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The second step of portfolio management is to identify selection criteria. This step is one of the most critical steps to the process of selecting what you should do out of everything you could do. When presented with any choice we immediately begin to take into consideration our selection criteria. Even with a simple decision such as which movie I want to watch tonight. I go through a series of selection criteria, what genre do I want? Comedy, Action, Drama? What’s the rating? Can the kids watch it with me? How long is the movie? What actors are in it? Depending on my situational constraints I will use criteria to help me get my desired result. I want a funny movie I can watch with the entire family, with Steve Martin, that’s not a new release, that’s less than 2hrs long because we have to get the kids to bed by 7:30pm, and that I don’t have to return for at least 3 days because I’m leaving early in the morning for a 2 day business trip.

When deciding on selection criteria we have to look at our current situation or constraints and identify criteria that will make our decision fit within those constraints. One key about selection criteria is that they must be orthogonal, meaning independent, non-redundant, and non-overlapping. If they are not orthogonal you are inadvertently giving a criterion extra weighting. For instance, CPU clock rate and Whetstone performance are closely coupled computer parameters–do not use both. Things like, cost, effort, or complexity are typically used as criteria. Any one of these is fine, but if you use two or more you will probably have skewed results. When people do not have a hard cost number they usually estimate cost based on complexity or effort. When they try to estimate effort they typically look at how complex a project/feature/requirement is and then estimate effort. Sometimes the best way to ensure that this isn’t happening is take a set of stakeholders that are making the decisions and ask what they believe each criteria is measured, or how they will base their rankings. Unless clearly defined and given unique metrics that do not overlap these criteria will lead to over weighted selection criteria, that will deliver results not in line with your strategy or business objectives. In the next step of portfolio management we will address Identifying Ranking Metrics for each selection criteria.

DerickWorkman Product Portfolio Management

Making Innovation Work: How to Manage It, Measure It, and Profit from It by Davila, Epstein, Shelton is a great book. Last year I was working with a client that was trying to incorporate the best practices in this book in his organization.  It was an interesting experience, and I learned a lot from it. This is an excellent resource on how to make innovation become part of your organization and culture.

In the beginning of the book it describes the 7 rules of innovation:

1. Exert Strong Leadership on Innovation Direction and Decisions
2. Integrate Innovation into the Business Mentality
3. Match Innovation to Company Strategy
4. Manage the Natural Tension Between Creativity and Value Capture
5. Neutralize Organizational Antibodies
6. Cultivate an Innovation Network Beyond the Organization
7. Create the Right Metrics and Rewards for Innovation

It went through and discussed how to go about implementing and ensuring these rules exist and are followed in your organization. One of the valuable things I got from this book was the discussion on Innovation Strategy and the Innovation Matrix.  It identified 2 major Innovation strategies: Play to Win (PTW) or Play Not to Lose (PNTL). The difference between the two was the different types of innovation that would be targeted from Incremental to Radical. Breaking each new innovation into one of the 4 types that are mentioned in the book makes implementing the strategy much easier. The 4 types are: Incremental, Semi-Radical Business Model Driven, Semi-Radical Technology Driven, and Radical.

Each of the Innovation strategies needs to have a certain mix of each innovation type (portfolio mix). I created a series of dashboards that enabled us to see that mix for each product roadmap and verify that the desired strategy was being implemented. We used a modified Boston Matrix showing Market Share vs. Growth and Revenue for the products in the product portfolio. Based on position in matrix we were able to determine our desired innovation strategy (PTW or PNTL) and based on that we knew our desired innovation type portfolio mix. We implemented the Innovation Matrix that is defined in this book on potential features. Using 6 levers described in the book we were able to identify the innovation type of each potential solution. We also implemented a series of performance scorecards containing a lot of KPIs and metrics identified in this book.

I found the book to be an excellent source for anyone, especially in a management position, who’s trying to become more innovative and create a culture that promotes, measures, and controls innovation, instead of relying upon spontaneous Eurekas. From creating the culture and organization, innovation strategy,  the external innovation network, learning organization, and instilling the proper metrics and rewards, this is a must have reference book. I highly recommend it.

DerickWorkman PM Book Reviews, Product Management

In a recent webinar on the Product Management View, we had a discussion about Roadmapping. There was a lot of discussion about creating a strategic roadmap. In the product management world, typically this isn’t the type of roadmap product managers are responsible for.  A roadmap is often thought of as a timeline of releases or features. It tells me what new features we’re going to add to my product in the next quarter or next few quarters. It’s typically focused on a single product and done be the product manager. These feature roadmaps are important to realizing the strategic roadmap. The strategy of the organization should drive, at least in part, the feature set of each release in the roadmap.

However, the roadmap isn’t just a feature planning tool for an individual product; it can be used by senior management to communicate the strategy and desired direction of the organization to each individual product manager. In the book “Leading Product Development” by Wheelwright and Clark it talks about these roadmaps and the role senior management plays as Product Line Architect. In this role, senior management defines the types of products that will be in the product line, such as breakthrough products or platform products. Take into consideration what the product line looks like to today’s customer, what it should look like in the near future, and the long-term view. They also determine the revenue and growth desired from each type of new product development.

Using a roadmap, senior management can plot out all the new products and their relationships to each other in order to communicate the desired direction of the company and the strategic vision. Having lunch with a VP of product management a few months ago, we discussed this type of roadmap. We plotted out on a timeline the current and future products in the product line and lifecycle of each going forward. We determined how much revenue, market share, growth, etc. we expected from each of the products at different times in the roadmap. This helped us plan out the new product projects to be introduced and products planned for end of life as well.

This type of roadmap, that I refer to as a strategic roadmap does not include feature sets, it is focused only on the types of products or new product projects, when they should be rolled out, and their relationship to each other. When used in this way, the roadmap becomes a key tool for communicating the direction of product development and our overall strategy.

DerickWorkman Product Portfolio Management

          The first step when performing portfolio management is to list the alternatives. When using PPM practices to make decisions we have to first try and identify all of the possible alternatives. The key here is to try to make it so the options are relevant and actually something you’d find plausible. The objective is not to come up with a huge list, unless the list represents actual possible choices. Depending on the decision we’re preparing to make this list may require you to solicit or brainstorm to come up with alternatives. In some cases the list is driven by customer requests, project needs, etc. In this case you will have a list of alternatives already for you, which make up your portfolio.

          A sub step to identifying alternatives is to segment them into sub-portfolios. This allows you to manage the alternatives in a much smaller group and will enable portfolio balancing later on. Sub-portfolios should be based on certain characteristics so that all elements of a sub-portfolio have those characteristics. These sub-portfolios create a hierarchy of aggregation for the entire portfolio. Characteristics for new business opportunities for example might include: investment risk, alignment to core-competencies, fit within existing product line, potential ROI, or market access. I would then create sub-portfolios for my organization that would use these characteristics to segment my portfolio of business opportunities.

          Let’s say I break it into 3 sub-portfolios and use typical ones from PPM called Maintenance & Utilities, Enhancements & Improvements, and Transformational. The Maintenance & Utilities sub-portfolio would include all business opportunities that had a low investment risk and ROI and small market size, but a very high fit with the existing product line and core-competencies. Thresholds would be setup for each characteristic to determine which of the 3 sub-portfolios a business opportunity should belong to. These sub-portfolios make it easier to perform the other 4 steps in portfolio management and to achieve one of the 3 goals of PPM: Balancing the portfolio.

DerickWorkman Product Portfolio Management

Product Portfolio Management (PPM) has often been positioned as an upfront process that is used to select which new product projects should be started. Once that decision is made then it moves into product or project management. I believe Portfolio Management is a horizontal process across the entire innovation value chain. It is not just about selecting the right new product or project upfront.  Portfolio management practices could and should be used throughout the lifecycle of a product. There are many decision points that need to be made throughout the lifecycle, such as analyzing market opportunities and deciding which ones to focus on, and in determining which features to put on the roadmap. Principles from portfolio management such as portfolio balancing and managing the portfolio mix can be used to decrease the total investment risk throughout the product development cycle. Maintaining a certain balance of innovation types in roadmaps and product releases so that you have the desired total risk based on the radical, semi-radical, and incremental innovations that are put into a product release. 

 In the Robert Cooper’s book on product portfolio management, he states the three main goals of portfolio management very well. First is to maximize the value of the entire portfolio of x (products, features, market opportunities, family activities, whatever you’re managing).   The second is to balance conflicting factors in your portfolio such as risk vs. reward, attractiveness vs. ease of implementation, etc. The third is to align the portfolio to strategy (product, corporate, or personal). If you simplify portfolio management it consists of 5 steps:

1.       List Alternatives

2.       Identify Selection Criteria

3.       Identify Ranking Metrics for Alternatives

4.       Weight Selection Criteria

5.       Determine Execution Capability

The first thing to do is make a list and identify all of your options. Once that is done, a set of selection criteria needs to be defined so that the selection is defendable and repeatable. Ranking metrics for each criterion need to be identified so that the options or alternatives can be ranked. The selection criteria need to be weighted based on their relative importance to your organization. Often times these weightings will change and be impacted by the current business driver of your organization. (Ex: increase sustainability, reduce cost, increase revenue, etc.) When this step is completed you have a ranked set of alternatives (opportunities, features, products, etc.) based on weighted selection criteria. The last step is to determine the capability of executing on the alternatives. This looks at resource demand and availability information to help select and sequence preferred selection in context of feasibility. Each one of these steps has best practices and approaches to performing them. In the future Portfolio Management Blog Series I will address each step individually.  

DerickWorkman Product Management, Product Portfolio Management

I find that often one of the issues that bubbles to the surface when dealing with developing new products is an organizational silo view of the customer. Support has a perspective of the customer based on their dealings with them, and so does development and marketing. Typically product managers engage in customer visits to try and gain a more complete picture of the customer. These visits are important for the product manager to see the customer in their own environment and feel the pressures that they have to deal with. Face to face discussion is typically more effective than phone calls, because you can see the emotions and reactions of the customer to your questions and the topics being discussed. Thanks to many best practice teaching organizations, many product managers are doing this today, but where we fall short is dissimenating that information to the the rest of the organization.

This creates the organizational silos, that prevent everyone to have a unified perspective of their customer. Even if they dissimenate the information gathered, can product management really gain a holistic view of their customer on their own? A product manager will be asking questions that they believe are important, and the feedback they are given from the customer will be focused on things they believe a product manager would care about. They probably wouldn’t bring up issues that are extremely detailed that only a developer or design engineer would be able to answer, because they aren’t in the meeting. This means that our customer visits are missing the customer perspective regarding issues that would be important to marketing, support, development, operations, and other organizations involved in the innovation value chain. These organizational silos cause everyone in the organization to see only a specific view of the elephant (customer) from a different perspective, and they all miss the entire elephant.

There’s a great book that I recommend to people, when trying to develop an effective customer visits program called “Customer Visits“. One of the key points in this book is that these visits should be made up of a cross-functional team inorder to address and discuss cross-functional issues that are important to the customer. By involving other organizations, these customer visits begin to foster a holistic perception of what who your customer is, what there needs are, and what type of solution would be most useful to them. When the product is being designed or developed, the engineer has an idea of the customer and can accurately imagine the use cases and scenarios that have been described. This complete view of the customer will enable each organization involved in the development of the product to more effectively execute on the plan and help the product manager to realize their product strategy.

The golden question today is, how do we do this in a downturn economy where everyone is cutting costs? Possible suggestions are to involve the entire cross-functional team in developing the discussion guide/topics and then have one person perform the visit. To avoid the silo, you can have a different organization responsible for each visit, so all of them are engaged.

I’d like to know some other ways people have come up with to gather this market research without spending all of their resources to do so.

DerickWorkman Product Management

What is the purpose of Product Management? Why does an organization need a product manager? I believe Product Management is all about executing strategy. Each product should have a strategy that is aligned to corporate strategy. Depending on what level you are at in the organization, you may be responsible for defining product strategy for individual products or for a product portfolio. For a lot of Product Managers the product strategy is already defined and they are responsible for executing on that strategy. So when people ask what is product management or what are PMs responsible for, I have to come back to executing the product strategy.

Everything we do as Product Managers should by tied to product strategy. We do win/loss analysis to verify our competitive strategy is working. We do competitive analysis to identify market gaps and differentiate in order to achieve a higher level product strategy, such as become market leaders in a specific segment. We develop roadmaps to communicate the strategic milestones we need to deliver in order to achieve our product strategy. We define/identify market problems in order to create business opportunities aligned to strategy…

So when asked how do we make Product Management success measurable and more strategic, I believe the answer is to develop metrics that keep the focus on executing product strategy and maintaining alignment to corporate strategy. If we are performing a product management task, we should ask how does this contribute, affect, or impact the product strategy. If we can’t answer this question we shouldn’t be performing that task. It may be a multitier relationship, but it must tie back to the strategy.  Otherwise product managers will get lost in the millions of tasks that don’t help them achieve their goals.

DerickWorkman Product Management

I recently saw a post called No Winloss Blame on the On Product Management blog where they posted results of a poll discussing why product managers don’t perform win/loss analysis. Lot’s of the reasons had to do with sales interference and not having any time. The one that jumped out at me was that many product managers don’t know how to perform win/loss analysis.

I thought I’d share my experience on the topic and some good resources I’ve found in defining and performing a good win/loss analysis. In an earlier post I did a book review on Business and Competitive Analysis. There is a section that gives a great starting point for win/loss analysis processes. I found some good sample questionaires from Pragmatic Marketing and also an article from Ellen Naylor. My friend and colleague Stewart recently had a post called Your Strategic Friend, Mrs. Winloss Analysis that gives some great insight on pointers on win/loss analysis.

The key I’ve found in working with product management teams, is trying to use it as a form of market research as opposed to a sales improvement tool. We don’t have enough time to go over every win/loss opportunity that sales has.

We need to define a target segment of opportunities to talk with based on our information needs in product management. Ex: Perhaps we have a new offering in a specific industry and want to know if our go-to-market strategy is working.

Define specific goals and information that we’re trying to validate or find out.

Get some background on accounts selected before talking with them. This could help you identify areas that you may want to dig deeper if possible.

I believe one of the biggest problems we have is that we don’t explain the value of win/loss analysis to others in or organization, inorder to get the support we need. I will try to sum up what I think are the three value propositions of win/loss analysis:

1) Be able to define more competitive products by understanding the product selection criteria of the buyer.
2) Create and validate competitive “Go to Market” strategies
3) Identify market gaps and increase product differentiation

Strategy Execution: Win/loss analysis is one of the tools that product managers can use to validate how well their product strategy is being executed, and if it is an effective strategy. Is the competitive strategy working with regards to positioning, product & service offerings, marketing, and sales and distribution?

DerickWorkman Product Management

I went to lunch with a friend of mine last week at the great BBQ joint Rudy’s. (Good food by the pound) We were discussing a current issue he’s having trying to manage a portfolio of many products by himself. All of the products are in different stages in the product lifecycle. We discussed the strategic direction he wanted to be able to take the portfolio. We then discussed how he wanted to manage and communicate these strategies. 

In brainstorming we defined a roadmap view that would be helpful showing this information in a graphical format. This roadmap would identify the types of products into different categories: Maintenance & Utilities, Enhancements & Improvements, and Breakthrough or Transformational products. We then discussed using similar techniques at the release planning level.

Based on the roadmap we’d know what type of product we were trying to launch. We would categorize features or requirements into each type: maintenance & utility, enhancements & improvements, and transformational. By setting target percentages for each of these categories, we can ensure that the product release is in line with the strategy.

This allowed us to tie the roadmap strategy down to the requirements and features being worked on in a release. I’d be interested to know how others have gone about ensuring strategy execution in release planning.

It was a great conversation with lots of possibilities and an excellent meal.

DerickWorkman Product Management, Product Portfolio Management

I was recently discussing competitive analysis and business methods with a client and I recommended the book, Business and Competitive Analysis by Craig Fleisher and Babette Bensoussan. This book helps to understand and identify better methods for competitive and business analysis. I personally found the book extremely useful in not just understanding these different methods, but also in helping me determine which methods would be applicable and useful to my organization.

It gives a brief description of the method, background and expected benefits, and then it discusses the pros and cons of the method. There are over 29 different methods in this book. I found it very useful for defining a win/loss method. It goes through a step by step approach on how to perform win/loss analysis and even gives a case study about its application.

 It was a good starting point, but it was not meant to contain everything there is to know about each method. For instance, in the Win/Loss analysis method, it tells you to develop a questionnaire and even gives some suggestions on categories, but doesn’t give you examples of questions. It turns out there is a science to the number of questions and the types of questions. These are based on the objectives of the win/loss analysis. Because of the breadth of the number of methods covered in this book, it could not go into very detailed levels of explanation of the different methods. I’m sure whole books could be written about each method discussed.

 It acts as an excellent reference guide for someone interested in doing competitive and business analysis. And will point you in the right direction for getting started. I would recommend this book to product marketing and management professionals and anyone else involved in these types of analysis.

DerickWorkman PM Book Reviews, Product Management