Portfolio Management

Kill the Poor Prioritize the Rich

NPD for MRIU 2011-2012

Overview
Portfolio Management NPD Strategy New Products Process Lifecycle

Management

Teams Tools and Metrics Market Research

20 % of Exam 40 Questions

NPD for MRIU 2011-2012

Portfolio Management
lesson 1: Overview Planning Literature definition Relation to Strategy

NPD for MRIU 2011-2012

Overview
Portfolio Management
Choose winning NPD projects

Kill the poor projects

Prioritization means: allocate resources to the good projects

How
Define : vision mission (NP) strategy (NP goals) Define criteria for winning projects (use NP strategy)

Divide criteria between: must-meet & should-meet

Quantify weighing factors for the criteria (use NP strategy) Score projects on each of the criteria (initiation, gates, reviews, . . ) arrive at Project Attractiveness Score
NPD for MRIU 2011-2012

Overview

continued

Goals of Portfolio Management: 1. Strategic alignment

Strategic bucket approach Project types

2. Assure balance
Bubble diagrams
PV

3. Maximize value
NPV, ECV, IRR
ECV D

Pts & Pcs (probabilities of success)

Timing
5

Success factors
Two critical success factors for a company to succeed at new products:

Selection : doing the right projects

and

Execution : doing projects right

Portfolio management is about doing the right projects
NPD for MRIU 2011-2012

Planning
Week 10 + 11 February Lesson 1 + 2 : kick off, NPD Proces, Funnel, Judging projects

Week 13 18 February Lesson 3 + 4 + 5 + 6: Gate criteria, Tools to select NPD Projects, Scoring Models, Information criteria, Bucket method

Week 27 February 3 March

Lesson 7 + 8 + 9 + 10: Week 19 24 March Riskmodels, financial metrics, Timing metrics

Lesson 11 + 12 + 13 : Commercial value, probability of commercial success, tools uses in portfolio Management

NPD for MRIU 2011-2012

Literature
Key to NPDP certification exam: Winning at New Products, 3rd edition, 2001, R.G. Cooper.
Chapter 8.

Secondary: PDMA Handbook, 2nd edition, 2005, K.B. Kahn.

Chapters 3, 8 and 21.

Extra (for those involved in Portfolio Management): Portfolio Management for New Products, 2nd edition,
R.G. Cooper.
NPD for MRIU 2011-2012

Definitions
Portfolio = set, collection
Product portfolio (PDMA Handbook)
The set of products and product lines the firm has placed in the market.

Project portfolio (PDMA Handbook)

The set of projects in development at any point in time.

Portfolio management (Cooper)

A dynamic decision process whereby a business list of active projects is constantly updated and revised.

Portfolio management is about resource allocation to achieve new product objectives. Robert G. Cooper
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
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Strategic arenas

Strategic Arenas

Technologies
(core competences)

(attractive)

Markets external

internal

SWOT
Strengths Weaknesses Opportunities Threats
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Background
Situation analysis
Vision mission

Now
Present Markets Current Products Core Competences

Future Time
Strategy
Investments
Strategic goals
Stated intents w.r.t. future products and markets . . . .

.....

Projects

Portfolio Management
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Strategic arenas

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Strategic arenas
Product Life Cycle

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End of lesson 1

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