Top three pain points in the management of product portfolio are:
- Too many projects for available resources,
- Not being able to drive innovation fast enough,
- Decisions that go back and forth, get made late or ineffectively.
according to the Third Product Portfolio Management Benchmark Study by Planview (http://www.planview.com/m1/pd/3rd-product-portfolio-management-benchmark-study-hph).
These top three pain points have been the same since 2009, when the survey first started, and the pain levels have consistently increased year over year. The study report adds that “too many companies are making critical project and pipeline decisions based on limited and/or inaccurate data; this is in large part thanks to the inadequate tools at their disposal.”
What adds to these pain points is companies’ inability to kill underperforming projects. In 2011, only 7% of the respondents stated that their companies stop underperforming projects immediately. The remaining 93% allow such projects to linger and consume scarce resources.
Here, I will describe a simple and effective tool to deal with the first pain point; too many projects for available resources. The tool is a combination of Boston Consulting Group’s Product Portfolio Matrix (http://en.wikipedia.org/wiki/Growth-share_matrix) and Geoffrey Moore’s Cycle of Innovation (Dealing With Darwin, p. 211, Penguin Group).
The original BCG matrix advocates dumping dogs (low market share and low growth potential) and moving resources in the direction of the arrows in the following chart.
However, this is not always feasible for a variety of reasons. Therefore, I incorporated Geoffrey Moore’s Cycle of Innovation concept and added Mission-Critical and Non-Mission-Critical to the mix. Mission-critical projects are those that directly affect how you do your business and in your core competence area. Non-mission-critical ones are those you need but they are not unique to your company (eg. an in-house ERP system versus a commercially available one). The size of the circle indicate the amount of resources a project consumes.
The above matrix paints a different picture than the original BCG. While discontinuing mission-critical projects may not be an option, portfolio managers now see clearly that the way to utilize their resources most effectively is through focusing on mission-critical projects and stop those that are not mission-critical.
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