| NOTES - slide #4
I hired a consultant to analyze our current research strategy. These basic parameters were used to generate statistical projections of profit performance from R&D based on a risk of failure analysis. Using this we can actually evaluate our research risk strategy and consider options for improving our profit performance from R&D activities in the long term. There is skepticism within CTI that we need to do this kind of evaluation of R&D right now because:
The latter arises because, although occasionally very successful, good for our prestige and undoubtedly desirable for technical support, in-house research for innovation is something which is not particularly well supported at the board level. Also, quite frankly, it has never been very dependable and has therefore never been the mainstay of our business. Nevertheless, we are spending 10.2 MM per year on it . The numbers in the chart are either estimates based on averaged known quantities, such as the time it takes to complete a project, or are our best guesses. One of the issues raised by the consultant was the question of our success rate in conducting projects. I asked a few of our managers at the research center if they knew and they all seemed to think that the chances of their current projects succeeding are very high. However, none of our original research staff are with us anymore and so we simply have no idea of the success rates we had in the past. The consultant said not to worry and that he would provide the necessary initial estimates which we could change later if we felt that the analyses were totally off-track. As it happens the analyses I am about to show you seem to be on-track and useful. |