Condesign strategic project planning


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Condesign strategic project planning

  1. 1. Strategic Product Planning & Portfolio Management Projektverktygsdagen 27/5 2010 Torbjörn Grahn, Condesign AB
  2. 2. Agenda• Condesign & Planisware, who we are…• From the Tunnel to the Funnel• The life without Portfolio Management• The life with Portfolio Management• What do the leaders do? The three main goals  Maximation of Value  Balance  Strategic Alignment• Summary
  3. 3. Information Knowledge since 1984• Founded in Göteborg 1984 VÄSTERÅS• 200 employees KARLSTAD KARLSKOGA STOCKHOLM• Offices at 9 different sites• Business Areas: - Engineering - Communication - IT/Operations Support GÖTEBORG LINKÖPING JÖNKÖPING LJUNGBY MALMÖ
  4. 4. Condesign is a partnerPlanisware is a global leadning supplier of PPM (Project Portfolio Management) systems since 1996Planisware 5 is a system for PPM (Project Portfolio Management) that supports the organizations complete project scope: from the operational level to the strategic level.Focus on NPDI (New Product Development and Innovation) Stage-Gate-certified – Best Practice for NPDI is integrated in the toolPlanisware’s PPM-system is used by more than 200 organizations worldwide with +200 000 users in market segments such as: Pharma, Energy, IT, Aerospace & Defence, Automotive A few examples:
  5. 5. Strategic Product Planning & Portfolio Management Which projects do we run ? NOT
  6. 6. From the Project Tunnel …
  7. 7. … to the Project Funnel !
  8. 8. Strategic project planning
  9. 9. Attrition ratio for New Product Projects
  10. 10. Everyday life withoutPortfolio Management
  11. 11. Symptom I
  12. 12. Symptom II
  13. 13. Symptom III
  14. 14. Symptom IV
  15. 15. General symptom – ”Acoustic prioritization”
  16. 16. Everyday life withPortfolio Management
  17. 17. The vision• Short Time to Market• High efficiency – low failure rates• Many Project Winners• Within the Business Strategy
  18. 18. Portfolio Management – The Challenges• R&D product portfolios are compared and benchmarked with existing products  Uncertain estimations are compared with real data• The decision process environment is dynamic  The status and prospect for projects are ever-changing• Projects in the portfolio are at different stages of completion  From the early stages to commercialization stage• Resources (money, people and time) is limited and hard to transfer seamlessly  Give priority to one project means taking resources from another project• Projects are interconnected  Outcomes from one project is essential for another project• Portfolio Management is critically important for the business  New products are the leading edge of business strategy
  19. 19. What the Leaders Do –Three Goals in Portfolio Management1. Maximation of Value 2. Balance 3. Strategic Aligment
  20. 20. Goal I - Maximizing the Value of the Portfolio• Main objective – the Portfolio should contain good projects that are:  Profitable  Successful  Attractive• Valuation methods: 1. NPV – Net Present Value 2. ECV – Expected Commercial Value 3. PI – Productivity Index Financial methods 4. OPT – Options Pricing Theory 5. Dynamic Rank-Order List 6. Scoring Model(s)
  21. 21. Goal I - Maximizing the Value of the PortfolioFinancial Methods – Practical Experiences• Major Conclusions:  Often error prone – insufficient and/or erroneous information  Uncertainties in early approximations  Tend to favorize short, low risk projects• Improvement suggestions:  Do consider financial data in go/kill-decisions – but not solely  Strive to improve quality of information  Track the estimates – do follow-ups, review the results
  22. 22. Goal I - Maximizing the Value of the PortfolioScoring Method – an example
  23. 23. Goal I - Maximizing the Value of the PortfolioScoring Methods – Practical Experiences• Positive • Negative  Captures multiple goals  Imaginary precision  Reduces complexity  Halo effects – high scores on similar criterions  Subjects each project  Tends to favorize large projects  Forces deeper considerations  Identifies strengths and weaknesses Which Scoring Model ? ”If You can explain success - then You can predict success!” Imaginary Precision ”They´re trying to measure a soft banana with a micrometer!”
  24. 24. Goal I - Maximizing the Value of the Portfolio• Valuation methods - financial & scoring  Both methods have their strength and weaknesses • Find a set that fits the organization and its goals – considering the pros and cons • Iterate better precision over time  Both methods fail to • Ensure to keep the portfolio balanced (Goal II) • Ensure to keep the portfolio strategically aligned (Goal III)
  25. 25. Goal II – Acheiving a Balanced Portfolio• Main objective – find a healthy Balance: • Long-term projects versus short, fast ones • High-risk long shots versus lower-risk sure bets • Between various markets • Different technologies • Different project types (new products, improvements, cost reductions, R&D)• Secondary objective – Manage risk and rewards… a multidimensional task …
  26. 26. Goal II – Acheiving a Balanced PortfolioBubble diagrams
  27. 27. Goal II – Acheiving a Balanced PortfolioBubble diagrams - findings• Criticisms:  Information overload – maps, maps and maps  Information display – not decision models  What do they mean, how should they be used ?  What is the ”right balance” ?• Features:  Handles multi-dimensional tasks  Input for maximizing the portfolio value against goals (Goal I)  Effective tool for monitoring that the portfolio is aligned with strategy (Goal III)
  28. 28. Goal III: Build Strategy into the Portfolio• Main objectives:  All active projects are aligned with the business strategy  Alla active projects contribute to achieving the goals and objectives set out in the strategy  Resource allocations – across business areas, markets, and project types – truly reflect the strategic direction of the business• Approaches 1. Top-Down • Product Roadmap • Strategic Buckets 2. Bottom-Up • Idea management 3. Top-Down, Bottom-Up • Combines both above
  29. 29. Goal III: Build Strategy into the PortfolioProduct & Technology Roadmapping
  30. 30. Goal III: Build Strategy into the PortfolioStrategic Buckets
  31. 31. The Three Goals in Portfolio Management - Repetition1. Maximation of Value 2. Balance 3. Strategic Aligment
  32. 32. Conclusions and Advise on PortfolioManagement Methods1. Portfolio Management Methods works !2. Not one Right Valuation Method – Try a hybrid approach3. Don´t over-rely on Financial Methods4. Look more into Strategic Approaches5. Consider a Scoring Model6. Bubble Diagrams are a Must7. Just Do It ! – Anything is better than nothing
  33. 33. The Business Case for PPM
  34. 34. The factors that determine the ROI1. Benefits: How will your company benefit from PPM tools?2. Costs: How will your company pay, both in hard costs and resources, for PPM tools?3. Risks: How do uncertainties change the total impact of PPM tools on your business?
  35. 35. The Benefits• Reduced project failures• Reduced project cost overruns• Reduced project throughput times• Reduction in low-value projects• Reduction in administrative activity time
  36. 36. The Costs• Software• Hardware• Implementation and Roll-Out• Support and Maintenance• Enhancements & Application Management
  37. 37. The Risks• Adoption  Risk for low value for implementations that • lack top-down support and accountability, • were designed in a vacuum • have objectives that aren’t communicated to end users• Scope  Risk for low value for implementations that • only plan to include some of PPM disciplines in the tool • become too complicated.
  38. 38. The ROI (Return on Investment) - exemplified• Improvement in Time to Market, from idea to launch 20 – 30 %• Improvement in number of projects completed with the same resources 25 – 300 %• Cut in average project duration 25 – 50 %• Better project success rate Over 90%• Better profit margin 50 - 100 %• Improvement in R&D productivity 50 % Performance Measurement Group LLC,
  39. 39. ”It’s all about knowing which projects to run – and which projects NOT to run.”
  40. 40. References• Portfolio Management for New Products  Robert G Cooper  Scott J Edgett  Elko J Kleinschmidt• Product Leadership  Robert G Cooper• Project Portfolio Management  Harvey A Levine• Advanced Project Portfolio Management and the PMO  Gerald I Kendall  Steven C Rollins• Optimizing Corporate Portfolio Management  Anand Sanwal
  41. 41. Thank You !Torbjörn Grahn, Condesign AB