Portfolio Planning

Definition of new product development

• refers to new-product portfolio management rather than existing-product portfolio
• establishes rules that help define/rank new-product projects on an ongoing basis
• helps to prioritize resources to assure the best overall corporate outcome
• important criteria may include:
  • alignment with strategic direction of the company
    • new products shape/define the future of the company
  • value (profits) to company
  • likelihood of success
  • maintain a balanced product portfolio
    • long-term vs. short-term opportunities
    • high vs. low risk
    • innovative vs. declining products

Click here to read about Three Goals in Portfolio Management

Click here to read about Software for Design and Construction Portfolio Management

Benefits

The Benefits of Project Portfolio Management

• Aligns new products with corporate & business strategies
  • New products in pipeline = Future company product offering
  • Focus on core competencies
  • Technological, market, and distribution "fit"
• Establishes priorities & allocates resources for NPD projects
• Assures objectivity in NPD project selection
• Helps plan for profitable balance of product & service offering

Consequences

• Make go/no-go decisions based on internal politics, not objective evaluations
• Be reluctant to “kill” misaligned projects or those with low likelihood of success
• Have too many NPD projects to adequately fund
• Have longer new product development cycles
• Focus too much on low-risk, low-reward projects
• Have lower profitability and frequent corporate "realignments"

• Establish method for evaluating new product project portfolio
  • Product Development Checklist
  • Scorecard Models - What are they?
  • Scorecard Models - White Paper
  • Scorecard Models - Academic Paper
• Establish criteria for evaluating and ranking new product:
  • resource requirements for development and launch
  • strategic fit with company
  • sustainability of competitive advantage
  • likelihood of market & technological success
  • potential reward to company - financial
• Evaluate existing ideas, opportunities, and concepts in new products pipeline using a scoring model or other method, and rank according to how well they meet decision criteria
• Decide to accelerate, decelerate, or cancel funding of projects according to their rank or potential value (strategic or economic) to the company
• What's Project Portfolio Management (PPM) & Why Should Project Managers Care About It?