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Example Project: Strategic Project Selection and Accelerated Development by John Thornton CleanFuture
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Example Project: Strategic Project Selection and Accelerated Development by John Thornton CleanFuture

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Strategic Project Selection and Accelerated Development - a summary presentation for ACME Corporation product development process improvement project.

Strategic Project Selection and Accelerated Development - a summary presentation for ACME Corporation product development process improvement project.

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  • 9/25/98
  • 9/25/98 New product development is vital to the success and future prosperity of the modern firm. Driven by rapidly advancing technologies, globalization of markets, and increasing competition at home and abroad, effective new product develop is emerging as the major corporate strategic initiation of the decade ahead. Increasing need for successful significant winning new products. The purpose of this project is to develop a methodology for ensuring strategic alignment between corporate strategy and the product development pipeline.
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  • 9/25/98 Q1 - A1 Resource allocation to achieve corporate new product objectives. Much like stock market portfolio managers, those senior executives who mange to optimize their R&D investments - to define the right new product strategy for the firm, select the winning new product projects, and achieve the ideal balance of new projects, - will win in the long run. A2 - That is, which new product projects from the many opportunities the corporation faces will it fund? And which ones will receive top priority and be accelerated to market? It is also about business strategy , for today’s new product projects decide tomorrow's product/market profile of the firm. A3 - Finally, it about balance; about the optimal investment mix between risk versus return, maintenance vs. growth and short-term vs. long-term new product projects. Short-term, moderate results vs. long-term high opportunity (may or may not be high risk) Product line extensions vs. new products (innovations), new markets, new niches
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  • 9/25/98 Portfolio management is a dynamic decision process , whereby a business’s list of active new product (and R&D) projects is constantly updated and revised . In this process, new projects are evaluated, selected, and prioritized : existing projects may be accelerated, killed, or deprioritized; and resources are allocated and reallocated to the active projects. The portfolio decision process is characterized by uncertain and changing information, dynamic opportunities, multiple goals and strategic considerations, interdependence among projects, and multiple decision-makers and locations. The portfolio decision process encompasses or overlaps a number of decision-making processes within the business, including periodic reviews of the total portfolio against each other (looking at the entire set of projects, and comparing all projects against each other); making Go/Kill decisions on individual projects on an ongoing basis; and developing a new product strategy for the business, complete with strategic resource allocation decisions. p3
  • 9/25/98 First, a successful new product effort is fundamental to corporate success . Recognition of the need for new products, especially the right new products . This translates into portfolio management: the ability to select today’s new projects that will become tomorrow’s new product winners. Second, new product development is the manifestation of the business’s strategy . That is, one important way a company operationalizes strategy is through the new products that it develops. If its new product initiatives are wrong, then the company fails at implementing its business strategy. The new product choices it makes today define business tomorrow. Third, portfolio management is about resource allocation . In a business world preoccupied with doing more with less, technology and marketing resources are simply too scarce to allocate to the wrong projects. The consequences of poor portfolio management are evident: the firm squanders its resources on the wrong projects. As a result, the best projects may be starved. 107-108
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  • 9/25/98 Risk vs. return new markets vs. maintenance long-term vs. short-term strategic vs. tactical Analogy of an investment fund fund manager seeks balance in terms of high-risk vs.. blue chip stocks, domestic versus foreign investments and balance across industries in order to arrive at an optimally diversified investment portfolio. One way of managing risk is through diversity of investments
  • 9/25/98 Portfolio management - the selection and prioritization of specific projects - must be very closely tied to business’s strategy. Strategic alignment has two meanings, with subtle but important differences: First, portfolio management must ensure strategic fit - that all projects are on-strategy and consistent with the strategic direction of the business. For example, senior management defines the arenas of focus or area of strategic thrust - the product, market, and technology areas on which to focus - and then selects projects only within these boundaries. Second, and most important, portfolio management must allocate spending across projects so as to mirror the strategy of the business. For example, if the business’s strategy is very much a growth one, then the majority of spending should be on business and market development projects, rather than on “maintain the business” projects. Or if management has defined certain areas of strategic thrust - for example a certain market or technology - then a heavy percentage of spending ought to be on projects in these areas. Business Planning pyramid, relationship to Top down / bottom-up approach
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Transcript

  • 1. Project Selection and Accelerated Development A project for ACME Corporation
  • 2. New Product Development: How to select the best project(s) ?
  • 3. Agenda
    • Introduction
    • Scope & Overview
    • Framework
      • What
      • Why
      • How
  • 4. Scope
    • Develop and implement a process to rate and rank multiple New Product Development projects.
    • Create “what-if” models that allow evaluation of cost/benefits of accelerated product development.
  • 5.
    • Process to look at multiple business/project opportunities
    • Decision support tool for entire portfolio
      • Process and Product
        • Create context for inquiry and dialogue
    • Quantitative, fact-based methodology
    • Modular/flexible approach
    • Utilize and integrate/extend existing systems, where appropriate
      • i.e., Business Case, Resource tracking, etc.
    Overview
  • 6. Framework
    • What
    • Why
    • How
    • When
  • 7. Product Strategy Issues
    • How should corporations invest their R&D and new product resources?
    • Which business development opportunities should be pursued?
    • How should resource allocation decisions be made?
    • How should balance be achieved?
    • How should strategic alignment be achieved?
  • 8. Key Concept Portfolio Management
  • 9. What is Portfolio Management?
    • Definition
      • Dynamic decision process
      • Project list is constantly updated and revised
      • New projects evaluated, selected and prioritized
      • Resources allocated
      • Considers multiple dimensions
      • Portfolio decision process encompasses or overlaps many decision-making processes within the business
        • Source: Portfolio Management for New Products , Robert G. Cooper, et al.
  • 10. Why is Portfolio Management important?
    • Fundamental to corporate success
    • Manifestation of strategy
    • Allocation of scarce resources
  • 11. Goals
    • Maximize the value of the portfolio against objectives
    • Seek the right balance or mix of projects
    • Provide linkage to business strategy
  • 12.
    • Prime goal is to maximize the value of the portfolio against objectives
      • Profitability
      • Strategic Importance
      • Value to the customer
    Maximize Value
  • 13. Seeking Balance
    • Balanced set of development projects in terms of key parameters
  • 14. Linkage to Strategy
    • Portfolio management must be closely tied to the business’s strategy
      • Strategic fit
      • Allocate spending to mirror strategy
  • 15. Top-Down
  • 16. Top-Down,
  • 17. Top-Down, Bottom-up Approach
  • 18. Top-Down, Bottom-up Approach
  • 19. Gaps in Portfolio Revenue & Investment A B C Market Type Project Type New Product Development Optimization Innovation & Technology
  • 20. Process Overview: Portfolio Management Analyze & Evaluate
  • 21. Key Concept Four Key Objectives
    • Development Speed (time-to-market)
    • Product Cost
    • Product Performance (conformance to market requirements)
    • Expense (development program expense)
  • 22. Tradeoffs among objectives
  • 23. Portfolio Management: Where and How used?
    • Portfolio reviews
      • Front-end project selection
    • Project reviews
      • Phase-gate or stage-gate
        • Pre-defined project review points
          • Compare actual vs. plan
      • Post-mortem project reviews
  • 24. Model Objectives
    • Accuracy
    • Flexibility
    • Simplicity
  • 25. Conclusions
  • 26. No Magic Solution
    • No magic answer or “black box model”
    • Creating a process & decision support tool/model
    • Hybrid approach; customized for ACME
      • Combination, considering issues of:
        • Balancing the portfolio
        • Maximizing value against certain objectives
        • Linkage to strategy
  • 27. Questions ?