R&D Controlling & Performance Management Conference
27-29 Septembre 2023
Cologne, Germany
Join our unique R&D Controlling and Performance Management conference where R&D Finance leaders from across industries will discuss how to focus resources and build performance management competencies that achieve a real business impact. We will explore ways to measure performance, balance risk and rewards in your portfolio, create a company culture based in innovation development, and navigate future challenges in R&D. You will learn from practical case studies and network with your peers at the cross-lines of R&D Finance, R&D, and Project Portfolio Management. At the end you will walk away with actionable insights on how to turn R&D performance management into a key source of value creation for your business.
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Interview with Oliver Hirschfelder, Strategy and Sustainability consultant, former VP Innovation & Business Development, Siemens Energy, Germany
Meet Oliver Hirschfelder, one of our esteemed speakers at the 9th Edition of the R&D Controlling & Performance Management Conference.
After the studies of business administration at HTWG Constance, Oliver has taken over several positions in the field of strategy, business development, and R&D controlling. In the last 20 years, Oliver held various positions in the field of strategy, and in technology & innovation.
As Strategy & Sustainability Consultant in the corporate strategy organization, Oliver is responsible for ESG ratings, disclosing the sustainability report, and focusing on strategic projects in sustainability, like analyzing the business impact of sustainability or economic modeling.
Parallel to his job, Oliver is a doctoral candidate researching the field of sustainability, time theory, and paradox theory.
Siemens Energy, Germany
Oliver Hirschfelder
Strategy and Sustainability consultant, former VP Innovation & Business Development
In my previous roles in innovation at Siemens and Siemens Energy, e.g., as VP Innovation & Business Development, the innovation portfolio management was often confronted with the question of how to derive an adequate R&D budget. R&D budgeting is not solely a financial question since it is strongly related to the innovation strategy. The managers’ responsibility in innovation is to identify and employ opportunities to develop new products and services while balancing between incremental and disruptive innovations. In the course of this process, the expectations of the innovation/R&D organizations are often limited by the company’s financial viability. In other words: The given resources, such as people and monetary funds, are boundary conditions to the inventors’ demands for innovative products, thus asking for a continuous dialog between R&D and finance. Likewise, sustainability faces tensions between finance, environmental, and social aspects. In this regard, innovation and sustainability are comparable as they both follow a “seed and harvest logic,” – invest today to harvest in the future.
Q1 : As a speaker at the R&D Controlling & Performance Management event, could you share a brief overview of your role and expertise in the field of strategy and sustainability, particularly related to R&D budgeting?
Q2 : In your upcoming case study presentation on "Innovative Strategies for Effective R&D Budgeting," could you discuss specific methodologies and techniques that organizations can employ to both evaluate the return on investment (ROI) of their R&D investments and effectively align their R&D budget with business priorities and market trends? Additionally, what benefits can organizations expect to achieve by implementing these strategies?
Managers often measure the success of innovation programs in financial terms, such as an R&D business case. Within innovation, managers apply a business case logic to financially assess R&D single programs and on an aggregated innovation portfolio level. Important parameters, influencing the financial case and managerial decision-making, are innovation and business priorities. As part of the priority setting, companies address ambidexterity, mainly the tensions between ‘exploit’ and ‘explore.’ Market trends, competitor moves, and the firm’s strategic orientation impact the innovation strategy since it contributes to strengthening the competitive advantage. The financial dimension combines all aspects and translates them into financial terms such as expected revenue and R&D budgets. In this regard, R&D budgets have an essential impact on the firm’s ‘innovation doing.’ In the paper “How to Create an Innovation Budget: The Grail of Wisdom Is Dialog”, Prof. Dr. Tobias Gutmann and I discuss five approaches to deriving an R&D budget. These are R&D intensity, peer benchmarking, the company’s capability, resource-driven approach, and commitment versus a wish list.
Q3 : Balancing short-term and long-term R&D goals can be challenging. Could you elaborate on the major challenges faced in this regard and propose potential solutions or strategies that can help organizations strike the right balance?
One of the major challenges is the temporal dimension of innovation programs. By nature, innovation programs last from a couple of months up to several years. This leads to tensions on various levels: Firstly, a financial lens values short-term effects higher than long-term ones because of the discount rate. Hence, a business case logic is short-term driven, rather than long-term oriented. Secondly, financial budget thinking is often associated with fiscal year planning. Often management approves R&D budgets on a fiscal year basis, not on a multi-year view. Thirdly, the short-term is more foreseeable than the long-term future, thus the risk of short-term projects is lower than for long-term programs. This also applies to market trends and customer requirements and is particularly true in fast-moving environments. Finally, ‘exploit’ topics are closer related to incremental innovation of an existing product and are typically fast in innovation compared to ‘explore’ topics which require more time to develop. Given these challenges, a ‘one-fits-all’ approach is not deemed a viable option. Instead, innovation managers should consider multiple perspectives simultaneously. Firstly, balancing between ‘exploit’ and ‘explore’ topics as part of the innovation strategy. Secondly, this creates a balance of time perspectives, since ‘exploit’ is often associated with shorter development cycles. Finally, managers should consider the firm’s capability in terms of financial available funds and resources such as competencies and knowledge. Both factors might limit innovation projects.
Q4 : Emerging technologies such as AI, machine learning, and blockchain are revolutionizing various industries. In the context of R&D, how do you foresee these technologies impacting the future of innovation, and what opportunities do they present for organizations to enhance their R&D efforts and drive greater productivity and outcomes?
The way how innovation is performed in the company has developed over time. So far, the innovation community combines invention with entrepreneurial (financial) aspects. We see more innovation organizations asking for the business case behind the innovation program which indicates a more financially driven mindset. In the next step, I expect digitalization and sustainability that both have a greater impact on innovation. Digitalization including emerging technologies such as AI, machine learning, and the like, could in the end revolutionize the innovation cycles. I could think of emerging technologies applied in software programming through AI support, ‘smart’/intelligent predictions of service intervals (e.g., predictive maintenance) through machine learning, and a change from on-site or test-bed testing of physical products to digital testing procedures based on digital twins. Even though AI is currently being discussed critically, especially with regard to the control of unintended consequences, I am certain that AI will play a greater role in future innovation cycles. How this will concretely affect innovation activity remains to be seen.
This Premier Conference is Sponsored by
Come and join us as we delve into an insightful case study presentation entitled Innovative Strategies for Effective R&D Budgeting featuring both
Oliver Hirschfelder - Siemens Energy & Tobias Gutmann - EBS Business School.
Q5 : With your experience in the field of R&D and innovation, why would you encourage your peers to register for the R&D Controlling & Performance Management event? What unique insights or valuable takeaways can they expect from attending your case study presentation and the overall event?
Since innovation requires curiosity and a forward-thinking mindset, I consider it valuable to exchange ideas with other like-minded people about how to shape the future. Innovation does not take place in secret, but in exchange with others in order to develop it further. Obtaining insights, ideas, and external impulses from peers, especially outside the industry, opens up further considerations and thus contributes to the development and design of innovations in the company. A conference offers a great opportunity to connect, exchange, and discuss. Today’s complex challenges require connections and partners — we can’t solve them alone, let’s do it together.
Check out our interview with Oliver Hirschfelder, Strategy and Sustainability consultant, former VP Innovation & Business Development at Siemens Energy, Germany in anticipation of the upcoming
R&D Controlling & Performance Management Conference.
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