A new strategic approach for R&D project portfolio selection using efficiency-uncertainty maps

<jats:sec><jats:title content-type="abstract-subheading">Purpose</jats:title><jats:p>New business practices and the globalization of markets force firms to take innovation as the fundamental pillar of their competitive strategy. Research and Development (R&amp;D) plays a vital role in innovation. As technology advances and product life cycles become shorter, firms rely on R&amp;D as a strategy to invigorate innovation. R&amp;D project portfolio selection is a complex and challenging task. Despite the management's efforts to implement the best project portfolio selection practices, many projects continue to fail or miss their target. The problem is that selecting R&amp;D projects requires a deep understanding of strategic vision and technical capabilities. However, many decision-makers lack technological insight or strategic vision. This article aims to provide a method to capitalize on the expertise of R&amp;D professionals to assist managers in making informed and effective decisions. It also provides a framework for aligning the portfolio of R&amp;D projects with the organizational vision and mission.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title><jats:p>This article proposes a new strategic approach for R&amp;D project portfolio selection using efficiency-uncertainty maps.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Findings</jats:title><jats:p>The proposed strategy plane helps decision-makers align R&amp;D project portfolios with their strategies to combine a strategic view and numerical analysis in this research. The proposed strategy plane consists of four areas: Exploitation Zone, Challenge Zone, Desperation Zone and Discretion Zone. Mapping the project into this strategic plane would help decision-makers align their project portfolio according to the corporate perspectives.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Originality/value</jats:title><jats:p>The new approach combines the efficiency and uncertainty dimensions in portfolio selection into an integrated framework that: (i) provides a complete representation of the stochastic decision-making processes, (ii) models the endogenous uncertainty inherent in the project selection process and (iii) proposes a computationally practical and visually unique solution procedure for classifying desirable and undesirable R&amp;D projects.</jats:p></jats:sec>