Module: Development

www.aipmm.com

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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)

Module: Development

www.aipmm.com

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