Portfolio Management
How should a company invest its product development resources effectively? And how should it prioritize its development projects and allocate resources among them? These are crucial issues in new product portfolio management. A company who is able to optimize its R&D investments will have success in the future.
Portfolio management is a management challenge for three reasons:
- a successful new product effort is fundamental to business success. This translates into portfolio management: the ability to select projects today that will become new product winners tomorrow.
- new product development is the manifestation of the strategy of the enterprise. One of the most important ways for a company to operationalize its strategy is through the new products it develops. If new product initiatives are wrong, either the wrong projects or the wrong balance between projects, the company fails at implementing its strategy.
- portfolio management is about allocation of the company’s resources. The goal of a company should be to create value for the shareholders. Technology and marketing resources simply are too limited to waste on the wrong projects. The consequences of poor portfolio management are clear: A company spills the limited resources and as a result does not give deserving projects a chance.
Much research has been done to discover the reason of new product success: Research (Cooper et al., 2000) has shown that there are ten critical success factors:
- Seek differentiated, superior products.
- Do your up-front homework.
- Take the voice of the customer into account.
- Demand a clear and early product definition.
- Plan and resource the market launch early.
- Build strict go/kill decision points into your process.
- Organize around cross-functional project teams.
- Attack from a position of strength.
- Build an international orientation into your new product process.
- The role and support of top management is central to success.
Read more about this topic: Portfolio Management For New Products
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