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Rethinking product portfolio management to optimize performance

What happens when you or your organization has more than one product to manage? It’s hard enough managing resources to sell and improve one product, but throw another one in the mix and see what happens. Or how about several more products?

Managing all those products is a challenge, and frankly, few organizations do it well. They use portfolio management to provide some order to the chaos, but for real order and reasoned decision making, my guest has been teaching people for the last decade to use Dynamic Portfolio Management.

His name is Roger Warburton and he is a co-author, along with Steve Kay, of the recent book titled, Dynamic Portfolio Management: The Bargery Fabrics Case.

Roger and I have both had the pleasure of teaching at Boston University, full-time for him and part-time for me. His integration of project management, product management, and strategy makes him the right person to learn proper portfolio management from.

In the discussion, Roger shares the:

• History of portfolio management,
• Challenges companies encounter with traditional portfolio management,
• Implementation of Dynamic Portfolio Management, and
• Road mapping for portfolio management.

As product managers take on more responsibility and become product leaders, you’ll need to know how to construct and manage a portfolio and the best approach is Dynamic Portfolio Management.

Summary of some concepts discussed for product managers

[3:09] What is portfolio management and how does Dynamic Portfolio Management differ?

In the 90s, portfolio management was all about return on investment and picking projects that would provide the biggest profits for the company. This was a terrible way to do things. In the 2000s, portfolio management shifted toward products that would bring the most value to the customer. There was not a formal way to match the portfolio to the company strategy. I came across an academic book on dynamic portfolios that talked about how they changed internally and externally. Dynamic portfolio management addresses those things with a roadmap. You and your customers know what’s coming, but there’s still flexibility to change things based on internal or external factors.

[10:01] What are some of the issues companies face with portfolio management?

The state of the art in portfolio management is very poor, but there are some simple things you can do quickly to improve. The first thing you need to do is “kill the dogs,” or those projects that are not helping your organization. It’s also important to remember that CEOs are no better at picking projects than anyone else. Setting up a more democratic system of choosing projects empowers middle management. We saw this firsthand at Bargery Fabrics. Two-thirds of the portfolio management team quit because the CEO was not flexible about the projects that were chosen.

[15:15] How does Dynamic Portfolio Management work?

Internally, you do what’s known as “sensing, seizing, and transforming.” Sensing is talking with customers and observing what’s happening. Seizing relates those findings to your portfolio. Transforming is the active step where you transform the internal portfolio and develop a preliminary roadmap for the internal piece of the portfolio. The external piece involves sensing, seizing, and reconfiguring. The external sensing is looking at things like regulation changes and how the company strategy has changed.

[23:13] What does a portfolio roadmap look like?

It’s in quarterly buckets because you don’t need to be more accurate than that. It lists all of the products and their major milestones each quarter. This includes things like development and user testing. It also includes marketing milestones to help inform the technical milestones. The roadmap integrates technical and marketing deliverables.

[25:48] Can you share an example of this in action?

The first thing you need to do in portfolio management is evaluate the history of your products, but everyone gets defensive if you start with that right away. Instead, we start with Bargery Fabrics on day one and go through their whole portfolio management process. This way, one is talking about their own products until day two. By the time day two arrives, people are less defensive and can talk about things in the right vocabulary. The portfolio team then briefs the senior executives about what the portfolio strategy should be.

Useful links:

• Roger’s book, Dynamic Portfolio Management: The Bargery Fabrics Case
• Roger’s Boston University profile

Innovation Quote

“If I had asked people what they wanted they would have said faster horses.” – Attributed to Henry Ford

Thanks!

Thank you for being an Everyday Innovator and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it on your favorite social network.