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GTM is a subscription program that GTM provides best practices, events, and
supportsexecutives within the functionsthat services that enable executives to address
report tothe CEO challenges within their companies
CEOs Growth Team GTM: Creating Client Value
Corporate Sales
Strategy Leadership Speed the design and implementation of initiatives
by not reinventing the wheel
Marketing
CEO Corporate
Development
Save money and reduce risk by avoiding mistakes
made by other companies
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SmartOrg
Software and Services to help you discover your most valuable opportunities.
SmartOrg provides solutions for the economic evaluation of opportunities, especially
when the future is clouded with uncertainty. Customers use SmartOrg to build
their capability in driving innovation from idea to commercial result, and in selecting
projects and improving returns in their portfolio. Customers include Boeing, Chevron,
Dow Agrosciences, Bayer, HP, Scholle, and Teva. Our flagship application, Portfolio
Navigator is an agile decision support system for project and portfolio evaluation.
For additional information, please visit www.smartorg.com or
send email to info@smartorg.com
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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Profiled Best Practice Company
Beta Inc.
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Growth Challenge
Problem:
Beta seeks to generate better returns from its product portfolio
(both existing products and those still in development). However, the
company struggles to evaluate and compare the value and risk of all
projects, which hampers funding and decisionmaking.
* Risk is defined as the range of uncertainty around the commercial value of the project.
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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Betas portfolio management process evaluates projects individually and as part of
the innovation portfolio
Innovation Portfolio Management Process and System
Process Owner
ROLE
Facilitates and maintains the portfolio
management process and system Screen Project
Evaluate Project
Executive Team
ROLE
Sets the companys innovation strategy
Portfolio
and manages the innovation portfolio
Management
System
Track
Project Teams Calibrate
Progress
ROLE Information
Develops the project and tracks its
metrics in the Portfolio Management
System
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Limit entry into the portfolio management process
Screen Project
The process owner evaluates the projects The process owner examines Betas The process owner benchmarks the
potential based on multiple attractiveness competitive position in the projects projects forecasted values against the
indicators. designated market. investment hurdle for its Life Cycle
StageEmerge, Grow, or Mature.
Market Attractiveness Indicators Competitive Advantage Indicators Investment Life Cycle Stage
Hurdle EMERGE GROW MATURE
Market need Does it fit with our strategic Productivity
direction? Rate (NPV/ >5 >10 >15
Cost)
Market size Does it take advantage of our core
Payback <10 <8 <6
competencies? Years
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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Establish proof points to assess the chance of success at each product development
phase
Evaluate Project Proof Point Development
Case in Point: Mark
PROOF POINTS
Proof Points allow the Project Team to determine project viability and anticipate difficult development phases. The Project Team
uses the following question as a prompt to identify proof points:
What would you want to know before mortgaging your house to fund theproduct?
Product Chance
Cost
Development Proof Point Duration of
(USD)
Phase Success
If the integration goes smoothly, we should have a Increase the
60% chance of completing the pilot phase. Due to predictive
the loyalty of our customers, it will be easy to find five performance $1
current customers to participate in a pilot of Mark. Demo of three major One Year million 50%
marketing
Project Team campaigns by
50%
In my judgment, we have a 50% Prove product
chance of successfully completing marketability Three $2
the demo. We just acquired Pilot through a 60%
months million
a technology that allows us to pilot with five
analyze social media chatter. customers
Sign up three
major marketing $5
Distribution agencies to One Year 80%
million
Securing three major marketing agencies to distribute distribute the
Mark will be easy. I think we have an 80% chance of product
completing the distribution phase. Overall Chance of Success 24%
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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Estimate the projects commercial value using a concise, fixed set of indicators
Evaluate Project
Our market share could be as low However, since there is little competition in this space,
as 10% if competitors get to market our market share could be as high as 40%. We seem
before we do. most likely to garner approximately 25%.
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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Pinpoint the indicators with the greatest impact on a projects
netpresentvalue(NPV)
Evaluate Project
Tornado Diagram
Case in Point: Mark
Total Available Market (thousands of units) 5 20 The longer bars signify factors
who have high levels of uncertainty
Potential Market Share (percentage) 40
and impact on the projects Base
10
Case NPV.
Unit Price ($ thousands) 20 60
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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Improve project value and reduce risk by addressing the areas of
greatestuncertainty
Evaluate Project Project Refinement
Case in Point: Mark
The total available market, potential To refine its assumptions, the By adjusting the total available market,
market share, and unit price have the Project Team: unit price, and potential market share
highest ranges of uncertainty and are the values, the downside risk is reduced and
greatest sources of risk. the Base Case NPV of the project is
increased.
Organizes a
Commercial ContributionNPV ($ million) Commercial ContributionNPV ($ million)
(100) 0 100 200 300 400 500 600
conference on social (100) 0 100 200 300 400 500 600
media data analysis
Total Available Market 5 20 Potential Market Share 15 45
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Use peer reviews to ensure project team assumptions are credible and comparable
Zoom
Fly and Mark are targeting the
same industry, but their assumptions
about the unit price vary widely.
According to the Portfolio Management
System, the Fly Project Team researched
Calibration pricing models for this industry. Therefore, we
Committee
trust the Fly teams assumptions about the
Why does Fly have a better upside
unit price, and we should use its pricing model
potential than Mark?
for Mark. We should use this pricing model
for future projects in this industry as well.
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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Prioritize all projects for funding in the portfolio based on their comparative value,
cost, and uncertainty
The CFO Chart permits apple-to-apple comparison by classifying each project as The Commercial Contribution Chart
high, medium, or low investment productivity and plotting them in descending order ranks projects combined uncertainty
of productivity. bars, by their Base Case NPV, to
underline risk and potential value.
High
Medium Productivity Commercial ContributionNPV ($ million)
Productivity Low Productivity Projects
Projects
Projects (500) 0 500 1,000 1,500
Life Flow
600 Zoom
AB Mark
500 Mark
Flow Fly
Cumulative 400
Project
Value ($ Life
million) 300
Fly
200 AB
100 Zoom
0
0 5 10 15 20 25 30 35 40 45
Cumulative Cost ($ million)
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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Assess the portfolios ability to meet strategic and business line goals
The Executive Team assesses the portfolio mix using the The Executive Team conducts a side-by-side comparison of
following classification scheme: Bread & Butter, Oysters, Pearls, the projects in each product line to assess potential value,
and White Elephants. product mix, and gaps.
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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Adjust financial goals and resource constraints to optimize the portfolio
Will we meet our revenue goal? What can we do to meet our goals?
The Executive Team assesses the portfolios ability The Executive Team can use several options to improve the portfolios value:
to meet the companys financial goals. Adjust the portfolio strategy Improve risk-adjusted value
Improve the Chance of Success
Our goal is to generate $500
for the projects in the portfolio.
million in revenue from
innovation by 2015. However, If we hire an external marketing
the expected value of our team to assist with Fly, Mark, and
portfolios revenue for 2015 is Life, we will have the resources we
only $250 million. We need Executive need to support these projects, Executive
to identify ways to improve Team ensure they meet their proof Team
the portfolios value. points, and achieve our goals.
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Revisit assumptions and refine projects based on their commercial value and
impact on the portfolio mix
Track Progress
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Business Results
Shareholder 6 2010
Projects approved 10 15 50% Value ($100 5
for development 10
millions) 4 50 15
Numbers in red signify the
Projects launched 3 6 100%
2 investment productivity for
each project.
Projects terminated 4 8 100% 0
0 50 100 150 200
Average Investment
($millions)
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The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. Source: Beta Inc.; SmartOrg; Growth Team Membership research.
The contents of these pages are copyright 2012 Frost & Sullivan. All rights reserved. SmartOrg; Growth Team Membership research.
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