roblem since, most likely, Joe's newly designed widget would have been available on the market for a few years and would have sold several million units, thereby offsetting the accrued labor cost of development. However, in the modern era of "just in time" manufacturing and global outsourcing, a new product will be hot for just a few months. This is why Apple Computer has continued developing new variation of their iPod series of As a business and technology consultant there is one significant error I continue to see in modern business practice. Too often, management treats their payroll expense as a fixed cost of doing business. This is caused by the accounting practice of lumping payroll as a operating expense line item. While this is an acceptable accounting practice, a good manager must accept the reality that the work output of the employee should be directly proportional to the salary.

Too often I have heard managers state something to the effect of "Well, we are paying him anyway so he might as well work on that project." This is shortsighted and just plain dumb. Logically, a good employee works on what is assigned to him or her. It is the job of a good manager to ensure that the work performed is delivering positive value to the corporate enterprise. This is why you don't pay a Chief Financial Officer to empty the trash cans; it is a poor use of resources.

For example, XYZ Corporation sells widgets. Joe, an employee who designs new widgets, spends an average of three months developing a new product. Those three months of Joe's time absolutely should be included in the overall pricing strategy for the new widget or the company will show a new loss on that specific product. Too many businesses don't want to do the necessary analysis to determine the viability of a new product based on the overall labor cost (i.e. Joe's salary) associated with the development. Instead, Joe's salary is rolled into the operating expenses of the Research and Development department.

This scenario causes a wide array of problems since you never really know if you are making a profit on the new widget. A decade ago this was less of a problem since, most likely, Joe's newly designed widget would have been available on the market for a few years and would have sold several million units, thereby offsetting the accrued labor cost of development. However, in the modern era of "just in time" manufacturing and global outsourcing, a new product will be hot for just a few months. This is why Apple Computer has continued developing new variation of their iPod series of p

directly proportional to the salary.

Too often I have heard managers state something to the effect of "Well, we are paying him anyway so he might as well work on that project." This is shortsighted and just plain dumb. Logically, a good employee works on what is assigned to him or her. It is the job of a good manager to ensure that the work performed is delivering positive value to the corporate enterprise. This is why you don't pay a Chief Financial Officer to empty the trash cans; it is a poor use of resources.

For example, XYZ Corporation sells widgets. Joe, an employee who designs new widgets, spends an average of three months developing a new product. Those three months of Joe's time absolutely should be included in the overall pricing strategy for the new widget or the company will show a new loss on that specific product. Too many businesses don't want to do the necessary analysis to determine the viability of a new product based on the overall labor cost (i.e. Joe's salary) associated with the development. Instead, Joe's salary is rolled into the operating expenses of the Research and Development department.

This scenario causes a wide array of problems since you never really know if you are making a profit on the new widget. A decade ago this was less of a problem since, most likely, Joe's newly designed widget would have been available on the market for a few years and would have sold several million units, thereby offsetting the accrued labor cost of development. However, in the modern era of "just in time" manufacturing and global outsourcing, a new product will be hot for just a few months. This is why Apple Computer has continued developing new variation of their iPod series of

n't pay a Chief Financial Officer to empty the trash cans; it is a poor use of resources.

For example, XYZ Corporation sells widgets. Joe, an employee who designs new widgets, spends an average of three months developing a new product. Those three months of Joe's time absolutely should be included in the overall pricing strategy for the new widget or the company will show a new loss on that specific product. Too many businesses don't want to do the necessary analysis to determine the viability of a new product based on the overall labor cost (i.e. Joe's salary) associated with the development. Instead, Joe's salary is rolled into the operating expenses of the Research and Development department.

This scenario causes a wide array of problems since you never really know if you are making a profit on the new widget. A decade ago this was less of a problem since, most likely, Joe's newly designed widget would have been available on the market for a few years and would have sold several million units, thereby offsetting the accrued labor cost of development. However, in the modern era of "just in time" manufacturing and global outsourcing, a new product will be hot for just a few months. This is why Apple Computer has continued developing new variation of their iPod series of

es don't want to do the necessary analysis to determine the viability of a new product based on the overall labor cost (i.e. Joe's salary) associated with the development. Instead, Joe's salary is rolled into the operating expenses of the Research and Development department.

This scenario causes a wide array of problems since you never really know if you are making a profit on the new widget. A decade ago this was less of a problem since, most likely, Joe's newly designed widget would have been available on the market for a few years and would have sold several million units, thereby offsetting the accrued labor cost of development. However, in the modern era of "just in time" manufacturing and global outsourcing, a new product will be hot for just a few months. This is why Apple Computer has continued developing new variation of their iPod series of

roblem since, most likely, Joe's newly designed widget would have been available on the market for a few years and would have sold several million units, thereby offsetting the accrued labor cost of development. However, in the modern era of "just in time" manufacturing and global outsourcing, a new product will be hot for just a few months. This is why Apple Computer has continued developing new variation of their iPod series of products. By continually improving on the original concept, they amortize early R&D costs over the life of the product. If Apple had frozen development of the iPod and never released a new version, chances are, the iPod would have been replaced with something else from another competitor by now.

The global marketplace requires innovation if you wish to remain on top. But innovation comes at the price of your R&D budgets. A good manager will always work off of sales projections for a new product prior to committing resources and manpower to the development of this new product. If the projected sales figures look high enough to cover all the costs of development then you should commit the necessary resources. Besides, if the product fails, you can always blame the sales department for giving you faulty figures!