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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How do you make good decisions in a mskes 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?

But solving the organizational problem alone is just as bad. In doing so, SB was able to avoid the premature evaluations that kill both creativity and the opportunity to improve decision making. Tom Keelin is worldwide managing director of the Strategic Decisions Group, an beechamm manage- ment-consulting firm based in Menlo Park, California.

At the same time, we needed a solution that would be credible to the organi- zation.

How SmithKline Beecham makes better resource-allocation decisions.

What was the solution? Content is the essence of roadmapping.

In the past, SB had tried a variety of approaches. They were unhappy that it had become politicised, as strong-willed project leaders competed for resources for projects that only they fully understood. Project teams were required–and helped–to create meaningful alternatives to current development plans.

Further posting, copying or distributing is copyright infringement. Major resource-allocation decisions are never easy. Although the approach looked good on the surface, many people in- volved in it felt in the end that the company was following a kind of pseudoscience that lent an air of so- phistication to fundamentally flawed data assessments and logic. 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 continents to call the shots effectively.


Frugal innovation – competitive advantage when resources are limited. In our case, it was to increase shareholder value. These valuations were reviewed and debated by the selection panel until everyone was content. A critical company process can become politicized when strong-willed, charismatic project leaders beat out their less competitive colleagues for re- sources.

Major resource-allocation deci- sions are never easy. For a pharmaceuticals company like SmithKline Beecham, the problem is this: One involved long, intensive ses- sions of interrogating project cham- pions and, in the end, setting priori- ties by a show of hands. Valuations were produced using decision trees and resulting in an upper and a lower valuation for each project rather than a single-point valuation. For a company like SB, the problem is this: Frugal innovation allows a company with a quality product to compete effectively with cheaper With none at all?

Enviado por Felipe flag Denunciar. The patent on its blockbuster drug Taga- met was about to expire, and the company was preparing for the im- pending squeeze: As we set out in to design a better decision-making process, we knew we needed a good technical so- lution — that is, a valuation method- ology that reflected the complexity and risk of our investments. With more projects successfully reaching late-stage development, where the resource requirements are greatest, the demands for funding were growing.

In particular, the traditional advocates in the process — the project teams and their therapy area heads — would have to believe that any new process accurately characterized their projects, includ- ing their technical and commercial risks. That is typi- cally what happens as a result of good backroom analysis, however well intentioned and well executed it is.

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? An often-quoted paper by Sharpe and Keelin, back inreported how managers at GlaxoSmithKline redesigned their portfolio selection process.


The process was seen as neither efficient nor objective. The careful and open valuation process was accepted as fair and the new portfolio projected a 3-fold improvement in return on assets.

Portfolio management at GlaxoSmithKline | R&D Today

Previous Post The other side of innovation. The improved approach had three phases:. The challenge of applying TRIZ tool kit for ideation. In most resource-allocation processes, project advocates develop a single plan of action and present it as the only viable approach. But the impact of impressive, professional visuals that Next Post Transferring new ideas from research to pract The improved approach hos three phases: In the end, the company learned that bettter tackling the soft issues around resource allocation–such as information quality, credibility, and trust–it had also addressed the hard ones: In another important departure from common practice, SB separated the discussion of project alternatives from their financial evaluations.

The easy part of our task was agreeing on the ultimate goal. The company had also been disap- pointed by a number of more quanti- tative approaches.

Resources Portfolio Management techniques. In the third phase the portfolio was selected bbetter an independent internal consultancy group who then presented it to the selection panel for review.

What would they do with more money? Read the full article: The selection panel could now concentrate on the portfolio debate, without getting drawn back into valuation issues. Related Posts Portfolio Management techniques. I This article is made available compliments of Strategic Decisions Group.

Open discussion may lead to agreement, enabling a company to move for- ward.