Portfolio Management Lesson 2 New Products Development proces The New Products Funnel Progress in the funnel Judging

the projects Judging the gates

NPD for MRIU 2011-2012

Organizational scope: SBU

SBU = Strategic Business Unit

Project 1

Project 3 Project 2 Project 4

Project 6

Project 5

Project portfolio
NPD for MRIU 2011-2012

Starting point
SBU has more (possible) projects than they can handle: Projects
Required budgets

Resources
Friction
People (capacity AND quality)

Assets

Portfolio management :
Is about project selection:
Kill poor projects Prioritize good projects

Gives focus, frees up resources Allocate resources to the good projects Results in faster and more successful product development
NPD for MRIU 2011-2012

New Product Development process

A possible NPD process for 1 project is easy

Several projects, run simultaneously, have to compete for resources

NPD for MRIU 2011-2012

The New Products funnel

100

50 25 12 6 4 2 1
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PDMA Handbook, chapter 21.

The projects funnel

Project types
PDMA Handbook, chapter 6.

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Stage-Gate
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Progress in the funnel

Investments Information Risk Uncertainty

Progress / time
NPD for MRIU 2011-2012

Portfolio pipeline = funnel

Kill moments Gate

Portfolio review

#
projects

Time / NP process

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Gridlock: a funnel, not a tunnel!

Too many projects at inlet of pipeline: no problem, BUT: no projects are killed!

#
projects

# project in = # projects out

Pipeline gridlock :

Time / NP process

Projects take too long long time to market Projects suffer from lack of resources: endemic! Too many projects per person
NPD for MRIU 2011-2012

Gridlock: a funnel, not a tunnel!

Gridlock

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Judging the projects

Two ways of judging :
Gate

1. At the Gates

Stage An individual project is taken in consideration

Prioritization is difficult

Stage

2. At Portfolio Reviews
Periodic meetings (typically 2 4 reviews per year) All projects in the portfolio are judged simultaneously Projects appraised are in different stages of development
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Judging at the gates

Stage
Gate

Stage

Quality aspects judged at the gates :

Execution Is the project done in the right way? Business Is the project (still) in line with strategy, etcetera? Action plan Is the suggested continuation of the project OK?
(especially with respect to the next stage)

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Gate components
Stage
Gate

Stage

Components of a gate :
Deliverables
Information as specified at former gate.

Criteria set beforehand

Decision (and work to do and deliverables for next gate)
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Video
Traditional NPD vs Portfolio Management :
Link:

Traditional:
- fragmented value propositions - difficult to differentiate - no game changes - biases views of same markets - redundancies & conflicting goals

Portfolio Management
- integrated holistic way - only advantages - choice between a. short term success: sales b. Long term: priorities for

- competition for resources

investments

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End of lesson 2

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