Portfolio management in the latest product develop

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Portfolio management in new product development

how can we make the most effective investment in product development resources? How many projects should be continued and which projects should be continued? How should we prioritize projects and allocate resources? These are the key issues of portfolio management. Finally, those who win the competition are those who have defined the correct development strategy, selected the best project and optimized and balanced the development project group

diagrammatic and effective portfolio management methods

my colleague R. g. Cooper and his Canadian colleagues at McMaster University have conducted several portfolio management methods in several industry-leading companies. The latest achievement was published in "new portfolio management", in which the author's method was used to analyze the strategic cases of portfolio management of many companies - full of groundbreaking work. In Europe, as part of the design and implementation of portfolio management systems, we have conducted a lot of analysis in private companies

four serious problems in the lack of good portfolio management

in the research, we will interview the management of each company. All managers admit that portfolio management is important to their product development process. The choice of projects and the correct allocation of resources have become the main obstacles, and the increasing demand for scarce resources makes this more important than ever. Therefore, the company aims at various resources by finding the best method

1. Make strategy and new product investment separate

many companies have formulated written strategies. Some companies have also formulated product development strategies in combination with the development objectives. For example, "within five years from now, 32% of sales should be generated from products that are not available now", and "60% of growth comes from new products"

some companies have also defined areas of focus - such as product types, markets and technologies - with the aim of targeting their efforts. However, few companies have shifted their strategies to the development project group. If the project focuses on the main product types, it is often proved to be strategic and practical. Therefore, 1 it is necessary to regularly check the temperature and vibration of electromechanical equipment and the internal wires. The consistency between the project allocation is very low

2. Fragile go/kill decision: channel rather than funnel

go/kill decision in product development process is often invalid

once the project starts, it is almost impossible to terminate it. In a large consumer goods company, 49 of the 56 projects are like express trains, which only slow down when they arrive at the platform (the evaluation of the project at the gateway or milestone)

rarely discuss terminating projects

only 7 items were fully discussed at the go/kill decision-making meeting. Terminated projects often reappear with new names

go/kill decision-making standards are often insufficient, or even not used

there is no mechanism for ranking and sequencing projects, or even a mechanism for terminating projects

a disappointed manager commented, "we claim that there is a filter device or funnel that can quickly eliminate projects without advantages. But we don't have a funnel, but there is a channel: start 10 ideas, develop 10 products. And launch 10 products in the market, and only one is successful."

3. There are too many projects in the pipeline

scarce resources are wasted in the wrong projects. All development managers complain about insufficient resources, especially in terms of market and production. Compared with the resources, most companies have too many projects. As a result, all projects lack resources, and even the best projects are inappropriately provided with very little time and cost

therefore, development managers spend a long time and perform important tasks rashly. As a result, some of these projects were inadequately prepared and defined from the beginning, resulting in additional delays

waste too much

4 Only implement easy projects

everyone must reduce their time on development, despite scarce resources and insufficient focus. Therefore, many companies often implement simple, fast and innovative projects. "We choose low hanging apples". For the product line, routine items like imitation products, updated products and additional products are common. This makes the project portfolio very short-sighted. The project group lacks leading projects that can bring new opportunities and new competitive advantages in the future

the detailed description of each stage includes the specifications of the objectives, tasks and achievements that the team must deliver at the end of the stage, so that the management can make the conclusion and decision of the project

a detailed description of each gateway or decision, including the decision, the decision maker, and the definition of go/kill decision criteria

creative management: select the creative form and standard of the best creativity. Linear temperature rise and fall speed refers to the four objectives and successful drive in the combination management in any period of time every 5 minutes. To solve the above problems, we must clarify the four objectives of the combination management. These goals have been scientifically proved to be important best practices and solid drivers to ensure that the company's new product development project group achieves high profit margins

1. Choose a portfolio of high-value NPD projects - projects with reliable business prospects, profitability and high returns. For most businesses, this is a weak area, and most of them have not found out how to achieve this goal

2. Build a well-balanced portfolio based on long-term/short-term, high-risk/low-risk, across the market and technology, and so on

3. Strike a good balance between many projects and available resources. This is another weak area. Nine out of ten companies have launched too many projects

4. Link portfolio and business strategy: ensure that the investment portfolio's spending on project type, market and business scope truly reflects the company's strategic priorities

portfolio management involves three decision-making processes (refer to the figure below)

in order to achieve the four goals, we need to have a portfolio management model or process. Our model integrates three coordinated decision-making processes

1. Strategic development is to specify new product goals (such as sales from new products), focus (such as the market and product range for which the new product is developed), and relative priorities (such as R & D costs in market, product range, and project type). Strategy is the circle in the upper left corner of the model. Arrows indicate that strategy affects all decisions in the model

2. The new product process (stage gateway process) has multiple go/kill decision points for each project and allocates resources accordingly. The strategic decision-making standard of the gateway is used to ensure that all approved projects comply with the company's new product strategy. The gateway also has profit margin standards to ensure that we achieve the goal of high-value NPD projects

for each project in the portfolio, the project plan is an important deliverable of the gateway. All project plans are summarized in the "R & D and release plan summary", which provides an overview of new product development and market introduction

other gateway deliverables include: financial impact estimation of each project - graphic description using investment calculation and project business success probability estimation. These deliverables are also summarized into an overview, such as "long term budget summary of new products"

3. Portfolio review refers to the regular review and comparison of all projects by senior management. The crucial question is: do we have the right project group? Are these what we really want to invest

the senior management confirmed three things in the portfolio evaluation

1 Maximum portfolio value: use data from projects in the stage gateway process. (refer to point 2 above)

2 Reasonable project revenue and expenditure balance: use various charts to describe the balance sheet, such as bubble chart and pie chart. The data in the chart comes from the product development process

3. Portfolio sequence in line with the company's strategy: here, a top-down method is used to allocate funds to map the company's strategic priorities. Or use different charts to show the spending in the strategic focus area (project type, market, etc.)

in many companies, portfolio managers or project managers prepare and promote portfolio evaluation. The chart details mentioned above are introduced in the book of portfolio management. These resources also contain information - which can be used in your company's upcoming portfolio management (5) checking the unit weight of insulation materials submitted for inspection


portfolio management helps force the use of "big picture" and problem analysis to analyze whether your company makes the right new product investment and meets the new product goals. Product development portfolio management is a relatively new management discipline. This paper introduces some principles and methods derived from scientific research, practical operation and testing. (end)

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