From Frazzled to Focused: Managing the Product Portfolio
As we polished off the last of the Girl Scout cookies, my daughter said, “When can I be a Girl Scout?” I simply answered, “Are you ready to give up gymnastics or violin lessons?” We need to make decisions about which to keep and which to let go of before we decide what to add. Managing our corporate product portfolio is no different. Here are five steps to help you move away from frazzled and into focused.
- Schedule time to evaluate. Top leaders schedule time to work on the business, not in it. One item that should to be done prior to evaluating your product line is to evaluate your corporate strategy. Review the mission statement to determine if it is still relevant and reflective of the business. Once you know that your corporate strategy is still on track, evaluate the product offerings that you are relying on to get you there. Then put time on the calendar for a full portfolio review.
- Understand your current product line-up. Break your products down into whatever categories make sense to your business — condition, target consumer, etc. Create a scorecard that allows each product to be ranked on: finances, presence of intellectual property, company strategic fit, estimated market share trends, and category growth. A five-year sales overview will give a sense of where a product might be in its life cycle.
- Proactively kill products. Companies routinely sell products that no longer fit the company strategy, no longer fill consumer’s desires, or simply aren’t profitable. Nobody likes to discontinue products. Yet, when management proactively discontinues poorly performing products, it frees up resources to work on new products and technologies. The key is in understanding why the product is failing expectations: either implement effective change or drop it—quickly.
- Identify gaps. If you have taken a hard look at your products, the market, and your competitors, it should become obvious what to kill, and where the gaps exist. What % of sales come from existing products vs. new ones? We like to see at least 30% of sales coming from new products. Once the gaps are identified, the team can begin developing concepts that will give a higher profit, take advantage of growing market trends, or begin to actively develop intellectual property that can meet consumer desires in a new way.
- Re-allocate resources. The slowest way to achieve corporate goals is to spread resources too thin. When a scientist or engineer has 10 different projects all deemed priority, milestones are slow to reach. When marketing funds are spread across 15 single products instead of a category, no one product is going to get enough attention. When the R&D budget doesn’t allow for testing concepts and benchtop prototypes before going to market, products are often launched prematurely, forcing additional revisions later.
Typically, companies keep adding products every year, and rarely take the time to evaluate the full portfolio of products and make the tough decisions. Portfolio management is really about resource allocation – for personnel and budgets. It’s actually not much different from prioritizing the activities we, or our children, particpate in. Out with the old, in with the new, staying intentional and focused, rather than frazzled.
View the official article:
5 Steps to take you from Frazzled to Focused