Before looking at product portfolio management software and highlighting some key best practices, it is helpful to take a step back and look at the concept of product portfolio management, highlight some examples, and look at the differences between project management, program management, and portfolio management.
What is Product Portfolio Management?
Product portfolio management is a practice of managing all of the products within an organization’s product portfolio. This includes assessing each respective product’s performance, opportunities and risks, while aligning the overall portfolio with shifting organizational priorities and strategies.
Effective product portfolio management is more than a key competitive advantage — it is vital for long-term success. As highlighted in the journal Foundations of Management: “The survival of any industrial organization depends on whether producing goods or services hinge on how innovative they have become in managing their product portfolio to craft new products that changes with the ever-changing tastes and needs of their customers.”
Product Portfolio Management Examples
There are numerous examples of product portfolio management. Some of the most well-known are:
- Johnson & Johnson, whose portfolio spans pharmaceuticals, medical devices and consumer health products.
- Coca Cola, whose portfolio spans several beverages across multiple categories, including soft drinks, waters, juice drinks, dairy products, sports drinks, and iced teas.
- Nestle, whose portfolio spans beverages, cereals, frozen foods, healthcare nutrition, instant foods, pet care, frozen foods, instant foods, seasonings, yogurts, and baked goods.
Differences Between Project Management, Program Management and Portfolio Management
Project management, program management and portfolio management share some fundamental similarities — most notably that they must be supported by the right resources (both physical and human). However, there are some key differences as well. According to the Project Management Institute (PMI):
- Project management is a temporary effort undertaken to build a unique product, service, or result.
- Program management is a collection of associated projects that are managed in a coordinated way, in order to generate benefits or results that are not available by managing them individually (i.e. as separate standalone projects).
- Portfolio management is an approach to bridging the gap between implementation and strategy, and balance various change initiatives with the potential ROI. The goal is to establish a cohesive strategic vision and plan that supports transformational programs, and supports better decision-making across work, resources and technologies.
It is important to keep in mind that project management, program management, and portfolio management all must be in alignment with an organization’s strategic goals and priorities.
What is Product Portfolio Management Software?
Organizations use sophisticated cloud-based product portfolio management software to manage and accelerate the development process, and ultimately deliver innovative, profitable, and differentiated products. Key benefits of class-leading solutions include:
- Enhancing the alignment between product portfolios and organizational strategies and priorities.
- Enabling effective communication and collaboration across internal teams and external stakeholders, including partner entities and supply chains.
- Capturing, assessing and prioritizing market research and other input to boost brand loyalty, and foster a culture of innovation.
- Streamlining the analysis of products and projects with respect to risk, complexity, capacity, financial impact, commercialization, and technical viability.
- Generate visibility into the portfolio mix and balance, in order to see what changes are necessary to align with risk tolerance, and to assess the maturity level of a product in the innovation lifecycle.
- Assessing various hypothetical scenarios to determine the potential advantages and drawbacks of shifting business conditions or other changes.
- Accelerating time-to-market through automation using various non-gated or gated (e.g. Agile) process methodologies.
- Leveraging out-of-the-box reports, key performance indicators (KPIs), and customizable workflows to make smarter, faster decisions.
Product Portfolio Management Best Practices
There is no standard formula for achieving product portfolio management excellence and success. However, there are some fundamental best practices that can help guide organizations as they establish and evolve their product portfolio management infrastructure and strategy:
- Use sophisticated product portfolio management software (as highlighted above) to effectively connect strategy with execution. Spreadsheets and emails are not designed to govern key processes and functions such as prioritizing the highest-value products, optimizing resource allocation, and balancing the overall product mix.
- Remain focused on all aspects of product portfolio management. This is especially important for managing resource allocation and anticipating resource capacity.
- Empower relevant stakeholders and decision-makers with immediate access to reliable, up-to-date data.
- Look for ways to implement processes that are both repeatable and measurable. Automation is key to accelerate the process, eliminate human input errors, and free up team members to focus on high-value tasks vs. tedious manual data entry.
- Be willing to adapt and pivot based on changing marketplace demands, new competition, increases or decreases in supply chain costs, and a variety of other factors. The right product portfolio management tools and software will make an enormous difference between whether an organization embraces uncertainty — or fears it.
The Final Word
As pointed out by McKinsey: “Managing a product portfolio is tricky at the best of times. There’s a constant tension between product development and its desire to create new things, operations and its focus on costs and complexities, and sales with its need to cater to customer needs in expanding the top line.”
Effective and efficient product portfolio management — which is driven by the right product portfolio management software and supporting technological infrastructure — helps simplify, standardize and navigate this complexity. Ultimately, this achieves what matters most to everyone in the organization, regardless of their particular role or function: delivering to market the most innovative and profitable products, on time and on budget.