By C. Chadwick on Apr 11, 2013
James Ramsey - Master Principal Consultant
Editor's Note: This article is the first in a series entitled "The Value of Complete Product Lifecycle Portfolio Management"
This is the first in a series of articles exploring the benefit of taking a lifecycle approach to managing the product portfolio. The article discusses the importance of Product Portfolio Management and identifies some common barriers preventing companies achieving the perfect portfolio mix.
For the purposes of this article, consider the Product Portfolio as a representation of a company’s business strategy providing the plan of action of how it will meet its goals, and Product Portfolio Management as the continuous business process of refining and optimizing the product mix.
Importance of Product Portfolio Management
Companies can have the fuzziest “innovation front-ends” and the best idea-to-launch processes, but if they lack formalized decision-making processes around their product portfolios they will be continually disappointed with their return on innovation.
According to Cooper & Edgett (Product Development Institute Inc), “recent benchmarking studies have identified portfolio management as the weakest area in product innovation management.” Whilst there is no doubting the importance of generating ideas and being able to execute on them, a company is only going to achieve the desired growth from innovation if it is executing on the right mix of ideas.
Product Portfolio Management is often disconnected from Product Lifecycle Management (PLM)
The business benefits of PLM systems are well established. Many of these benefits come from creating a centralized “Product Record” and by executing projects in the development pipeline in the right way, utilizing the right resources.
But profitable innovation is not just about executing efficiently and doing things in the right way, it is also about investing in doing the right things.
Increasingly a widening gap is emerging between a company’s PLM driven execution activities and their innovation strategy. Most companies still support their strategic product portfolio planning processes with multiple Excel spreadsheets, point software solutions and PowerPoint presentations, all totally disconnected from the PLM product record.