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Product portfolio optimization to enable growth at speed


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Tough economic times and competitor activity drive the need to ensure the product development pipeline is not just adequate but closer to optimal. This need is true of big companies as well as small ones. Companies of all sizes are seeking faster strategic changes.

One trend in product portfolio optimization has existed for many years: automating the phase-gate development process.  Such a process requires moving new products from the initial idea and concept to development and, ultimately, commercialization.

Although there is still a fundamental need to automate the gated processes, companies also need to establish portfolio management for a dynamic environment. Companies have embraced this need at different rates. While some organizations have established mature portfolio management, most have not. And many have not yet started. Yet the need has not gone away. In fact, it has intensified due to the dynamic business climate we are all in.

Optimization of a portfolio can assume many forms and can be gradually implemented with progressive improvement towards eventual optimization.

Here are some foundational elements of portfolio management that must be addressed.

Portfolio optimization should reflect quickly-evolving market demands

Markets are not as stable as they once were—they are constantly shifting and changing. From supply chain disruptions and global political instability to new market openings and aggressive moves by a competitor, many factors require a degree of portfolio optimization that can respond to fast-moving market demands. These fast-moving market demands are bringing drastically truncated lead times to make changes.

Companies must make portfolio decisions swiftly and crisply to keep pace. They also need portfolio management for speed, but the speed I’m referring to isn’t just about getting to market with a product faster. Instead, companies now need to be able to change their product direction according to these dynamic markets more quickly.

The drivers for portfolio planning changes must be recognized

Tough economic times and competitor activity drive the need to ensure that the product development pipeline is at least adequate, if not optimal. This need is true of large organizations as well as smaller ones. Companies of all sizes are seeking ways to make faster strategic changes.

What precipitates the need for a company to change the direction of portfolio planning? While external factors are drivers in portfolio planning shifts, changes can also be driven by looking ahead and aligning company goals to the segments of the market it wishes to serve. Whether a change of direction is reactive or proactive, it’s critical to have the right processes in place to adjust as necessary regardless of the reason for the change.

Make sure the right resources are in place

The core goal of product portfolio management has always been to align products with strategy, but often the goal expands to encompass the alignment of product-related initiatives and projects to resources. Balancing the portfolio for today’s companies means balancing the right products and the right mix of resources required to bring those products to market.

These resources can be employees, factories, funding, etc. Or they could even be specific ingredients, components or parts for a new product.  For example, a company may want to maximize the use of a particular resource. Portfolio management lets them consider that dimension.

If several products require using specific subject-matter experts, then availability constraints on those experts could jeopardize one or more of those products.

Perhaps a company needs to use resources in a particular geographic area for cost or market proximity reasons. The product manager needs to be able to look across the portfolio of new product initiatives and assess which ones will use resources from which regions. The manager can then consider initiatives that can take advantage of the desired geographic regions.

Create a quick portfolio planning checklist

To make smarter portfolio decisions quickly, it’s critical to have the proper system in place. These four suggestions can position your organization to do just that:

  • Implement an innovation management system. All your portfolio data needs to be in one place. Anyone who needs to make a portfolio decision will need to have complete visibility to, and instant access to the data within their portfolios.
  • Identify your portfolio intersections. Products no longer fall into singular buckets—they now span across multiple portfolios. Knowing the portfolio intersections will help uncover new insights to address market changes.
  • Simplify your portfolio data entry. Making portfolio data entry easy increases the chances of having the most up-to-date data possible to inform the right decision.
  • Implement data validation. You can’t make a successful portfolio shift without cored data. Check and re-check portfolio data.

In short, companies need to react to internal and external developments and quickly change direction. Effective portfolio management helps keep the company’s product pipeline aligned with its strategy and allows it to maneuver in a dynamic environment while ensuring optimal asset utilization of the organization’s resources.

In a matter of months, Mondelēz quickly enabled their global businesses to focus limited resources on innovations that will create the most significant business impact. In this case study, you’ll learn how Mondelēz International deploys an “MVP” approach to portfolio and process management. Download it now.

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