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  • Writer's picturePer Lindstedt

The Third Rule

The management literature is full of complicated, unreliable, or impractical advice on how to make a company truly great. Therefore the research results of Raynor and Ahmed were a relief. They claimed that you only need to follow three simple rules.

After analyzing around 25.000 companies for many years, they formulated the following three rules:

  1. Better before cheaper

  2. Revenue before cost

  3. There are no other rules

However, I believe that a third rule exists if you are going to apply them on R&D:

3. Value before performance

I believe that a truly innovative solution to a complex problem is always simple. Unfortunately, the beauty of simple solutions to complex problems is utterly underestimated. People creating simple solutions receive little credit because people think that the effort of making a simple solution is small. On the other hand, the person creating a complex solution receives lots of recognition. Therefore, I will probably not receive any praise for formulating the third rule.

My thinking is in line with Leonardo da Vinci:

  • "Simplicity is the ultimate sophistication"

I have been in product development for almost forty years and have worked with more than 100 different R&D departments globally. And this is the best advice I could give based on my experience.

I believe that any R&D organization consistently following these three simple rules will outperform all competitors:

  1. Better before cheaper – never develop products with low price as the main USP

  2. Revenue before cost – prioritize developing products that can increase your revenues before those that reduce your costs

  3. Value before performance — develop products that meet customer needs before the ones with the best performance

Now it is up to you. If you don´t like the rules, I will happily sell you my nearly 700 pages thick book.

Are you interested in a simple way to improve Project Management for R&D? Follow this link "Project Management for R&D,"


Per och Ulf

Value Model


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