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Portfolio management for product development
The three decision processes in product portfolio management 1) Strategy development is where you specify the product development goals (e.g., profit from new products), arenas of strategic focus (e.g., those markets and product areas that new products will be aimed at) and relative priorities (e.g., the breakdown of product development investments across product areas, markets and project types). 2) The new-product process has gates where the gatekeepers make go/kill decisions on individual projects and thereby allocate resources to development work. 3) The portfolio review meeting: this is where the senior executives periodically review all projects. The vital question is: Do we have the right portfolio of new-product projects? Is this how we want to spend our money in order to maximise our performance? At portfolio review meetings, executive management optimise three things 1) Maximum value of our program of projects: Here, we use data about each project derived from the Stage-Gate® development process. Typical data include net present value (NPV) adjusted by the technical and commercial probabilities of success for each project. The projects are then selected and prioritised according to their expected commercial values. 2) The right balance: The active development projects must have a good balance in terms of high risk versus low risk projects, different markets and types of projects and other important factors. The balance dimensions are shown by pie charts, bubble diagrams or the like. Again, the data come from the Stage-Gate® process. 3) Alignment with the company's strategy: Here, we use the Strategic Buckets method to allocate funds so they follow our strategic priorities. Again we use various charts and diagrams that show investment splits across strategic focus areas (markets, project types, product lines, etc.)
 Clarification of the company's strategy for new products
Designing the details of the system
Selection and installation of software, trial runs and adjustment
Adjustment of the existing Stage-Gate® process
The system or process is usually designed and implemented in three steps. (See figure). During the design phase (step 2), the results are presented and tested several times against executive management and other key users to allow for adjustment of the process before the implementation begins. This greatly improves the process and facilitates buy-in and ownership. We can help you developing a professional best-in-class solution for your company. Please order more information about how to tailor and implement a professional process. © Jens Arleth, 2010 |
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