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Module: Development
www.aipmm.com
SIL
A
Pro
ject
Id
en
tifica
tion
1.
Con
ceiv
e
2.
Pla
n
3.
Develo
p
4.
Qu
alif
y
5.
Lau
nch
Managed
Front
End
Innovation
Bu
sin
ess
Case
Develo
pm
en
t
New
Product
Development
Develop
Module: Development
www.aipmm.com
VALUE OF PORTFOLIO MANAGEMENT
• Collaborative decision making by senior leadership on the best projects to pursue• Consistent decision processes and tools• Continued link between strategy and execution• Increased profitability (ROI) of new products• Decrease time to market
(Cooper, 2011)
Module: Development
www.aipmm.com
GATE AND DECISION
Go, No, Send Back, Refer, Park
Gate Actions
• Review all information, ask questions, identify gaps, etc.
• Review show stoppers.• Determine if additional information is needed.• Evaluate information against Gate criteria using
scorecard or checklist.• Make Decision: Go, No, Send Back, Refer, Park• Communicate decision to stakeholders
(AIPMM Glossary, 2011)
Module: Development
www.aipmm.com
EXAMPLE: PHASE 3 GATE MEETING CHECKLIST
(Product Innovation Educators, 2012)
Module: Development
www.aipmm.com
DEFINITION OF PORTFOLIO MANAGEMENT• A set of activities that includes portfolio
assessment, resource management, and portfolio review
• A dynamic decision process for the evaluation, selection, prioritization, and resource management of new product projects
(AIPMM, 2011; Cooper, Edgett, Kleinschmidt, 2001; Marjorie, 2004)
Module: Development
www.aipmm.com
DEFINITION OF PORTFOLIO MANAGEMENT• Resource allocation + Doing the right projects
• Three keys:– Led by senior management– Guided by strategy– Best use of resources
(AIPMM, 2011; Cooper, Edgett, Kleinschmidt, 2001; Marjorie, 2004)
Module: Development
www.aipmm.com
OBJECTIVES OF PORTFOLIO MANAGEMENT
• Maximize the value of the portfolio – investment in the future, utilize resources well, decrease time to market, etc.
• Developing a balance of projects (balanced portfolio) – platform vs breakthrough, risk vs reward, etc.
• Assuring that the projects are consistent with the corporate and business strategy
Module: Development
www.aipmm.com
PORTFOLIO MANAGEMENTFUNDED /NON-FUNDED PROJECTS
Project Fit to Strateg
y
Customer
Advantage
Projected ROI in first year
Reward in 5 years
Technical & Core
Competencies
Resources
Required (next 6 months)
Score
Fund?
Green 9 10 5M (8) 65M (9) 9 10 45 Yes
Blue 8 9 7.8M (9) 75M (10) 8 8 44 Yes
Red 10 9 (6M)8 (50M)8 9 9 44 Yes
Yellow 8 8 7M(8) (55M)8 7 8 39 No
White 8 7 5M(8) 55M(8) 8 5 39 No
Gold 9 7 0 (5) 68M(9) 8 5 38 No
(PIE, 2011)
Module: Development
www.aipmm.com
Adapted from Cooper, Edgett & Kleinschmidt (2001). Portfolio Management. Available from http://www.stage-gate.com/knowledge.php.
Bubble Chart for Portfolio Assessment
Module: Development
www.aipmm.com
PORTFOLIO MANAGEMENT – APPROACHES
Top-Down Approach (aka –strategic buckets)
– Vision and strategy developed first– Management decides where new product resources will be spent– Buckets with ideal spending are defined
• EXAMPLE: 20% breakthrough, 50% platform, 20% derivative, 10% support • EXAMPLE: 60% Business A, 30% Business B, 10% Business C
– Projects are prioritized within buckets– New product spending reflects business strategy
(Cooper, Edgett, Kleinschmidt, 2001)
Module: Development
www.aipmm.com
PORTFOLIO MANAGEMENT – APPROACHES
Bottom-Up Approach– Strategy criteria built into the selection criteria used to
judge each project – Results in a single portfolio unlike the top down
approach– Assures all projects are on strategy– May not result in desired percentage of spending to
particular types of projects
(Cooper, Edgett, Kleinschmidt, 2001)