Infomtion, such s pobbilities of technicl nd commecil success, blnce of diffeent vibles, s well s infomtion on finncil meits, is gtheed on the diffeent poject poposls. This seves s n infomtion bseline when potfolio decisions e mde bsed on mngement judgement nd input fom vious poject stkeholdes. NPV o IRR might seve to quntify finncil infomtion nd e the only foml tools used duing the potfolio selection phse. Howeve, NPV nd IRR wee not used to nk pojects; they meely seved s filte. A wide nge of citei ws consideed in decision mking t the compnies inteviewed. These included: Blnce between business units seved Risk pofile of potfolio R&D/technicl isk Mket cceptnce/stkeholde endosement nd esulting likelihood of commeciliztion Vlue dd/npv/irr Avilble budget R&D cost Time fme fo R&D Pybck peiod Synegy effects between pojects Pesonnel esouces/cpbilities Socil, politicl nd envionmentl issues Job cetion/welth cetion Sttegic lignment Sttegic levege Intellectul popety issues. As foml tools, bubble digms e used t two out of the fou compnies inteviewed nd will be intoduced t nothe compny in the ne futue. Thus, this tool cn be seen s being consideed useful. A typicl exmple fo bubble digm is shown in Figue 1. Futhemoe, one compny out of the fou investigted, mkes use of the Wheelwight mtix. An exmple of such mtix is shown in Figue 2. Howeve, these tools e not used to fcilitte the potfolio selection s suggested by litetue. Rthe, they e employed to double-check whethe potfolio, ledy decided upon, is ligned with compny sttegy nd tht it consides the pticul blnce tht is being sought by top mngement. The compny tht plns to implement bubble digms, plns to use them s tool fo potfolio selection, s suggested in the litetue. The othe two compnies ledy using the tool employ bubble digms only to double-check the poposed R&D potfolio. All foml tools nd fequency of use e summized in Tble I. Results nd conclusions Most inteviewees expessed tht R&D poject potfolio mngement foms vey impotnt pt of the wok of esech ogniztion. The esech questions could be nsweed s follows: Technicl isk Technology tnsfe isk Figue 1 Exmple of bubble digm 668 OCTOBER 2006 VOLUME 106 NON-REFEREED PAPER The Jounl of The Southen Aficn Institute of Mining nd Metllugy

5 An investigtion into the cuent pctice of poject potfolio selection in esech Next poduct New coe pocess Next-genetion pocess Single business upgde Tuning nd incemenetl Bekthough J o u n l Poduct chnges Next-genetion poduct Addition to poduct fmily Pltfoms Deivtives P p e Add-ons / enhncements Sustining Figue 2. Exmple ofwheelwight mtix Tble I Summy of methods used Compny No. 1 No.2 No. 3 No. 4 Method used (Minel nd enegy) (Minel nd enegy) (Minel nd enegy) (Pulp nd ppe) IRR No Yes Yes No 2 NPV No Yes No No 1 Bubble digm No Yes Yes No 2 Wheelwight mtix No No Yes No 1 Question 1 Wht methods e used fo R&D potfolio selection in South Aficn compnies within the minels nd enegy industy? No foml methods wee used to decide upon the R&D poject potfolio. Rthe, only the pocesses to mke the decisions wee foml. Once poject ides hve been geneted, futhe infomtion is sought. Bsed on this infomtion, senio stff nd mngement jointly mke the potfolio decisions, bsed on judgement nd expeience. At two of the fou compnies, bubble digms e dwn up to eview the poposed decisions in ode to mke dpttions, should the ovell potfolio not be blnced o not ligned to copote sttegy. Compny No. 4 (see Tble I) plns to implement the bubble digm method in the ne futue nd will use it s diect method fo designing the R&D poject potfolio. One out of the two compnies tht employ bubble digms ledy uses the Wheelwight mtix s futhe tool to ensue sttegic lignment nd blnce of the R&D potfolio. One compny out of the fou does not use ny foml tool t ll. Question 2 Why e the pticul methods used? All compnies explined tht they do not use ny foml method fo decision mking bout the R&D poject potfolio due to the complexity of thei business nd the high uncetinty involved. Accoding to the people inteviewed, foml methods cnnot del ppopitely with the vgueness tht exists duing the vey ely esech phses. Thus expet expeience nd mngeil judgement e used to pick the ight pojects. Mnges lso mentioned tht n ppoch tht uses intuition to select the R&D poject potfolio, suppoted by infomtion bout diffeent citei, is well suited to the compny since this ppoch is not too foml. This leds to the ssumption in the compnies inteviewed tht foml methods e not effective. The Jounl of The Southen Aficn Institute of Mining nd Metllugy VOLUME 106 NON-REFEREED PAPER OCTOBER

6 An investigtion into the cuent pctice of poject potfolio selection in esech Question 3 Is systemtic ppoch used to tke the vilbility of pesonnel esouces into ccount in R&D potfolio selection? It ws found tht in ll compnies investigted, humn esouces wee tken into ccount when R&D pojects wee chosen to be pusued. Howeve, this is not done in systemtic o foml fshion. Rthe, befoe the finl R&D poject potfolio decision is mde, it is double-checked whethe the potfolio could be executed with the stff vilble, o whethe coective mesues would need to be tken. The study uncoveed tht the compnies exmined did not develop completely new tools o models to decide on the R&D poject potfolio o to eview it. Fo eview puposes, the bubble digms found ppliction without ny specific dpttion to cicumstnces within the pocess industy. One compny used the Wheelwight mtix to confim blnce of the R&D potfolio. In line with the findings of the cuent study bout esech question 2, compnies in the pocess industy might employ simple nd pcticl model to fomlize poject potfolio selection. Sttegic lignment nd blnce of poposed poject potfolio wee found to be the most impotnt fctos tht needed to be tken into considetion t the compnies inteviewed. As it is difficult to gthe exct infomtion on poject fesibility nd the finncil vlue, model tht suggests the choice of poposed R&D pojects bsed on sttegic lignment nd blnce is equied. Potfolio mps, customized fo specific compny needs, seem to be ppopite. Potfolio mps equie qulittive infomtion. The xes of such mtices, s well s dimetes nd colous ssigned to pojects, could epesent the dimensions cucil to mke potfolio decisions to futhe compny sttegy. To fomlize the pocess of R&D poject potfolio selection, potfolio mps should be used to pick pojects the thn to check the blnce of n ledy suggested potfolio decision. The ting of diffeent R&D pojects on qulittive scle is to be estblished in meetings involving diffeent poject stkeholdes. In ode to bing suggested poject potfolio in line with pesonnel esouces, stff lloction might be given pioity to pojects being the most impotnt s identified within the potfolio mp. Poposed futhe esech In futhe esech, it could be of inteest to conduct cse studies of simil South Aficn compnies within diffeent industy, s well s foeign compnies within the minels nd enegy industy. This would mke it possible to estblish whethe the fct tht the compnies did not use ny foml ppoches to mke R&D poject potfolio decisions, s suggested in the litetue, esults fom the type of industy in which they opete, o whethe it esults fom specific geogphicl o cultul envionment. Refeences 1. TWISS, B. Mnging Technologicl Innovtion, 3d edition, London, Longmn Goup Ltd., LAGER, T. A stuctul nlysis of pocess development in Pocess Industy - A new clssifiction system fo sttegic poject selection nd potfolio blncing, R&D Mngement, Oxfod, United Kingdom, Blckwell Publishes Ltd., no. 32, 3. Deptment: Minels nd Enegy, Republic of South Afic, South Afic s Minel Industy 2001/2002, Mineli Cente, 234 Visgie Steet, Petoi, South Afic, KAVADIAS, S., LOCH, C.H., nd TAPPER, U.A.S. Using Mginl Retuns to Allocte the R&D Budget t GemStone, Ppe submitted to Mnufctuing nd Sevice Opetions Mngement, New Yok, USA, UTTERBACK, J.M. Msteing the Dynmics of Innovtion How Compnies Cn Seize Oppotunities in the Fce of Technologicl Chnge, Boston, Msschusetts, USA, Hvd Business School Pess, PISANO, G.P. The Development Fctoy Unlocking the Potentil of Pocess Innovtion, Boston, Msschusetts, USA, Hvd Business School Pess, ADLER, P.S. et l. Fom Poject to Pocess Mngement: An Empiiclly- Bsed Fmewok fo Anlysing Poduct Development Time, Mngement Science, Mch vol. 41, no STAMBOULIS, Y. 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Applying Options Thinking To R&D Vlution, Resech Technology Mngement, My June 1996, Pts 1 nd GOCHERMANN, J. Kundenoientiete Poduktentwicklung, Mketingwissen fue Ingenieue und Entwickle, Weinheim, Gemny, Wiley-VCH Velg, HOMMEL, U., SCHOLICH, M., nd VOLLRATH, R. Reloptionen in de Untenehmenspxis Wet schffen duch Flexibilität, Gemny, Spinge Velg, LUEHRMAN, T.A. Investment Oppotunities s Rel Options: Getting Stted on the Numbes, Hvd Business Review, July August YIN, R.K. Cse Study Resech: Design nd Methods, 2nd edition, Sge Publictions, Thousnd Oks, LEEDY, P.D. nd ORMROD, J.E. Pcticl Resech Plnning nd Design, 7th Edition, New Jesey, USA, Meill, OCTOBER 2006 VOLUME 106 NON-REFEREED PAPER The Jounl of The Southen Aficn Institute of Mining nd Metllugy