Portfolio Management in Expansion:Defining and Competing in New Product Markets

Brad Barbera, NPDPDirector, New Product Development and InnovationPartyLite, Inc.

Please Note: The slides for this presentation are primarily graphical in nature. To fully understand the presentation, it is best to download it, open it up in PowerPoint, and view it in the "Notes View" format. Some speaker's notes are included there, explaining what was discussed in each slide.

Four Steps to Discuss Today

1. Research

2. Strategy

3. Portfolio Management

4. Execution

1. Research

“Look well into thyself; there is a source of strength which will always spring up if thou wilt always look there.”

~Marcus Aurelius

Research – Internal

How do you currently define yourself?

How do your customers define you?

How do your competitors define you?

How do you want to be defined?

How do your business partners define you?

Research - External

Potential Entrants

Buyers/Customers

Substitutes

Suppliers

Bargaining Power of Suppliers

Bargaining Power of Buyers

IndustryCompetitors

Rivalry amongExisting Firms

Threat of SubstituteProduct or Service

Threat of SubstituteNew Entrants

Porter’sFive Forces

ModelAnalytical

Tool

Research - External

Chosen method of achieving stated objectives, based on situational assessment and forecast.

Chosen method of achieving stated objectives, based on situational assessment and forecast.

Chosen method of achieving stated objectives, based on situational assessment and forecast.

2. Strategy

Definition of Strategy

Chosen method of achieving stated objectives, based on situational assessment and forecast.

Chosen method of achieving stated objectives, based on situational assessment and forecast.

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”

~Sun Tzu

Common Objective:Producing High Value

C

BxUV

UC

BV

Potential Entrants

Buyers/Customers

Substitutes

Suppliers

Bargaining Power of Suppliers

Bargaining Power of Buyers

IndustryCompetitors

Rivalry amongExisting Firms

Threat of SubstituteProduct or Service

Threat of SubstituteNew Entrants

Porter’sFive Forces

ModelAnalytical

Tool

Product Development Strategy

Fit. Value. Priority.

Expansion Strategy – Example

Internal Assessment

External Assessment

3. Portfolio Management

Top-Down

Bottom-Up

“Wisdom is your perspective on life, your sense of balance, your understanding of how the various parts and principles apply and relate to each other. It embraces judgment, discernment, comprehension. It is a gestalt or oneness, an integrated wholeness.”

~Steven Covey

Top-Down Approach to Project Identification

Corporate Strategy Directs Innovation

QuantitativeResearch

QualitativeResearch

Leverage Your Business Partners!

Top-Down Approach to Project Identification

Ideation Techniques

Problem Statement: How to... Idea 1 Idea 2 Idea 3

1 2 3 4 5 6

“Brainwriting” “Role Playing”

Bottom-Up Approach to Project Identification

“Chance favors the prepared mind.”~Louis Pasteur

Bottom-Up Approach to Project Identification

Ideation Techniques for Bottom-Up Approach

“Suggestion Box” “Shopping”

Idea Screening and Selection – Delphi/Scorecard Hybrid

Innovation Project Scoring Sheet

For determining resource allocation against innovation projects

Team Rating (1-10) Weight PointsStrategic Alignment 20%Does the project fit with product development strategy? 0Is the project an important component of the product development strategy? 0

Competitive Advantage 20%Does the product offer unique and perceivable benefits to the end user? 0Does the product meet the needs of the end user better than other products? 0Does the end user perceive this product as a good value for the price paid? 0Is the product performance/benefit "ownable" (patent, trademark, etc.)? 0

Market Attractiveness 20%What are the volume projections? 0What are the production costs and profit margins? 0How challenging is the competitive environment for this product? 0Is the market for this product growing? 0

Core Competency Leverage 20%Can the product be efficiently distributed? 0Does the product lend itself to the skills of our sales force? 0Can the product be sourced/manufactured efficiently? 0Is there a strong technical understanding of the product and its manufacture? 0

Investment Analysis 20%What is the probability of technical product development success? 0What is the investment required for product development? 0What is the probability of commercial success after launch? 0What is the investment required for commercial success? 0Does the expected return justify the required investment? 0

Total 100% 0

Idea RetentionInnovation Idea Library

Proposed Project Portfolio Balancing

Short Term(Commercialization)

Long Term(Discovery)

Lower Probability of Success

Higher Probability of Success

Legend:Size of Circle Indicates Relative Economic ValueColor of Circle indicates location of research work

•Blue = Location 1•Green = Location 2•Orange = Location 3•Red = Location 4•Purple = Location 5

Medium Term(Development)

Proposed Project Portfolio Balancing

Short Term(Commercialization)

Long Term(Discovery)

Lower Probability of Success

Higher Probability of Success

Legend:Size of Circle Indicates Relative Economic ValueColor of Circle indicates location of research work

•Blue = Location 1•Green = Location 2•Orange = Location 3•Red = Location 4•Purple = Location 5

Medium Term(Development)

Proposed Project Portfolio Balancing

I ER

Proposed Project Portfolio Balancing

I E R

IE

R

VS.

4. Execution

This!This

“However beautiful the strategy, you should occasionally look at the results.”

~Winston Churchill

4. Execution

ObjectiveIncluding time and success metrics

Weight

   %

Benefit Specific Link to Strategy

  

InterdependenciesConscious cross-functional coordination

  

Objectives & Accomplishments Worksheet

Employee Name: __________________________________________