5
Managing the Products and Services Portfolio
Purpose
To support the Strategic Plan through the development and implementation of an optimized products and services. The portfolio with deliver customer value, optimal performance, and financial goals enabled through sustained Class A capability and performance.
Positioning
Product and Portfolio Management includes all aspects of planning and managing the company's Products and Services Portfolio: customer and consumer insights, market roadmaps, product and portfolio roadmaps, product and portfolio planning, ideation, management of the innovation funnel, program and project management, resource management, product development and launch, portfolio management, and product life-cycle management.
Process maturity improves over time through education, committed leadership, expert guidance, and a focused effort to attain key business milestones.
After embarking on the path to improvement, accountabilities are assigned, the elements and characteristics of the processes are implemented, and targeted measures drive improvement to enable process transformation.
Done well, a Class A Milestone is achieved at the top of Phase 1 of Business Maturity (see Foundation, Figure I.1). At this stage, the Product and Portfolio Roadmaps drive product portfolio and life-cycle planning to ensure product succession. Product plans are fully integrated and effective to increase launch success. Programs and projects are managed through team-based Project Management, including the early involvement of customers and suppliers.
From this Class A Milestone vantage point, we introduce the next level of maturity in the seventh edition of The Oliver Wight Class A Standard for Business Excellence.
Within this chapter, the term product is used to refer to both products and services.
Chapter Content
- Driven by Strategy
- Integration
- Product and Portfolio Management and Marketing
- Managing and Optimizing the Portfolio
- Managing Programs and Projects
- Team-Based Project Management and Concurrency
- Program and Project Resource Planning
- Managing Technology and Innovation
- Behavior and Competencies
- Performance Measurement
Driven by Strategy
1. The Strategic Plan Includes Marketing, Product and Portfolio, Supply, and Finance Strategies and is Used to Develop a Product and Portfolio Roadmap, Which Includes a Technology Roadmap. The Combined Direction Drives Product and Portfolio Planning and Execution.
a. Congruence with Strategic Plan
The leader accountable for managing the Products and Services Portfolio uses the Strategic Plan to develop a Product and Portfolio Roadmap that drives Portfolio Management and optimization.
b. Value Proposition and Value Disciplines
The Product and Portfolio Roadmap fully aligns with the Value Proposition and Value Discipline focus.
c. Congruence with Market Roadmap
All product and service development is directed by the Market Roadmap and translated by the Product and Portfolio Roadmap into actions.
d. Competitive Analysis
The Product and Portfolio Roadmap is updated at least annually with the new insights derived from an analysis of the competition and industry standards.
e. Technology Roadmap
The Technology Roadmap identifies the core technologies and capabilities to fulfill the company strategy and defines the company's research and development and investment programs.
2. The Product and Portfolio Roadmap Guides Products, Brands, Platforms, Product Life Cycles, and Technology Deployment.
a. Brand Deployment
The Product and Portfolio Roadmap deploys the brand strategy through a clearly defined, multi-year timeline.
b. Product Platforms
Products with similar characteristics and requirements are grouped into platforms, and the plan for each is clear and consistent with the aggregate plan.
c. Life-Cycle Management
A process exists to monitor and predict life-cycle trends and, therefore, support planned product introduction and phase-out.
d. Technology Deployment
Opportunities for new and available technologies are identified in support of the Product and Portfolio Roadmap, and plans exist to drive maximum return from technology investment across the business.
Integration
3. Product Plans are Assessed, Balanced to Capability, and Managed Through a Monthly Product Review Process. Integration with Demand Management, Supply Management, and Financial Planning is Ensured Through an Integrated Business Planning Process.
a. Process Mechanism
The linkage between Product and Portfolio Management and the other elements in the integrated planning process is defined and made explicit.
b. Linkages
The Product and Portfolio Management process ensures the volume and value projections related to changes to the portfolio are updated at least monthly based on the latest project plans and their business cases. The updated numbers, and supporting assumptions, are provided to Demand, Supply, and Finance and used by each of them as inputs to their plans and projections.
c. Gap Management and Assumptions
An Assumptions Database is maintained to enable gaps to be analyzed and understood based on the thinking used to establish current plans. Assumptions are used to ensure plans are adjusted only if new information is better than that used initially.
d. Linkage to Reconciliation Management
Product and Portfolio Management develops business solutions when its proposed plans identify business gaps or risks that are deemed unacceptable.
4. Processes Exist to Forge the Operating Links Between Day-to-Day Planning and Execution, Providing Visibility and Control of Uncertainty and Enabling Consistent and Improving Performance in Support of Business Goals.
a. Product and Portfolio Management Defined
Product and Portfolio Management process maps have been converted to Value Stream Maps to ensure the purpose and the value of each step are understood and, hence, a true Lean capability can be exploited.
b. Fully Integrated with Core Processes
Processes share real-time information to enable decisions to be made at the optimal time.
c. Performance Gap Management
Timely adjustments to Assumptions enable performance gaps to be identified for decisions and action.
d. Modeling and Analytics
Modeling and analytics methodologies are developed and deployed to enable ongoing optimization of the portfolio.
Product and Portfolio Management and Marketing
5. Information is Provided About All Targeted Markets to Help Create or Modify Roadmaps. These Roadmaps are Aligned with Business Goals.
a. Markets, Sectors, Segments, and Channels
There is a process to understand the characteristics of the chosen markets, sectors, segments, and channels to keep product development aligned with market requirements.
b. Portfolio Plan
The Portfolio Plan is time phased and defines the portfolio of current products, additions to the portfolio through product launches, and removals from the portfolio through product phase-outs.
c. Funnel Health
The number and type of projects at each development stage are balanced and aligned to the Product and Portfolio Roadmap for sustaining the business and meeting growth and margin objectives.
d. Market Position
Market position and profitability are understood by markets, sectors, segments, and channels for the current portfolio. Gaps are identified through updates in Assumptions, and actions are taken to ensure planned business goals are achieved.
e. Segmentation
A segmentation approach has been implemented to optimize customer and consumer service. The portfolio has been structured to support this approach consistent with the Strategic Plan and Roadmaps.
6. Techniques are Used to Create Understanding of Both Customer and Consumer Future Needs to Develop a Value Chain Response.
a. Gaining Insights into Customer and Consumer Needs
An Insights process gains knowledge of customer and consumer needs as expressed, deduced, or created to keep the product portfolio competitive.
b. Anticipating Customer and Consumer Needs
Insights enable Product and Portfolio Management to anticipate customer and consumer needs, including unanticipated needs.
c. Creating the Value Chain
Customer-understood value is embedded in the Supply Chain, enabling a Value Chain to be established.
Managing and Optimizing the Portfolio
7. There is an Understanding of Product Life Cycles That Drives the Portfolio to Support the Product and Portfolio Roadmap.
a. Portfolio Management
A process exists to maintain alignment of the portfolio to the Market Roadmap and supply capability.
b. Balancing the Projects
The mix of products that are existing, new, and under development is reviewed to ensure the right balance of projects to maintain a competitive portfolio aligned to business goals. Considerations include innovation, risk, and timing.
c. Proactive Product Phase-Out
Life-cycle maps identify when product phase-out should be initiated. Product phase-out is actively managed.
8. There is a Business Filtering Process to Ensure the Most Effective Use of Resources. The Process Ensures Selection, Prioritization, and Resourcing of Active Projects.
a. Projects Prioritization
A defined Prioritization process exists for the ranking of all active projects and projects waiting for authorization.
b. Prioritization Process Considerations
The Prioritization process criteria include a number of business drivers, such as strategy, return on investment, feasibility, risk, and profitability and are not based solely on financial measures.
c. Business Filter
A Business Filtering process uses the prioritization mechanism to ensure optimal use of resources for authorized and pending projects.
d. Filter Criteria
Pass/fail rates are monitored along the funnel to regularly challenge and update filter criteria and the Prioritization process.
Managing Programs and Projects
9. Formal Processes Exist to Manage Programs and Projects to Achieve the Product and Portfolio Roadmap. These may be Centralized Through a Program Management Office.
a. Program and Project Management
All Programs and Projects are planned and managed through a formal process to ensure the best use of resources and competencies and to achieve business goals.
b. Decision Checkpoints
The program and project control process includes formal decision checkpoints to determine the progression of Programs and Projects to the next stage.
c. Cost Control Process
A formal cost control process is used to ensure that Programs and Projects are developed and launched within their approved budget.
d. Managing the Launch
The decision to launch is supported by a formal prelaunch checklist that is used to minimize launch execution risk.
e. Tactical Launch
Launch plans and timing are defined based on the latest insights gained from the market, customers, and competition.
f. Post-Launch Review
Formal post-launch reviews are conducted following market reaction, when learnings and benefits can be maximized, to ensure future programs and projects take advantage of these experiences for future development and introductions.
g. Attrition
The number of ideas that begin as projects, but fail to pass decision checkpoints, is monitored to establish the attrition rate of the funnel. This rate is used to ensure that there is sufficient flow of ideas to ensure there are no funnel gaps.
h. Program and Project Handovers
Program and project handovers have been clearly defined to ensure the effective transfer of accountability.
i. Business Improvement
The Product and Portfolio Roadmap is supported by a company-wide commitment to continuously improve the product development and delivery process.
10. Program Management is Applied to the Integration and Synchronization of Multiple Interdependent Projects.
a. Program Management Process
The concept of Program Management is well understood and applied to situations that require the integration of multiple interdependent projects.
b. Alignment with the Product and Portfolio Roadmap
There is an agreed plan among the program partners (internal and external) regarding achievement of the program goals that are aligned to the Product and Portfolio Roadmap.
c. Program Synchronization
Program Management deploys appropriate tools to synchronize all projects that are integrated into the program.
d. Service Level Agreements
Formal Service Level Agreements are used to define deliverables for the program, and Key Performance Indicators validate they are being followed.
11. All Authorized and Pending Projects are Formally Managed Through the Master Product Development Plan to Meet the Business Goals.
a. Unconstrained View
An unconstrained view for programs and projects is used to ensure the Master Product Development Plan (MPDP). When this plan does not satisfy the Strategic Plan, gap-closing opportunities are identified and modeled.
b. Master Product Development Plan
The MPDP communicates the order and priority of approved projects and includes anticipated future activity to resolve resource conflicts.
c. Master Product Development Plan Scope
The MPDP provides all the information required to effectively integrate with Demand, Supply, and Finance to support their planning and decision making.
d. Horizon
At a minimum, the MPDP provides visibility of activities within the current Integrated Business Planning horizon.
12. Program and Project Management Processes Use Vulnerabilities and Opportunities to Enable Modeling, Escalation, and Decision-Making Processes.
a. Vulnerability and Opportunity
The Program and Project vulnerability and opportunity database is used to determine parameters to support scenario planning for modeling and decision making.
b. Decision Escalation
Decision making has been empowered throughout the organization, and there is a formal decision escalation process to obtain the required authority.
Team-Based Project Management and Concurrency
13. The Company has a Team-Based Culture Facilitating Concurrent Project Design and Development. This Improves Velocity and the Ability to Deliver and Increases Right-First-Time Performance.
a. Team-Based Project Management
Team-Based Project Management is used to facilitate sharing of knowledge and activities, enabling execution of work elements in parallel to accelerate time-to-market. Self-managed team capabilities are developing.
b. Extended Project Teams
Project teams are extended as necessary and may include customers, consumers, suppliers, external technology owners, and regulatory experts.
c. Concurrency
A concurrent approach is used to optimize time-to-market. This is demonstrated through team-based execution of activities in parallel.
d. Design for Supply
Supply activities are introduced concurrently and as early as possible so that products are developed considering ease of supply.
e. Collaboration
The environment enables natural sharing of information and data across all areas of the business and extended project teams. This ensures decision making is optimized to sustain Class A performance.
f. Drive the Future Organization
The organization design has removed traditional functional and departmental barriers to support a team- or process-based structure.
Program and Project Resource Planning
14. Aggregate Resources are Planned and Optimized to Achieve the Product and Portfolio Roadmap and Support Business Goals.
a. Aggregate Resource Plan
The Aggregate Resource Plan captures all critical resource needs. It uses established templates based on historical profiling. The plan is built on assumptions informed by past performance to model the future mix requirements.
b. Horizon
At a minimum, the plan covers the horizon of the MPDP and must reflect the lead times to secure additional critical resources. Resource planning decisions are routinely made well in advance of requirements.
c. Resource Deployment
Multi-functional resources are managed to satisfy the requirements of the plan.
d. Resource Optimization
Where there is a conflict between multi-functional resource allocations, issues that cannot be resolved are modeled to enable decisions for optimal allocation.
e. Business Agility
Sufficient flexibility is available in the plan to support business opportunities that were not anticipated in roadmaps.
f. Resource Acquisition
Changes in headcount and critical skills are identified in the plan, and decisions are made to acquire the required resource mix.
Managing Technology and Innovation
15. The Company Understands and Manages Current and Future Technologies Required to Deliver the Product and Portfolio Roadmap.
a. Current Technologies
The company understands and is investing in its technologies that underpin the business.
b. Future Technologies
The concept of the critical mass is established. Where new technology is important to the business but the required capability is not in place, decisions are made to secure the capability.
c. Supply Chain and Technology
The Supply Chain is a potential source of technology and competency. Partnerships are sought to enhance skill and competency to satisfy business requirements, and they are used to drive the technology development process.
16. Ideation, Innovation, and Knowledge Management Provide a Competitive Advantage.
a. Ideation
Sources of ideation extend beyond the boundaries of the organization, drawing from customers, consumers, suppliers, competition, and the marketplace in general. Ideation is a formal and thought-lead process.
b. Innovation
Active programs are in place to convert prioritized ideas into applications that secure a competitive advantage.
c. Knowledge Management
A culture exists to motivate the free flow of ideas and innovations through the organization as individual and team knowledge are accepted as ways to drive competitive advantage. This is enabled through a formal set of Knowledge Management practices.
Behavior and Competencies
17. The Required Behaviors to Optimize Interactions have been Established from the Business Values that Enable a Team-Based Culture and Natural Communication.
a. Rewards and Recognition
A team-based culture has been established, enabling both individual and team activities to be recognized and rewarded to communicate successes.
b. Ownership and Accountability
Employees have a clear understanding and ownership of the Strategic Plan, which enables them to establish teams when deviations from the plan are detected. The use of self-managed teams is encouraged by leadership, who hold the teams accountable through the allocation of required resources.
c. Communication
The communication of information and data is technology enabled and has significantly reduced the need for meetings. Employees and teams naturally share their progress to accelerate learning.
d. Decisiveness
The environment enables sharing of information and data, in real time, which are then used by employees and teams to take action.
18. An Environment Exists That Encourages Individuals and Expert Teams to Accept Empowerment and Take Initiative.
a. Leadership for Business Excellence
Leaders foster an environment that systematically provides the required resources and skills to support the Product and Portfolio Roadmap. Empowered individuals and teams are a natural consequence, providing the knowledge and expertise to achieve business goals.
b. Situational Leadership
Predominant management style has evolved to Leadership increasing the use of delegation and empowerment and enabling different styles of management/leadership to be used. This has eliminated traditional organizational barriers, enabling the successful use of multi-functional teams and concurrency.
c. Knowledge-Based Processes
Knowledge captured in the processes makes them intuitive and self-sustaining.
d. Teams
Team and Process-Based thinking has become a natural way of life; self-directed teams are developing. Teams hold themselves accountable to deliver results on time. This capability enables programs and projects to be successfully managed and delivered.
e. Culture
The inclusive environment and empowerment at all levels ensure shared knowledge, understanding, and application. Decisions are moving more to a consensus basis. Trust has been earned up and down the organization.
19. Competencies are Unique Skills, Talents, and Proficiencies to Ensure Individual, Team, and Organizational Success. Competencies are Developed to Support Current and Future Needs, in Both Development and Delivery.
a. Developing Talent, Skills, and Competencies
The talent, skills, and competencies required to undertake current and future needs of Product and Portfolio Management are understood. This includes competency in optimization of Program Management, Project Management, and Regulatory compliance.
b. Collaboration with the Supply Chain
Collaboration has become the basis to ensure new knowledge is embedded in process designs and that learnings are shared.
c. New Technology Implementation
Development plans are in place for the talent, skills, and competencies required for new technology to be implemented.
d. Portfolio Management
Product Portfolios are managed through internal knowledge of product capabilities, applications, and performance as well as external evaluation of information from the market, competition, and customers.
20. The organization has Evolved to Enable Behaviors, Teamwork, and Decision Rights That Best Support Delivery of the Product and Portfolio Roadmap.
a. Customer Focus
There is a passion for customers' success based on an understanding of their requirements. The organizational structure enables collaboration.
b. Structure
The organization has evolved into a broader, flatter structure, which provides a responsive and agile capability with greatly simplified communication through fewer layers.
c. Promotions and Rewards
The organization values and recognizes gaining skills and taking initiative to increase responsibilities.
d. Roles and Responsibilities
Roles and responsibilities and associated decision rights are regularly redefined to align their scope in response to organization changes.
e. Management of a Virtual Organization
The organization has developed a capability to manage a virtual organization to better respond to new challenges and collaboration.
Performance Measurement
21. A Balanced Hierarchy of Measures That has Targets and Time-Phased Improvement has been Defined by Product and Portfolio Management. These Measures are Critical to Business Excellence, to Drive Competitive Advantage, to the Delivery of the Product and Portfolio Roadmap, and to Creation of the Business Scorecard.
a. Measures Defined and Understood
A balanced suite of measures has been defined, and targets are based on external benchmarking where possible and support achievement of the Product and Portfolio Roadmap. The measures have been communicated to all stakeholders.
b. Reviewed
The key measures are reviewed to align improvement projects to the Product and Portfolio Roadmap and achievement of Critical Success Factors. Key Performance Indicators and targets are changed to maintain visibility and prioritize improvement.
c. Hierarchical Linkage
There is a clear hierarchical link between the suite of key measures for each business process and the Business Scorecard. Once process proficiency has been established, the measures are delegated or redefined, or the targets revised.
d. Competitive Advantage
Key measures and associated Key Performance Indicators are a competitive advantage rather than a goal and drive individual and team-based behaviors.
e. Balance
A reasonable balance of measures exists among process areas. Leading indicators are increasingly used.
f. Evolving
It is recognized that when percentile performance is insufficient to determine improvements, a migration to Six Sigma methodology/statistical performance is required.
22. Process Measures are Valued and Used by the Product and Portfolio Organization to Drive and Demonstrate Delivery of the Roadmaps. Process Measures are Agreed in Advance to Ensure Class a Performance.
a. Suite of Process Measures
There is a suite of measures for ideation, program and project effectiveness, Resource Management, and product development covering the full scope of Product and Portfolio Management.
b. Perfect Project Delivery
Perfect Project Delivery is viewed as a vital measure for Product and Portfolio Management performance. Percentage of projects delivered completely to cost, specification, launch date, and initial volumes, as compared to the business case at the go-to-development gate, is measured and is improving.
c. People Measures/Team-Based Measures
Measures in place recognize the importance of key skills to be developed in support of the Strategic Plan. These measures should capture, for example, the positioning of skill sets versus plan, percentage utilization of critical resources, retention of critical resources, and percentage of the project resourced appropriately for success.
23. Business Performance Measures are Established in Recognition That Process Measurement Alone is Insufficient. Business Performance Measures are Agreed to Ensure Class a Performance and Ensure Value to Stakeholders.
a. Strategic Alignment
Strategic Plan alignment is confirmed through the Critical Success Factors Roadmap.
b. Financial
Financial success is confirmed through plan attainment and is monitored through Integrated Business Planning.
c. Variance to Plan
Variance to plan is understood in both financial and operational performance terms.
d. Product Performance Management
Performance of product and services in the marketplace and with customers is routinely measured and managed.
e. Responsiveness
The importance of Velocity to deliver a real competitive advantage is understood. There is a focus on improving responsiveness to market competitive expectations, demonstrated by an improving trend in time-to-market, time-to-volume, and time-to-profit.