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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But without a technically sound compass, will it be moving in the right direction?

The challenge of applying TRIZ tool kit for ideation. Valuations were produced using decision trees and resulting in an upper and a lower valuation for each project rather than a single-point valuation. To order more copies go to www.

How SmithKline Beecham makes better resource-allocation decisions.

The selection panel could now concentrate on the portfolio debate, without getting drawn back into valuation issues. Next Post Transferring new ideas from research to pract That is typi- cally what happens as a result of good backroom analysis, however well intentioned and well executed it is. A critical company process can become politicized when strong-willed, charismatic project leaders beat out their less resoucre-allocation colleagues for re- sources. 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.

SharpeKeelin How Smith Kline Beecham Make Decisions RD HBR

An often-quoted paper by Sharpe and Keelin, back inreported how managers at GlaxoSmithKline redesigned their portfolio selection process. In our case, it was to increase shareholder value.


If we solved the technical problem alone, we might find the right direction, but we would fail to get anyone to follow. The smithklinr and open valuation process was accepted as fair and the vetter portfolio projected a 3-fold improvement in return on assets. The easy part of our task was agreeing on the ultimate goal. In most resource-allocation processes, project advocates develop a single plan of action and present it as the only viable approach.

With more projects successfully reaching late-stage development, where the resource requirements are greatest, the demands for funding were growing. Some within the company thought that SB needed a directive, top-down ap- proach.

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. That smirhkline turn leads to the cynical view that your project is as good as the performance you can put on at funding time. Resources Portfolio Management techniques. With none at all?

Portfolio management at GlaxoSmithKline | R&D Today

For a company like SB, the problem is this: Inthe company experimented with ways of depoliticizing the process and improving the quality of decision making.

The improved approach had three phases:. They were unhappy that it had become politicised, as strong-willed project leaders competed zmithkline resources for projects that only they fully understood.

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? In the third phase the portfolio was selected by an independent internal consultancy group who then presented it to the selection panel for review.


But the impact of impressive, professional visuals that Major resource-allocation decisions are never easy. Would an analogy help? In another important departure from common practice, SB separated the discussion of project alternatives from their financial evaluations. These valuations were reviewed and debated by the selection panel until everyone was content.

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. It used a variety of valuation techniques, including pro- jections of peak-year sales and five- year net present values.

Most organizations think of deci.

How SmithKline Beecham makes better resource-allocation decisions.

Major resource-allocation deci- sions are never easy. Although the approach looked good on the surface, many people resource-allcation 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.

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?

Frugal innovation allows a company with a quality product to compete effectively with cheaper Open discussion may lead to resource-alloation, enabling a company to move for- ward. In doing so, SB was able decisiosn avoid the premature evaluations that kill both creativity and the opportunity to improve decision making.