I Had a Portfolio Management Epiphany

DownloadArticlePDF-buttonThe Smart Perspective to Reap Meaningful Gains from NPD Portfolio Management

Years ago, a thought struck me about how I was wrong regarding a very critical aspect of new product development (NPD) portfolio management. I had always been a strong proponent of managing the portfolio so as to attain a proper balance or mix of projects and to align the portfolio with strategy. This seemed so fundamental that, to me, this simple concept of “portfolio balance” was beyond reason to question.

I was adamant that balance was fundamental to smart portfolio management. Indeed, I went so far as to create graphical views of the portfolios laying out specific ranges of mix ratios that represented ranges for any set project types. This to me was how to get at the best mix of projects in the portfolio. Much like the bullseye target at which archers shoot their arrows, each group of projects within the portfolio had an outer and inner target ranges, plus the ideal specific target. The idea was to indicate when the actual value for the portfolio group was too high, too low or within targeted mix range. The graphical view was created by a trick in Excel that can create box-whisker type charts (see Figure 1). Analysts would use the graphic to explore new scenarios to bring their portfolios back into balance. Simply by observing how the actuals mix numbers matched the target range for each group, an analyst could then create a scenario where resources shifted from projects in a ‘too-high’ grouping to projects in a ‘too-low’grouping.


Figure 1 Great graphic focused on the wrong objective: Graphic display in pursuit of portfolio balance.

Over the years, I have taught this technique in dozens of workshops and to many, many clients. But it didn’t take long for notable feedback to come back to me. Part of the problem is that most analysts did not want to be the person that sets the target ranges, or even deciding what the groups should be. Plus, management teams also struggled with, and ultimately shunned, the task of reaching the political agreement needed to articulate specific target ranges on selected metrics so as to reflect “strategy.” But because I was a stubborn supporter of the need for balance within a product development portfolio, these rejections did not stop me.

“The notion hit me that the balance of NPD portfolio related to any single or a full set of metrics mattered little if the portfolio did not carry out the near-term project activities being called for in each product line strategy.”

What did stop me was a significant insight. The epiphany came while building out the foundations to product line strategizing and roadmapping. It hit me that the balance mattered little if the portfolio did not carry out the near-term project activities being called for in each product line roadmap. Moreover, each product line roadmap needed to be a clear execution plan, both for the near term and the long run, of the product line strategy. Therefore, the proper mix of projects in the portfolio should always be that which enables the execution of each product line strategy and specific roadmap. The product line strategies and roadmaps mattered more than the portfolio balance.

Going one step further, it occurred to me that rationalization and prioritization of projects should take place in the rollup of product line roadmaps, not in NPD portfolio management related to stage and gate development projects. Portfolio management without a rationalized and aggregated set of roadmaps – each with embedded smart product line strategies – is incomplete and misdirected. This epiphany pointed out that NPD portfolio management and product line strategizing and roadmapping need to be tied at the hip. Trying to do one without the other and will always fall short.

 “There is little benefit gained from optimal throughput in a less than optimal direction.”

So what does this mean for portfolio management practitioners? Simple. You have management art and science of product line strategizing and roadmapping in your future. While project management and the PMO will continue to strive for more optimal throughput of highly task-uncertain NPD projects – the central responsibilities of portfolio management – such progress will be of little benefit without clear and intelligent product line strategies with rationalized roadmaps of executions plans. There is little benefit gained from optimal throughput in a less than optimal direction. Product line strategies and roadmaps must be linked directly with portfolio management.

My call to action for all product developers and, in particular, for those involved in portfolio management: Learn product line strategizing and roadmapping. Gain an understanding of how these two seemingly disparate practices are, in fact, inherently linked and interdependent.

And for software vendors of systems in support of either portfolio management or of roadmapping, I hope you’ll heed the lesson learned and investigate how systems supports can unite these thought worlds for notable synergistic gains.

The world of NPD and organizational capabilities in this field are advancing every day. From a high-level perspective, we have seen staged development processes mature over the last 20 years, and we have seen front end and open innovation gain notable momentum over the last decade. Now is the time to reap meaningful gains from portfolio management through a deep integration with product line strategizing and roadmapping.

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