Selecting ground-breaking new projects for additional investment and expansion is risky and difficult, as new ideas are fraught with technological and market uncertainty. There will always be winners and losers in the process of evaluating Capital Investment projects for funding, but no one wants to be the decision-maker who missed a fantastic investment opportunity.
According to research, project selections can go wrong as a result of the following 5 issues within the expert panel formed to select the project:
- Predisposition toward novel concepts.
- Expert panels are devoid of diversity.
- More emphasis on technical aspects.
- The panelist's bias in introducing the project.
A well-chosen R&D project can revitalize an organization's product lines, processes, and services, as well as improve its functioning and competitiveness.
Leaders must understand the areas in which R&D selection panels may make errors in order to improve their performance in selecting appropriate projects. Research demonstrates that by recognizing potential pitfalls and optimizing the process, organizations can make more informed decisions and achieve superior results.
There are several techniques that can be used prior to, during, and after selecting strategic initiatives to mitigate biases and improve investment selections. By following the best practices outlined below prior to, during, and after selection, decision-makers can make more informed decisions about which projects to invest in:
- Conceal Names & Demographics
- Homogenize Submissions (Heilmeier Catechism)
- Pursue Diversity
- Apply Crowdsourcing
- Adopt Workshop Approach
- Entrust to Probability
- Organize One-on-one Contests
- Give Feedback
- Gain from Failures
While these procedures will require some resources and effort, they are expected to be less expensive than the traditional method of selection, which heavily relies on the time and effort of senior managers and technical subject matter experts.
Let us consider some of the best practices in a little greater detail.
Conceal Names & Demographics
One way to eliminate bias is to conceal the names and demographic information of those submitting proposals for strategic initiatives. According to limited research, concealing women's names and demographic characteristics in science submissions increases their chances of receiving grants.
While masking name and demographic information in submissions is an important first step, organizations may need to take additional measures to detect bias.
Homogenize Submissions (Heilmeier Catechism)
Comparability is necessary for projects with similar themes. A standardized approach to proposal development simplifies evaluation of initiatives. Comparability can be facilitated through the use of a comprehensive, uniform template for proposals. This was demonstrated in the mid-1970s by George Heilmeier, director of a US research organization.
Heilmeier Catechism is also used as a screening technique to assist project proposers in determining the viability of their ideas.
A more diverse selection panel helps to mitigate biases and also results in products that are more appealing to people with a range of requirements and interests.
Diversification has been demonstrated to be critical in a variety of ways—not just in terms of demographic characteristics, but also in terms of professional capability and background.
Interested in learning more about Project Investment Selection Best Practices? You can download an editable PowerPoint on Project Investment Selection here on the Flevy documents marketplace.
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