Category Archives: PORTGENIE

Business transformation, meet product portfolio management..

Business transformation is a much bandied term these days and in practice is often used to cover business change activities. This article is to make some comparisons between the goals & activities of transformation against those of a product portfolio planning and management process.

First, a reasonable definition of product portfolio management (PPM):

The process by which business strategy is converted into a product roadmap which delivers corporate goals and optimally utilises the business’ product making and marketing abilities in relation to the market opportunity.

Next, a couple of definitions for business transformation (BT):

Business transformation is about making fundamental changes in how business is conducted in order to help cope with a shift in market environment.
Business Transformation is a change management strategy which has the aim to align People, Process and Technology initiatives of a company more closely with its business strategy and vision.

In summary then, business transformation is an external market and business strategy driven process with the goal of creating change in the organisation to enable it to execute the business strategy and align it to compete in the new market reality. This is now sounding rather like the definition for product portfolio management…

So, are there any real differences between business transformation & PPM?

Transformation scope covers situations where major cultural change is required
PPM builds upon reasonably well working functional processes. Functional competence needs to be in good enough order for PPM e.g. functional capacity planning
PPM has built-in “closed loop” feedback to adapt and sustain in the face of continued change as opposed to transformation which is about initiating & driving a big change
PPM generates risk/return options for business decision e.g. between long and short term gain and taking technology risk or market risk or a balance of both.

PPM vs. business transformation

If we were to try and make an analogy of personal health to these two approaches then business transformation “treatment” might be required in the most extreme situations to shock the patient to help them survive and then guide them toward a more healthy way of living. By contrast, PPM might be seen as a combined exercise and dietary approach which avoids the risk of extreme intervention and helps the person achieve their best health and fitness.

Personal reflection

In my own experience of working for a large corporate (Nokia) over many years, I have seen both transformations in action and then also contributed toward the formalisation of product portfolio management. My perception would be:

The transformations galvanised the organisation into “change mode” and caused for example the creation of new business units with unique missions
Whilst the initial phases of the transformation mostly bore fruit in line with their mission, often the nature of the transformation challenge could make the timing of the first fruit quite unpredictable
Real value was only generated further through the transformation. This might be partly attributed to the benefits of the learning curve but the main value transition was co-incident with product portfolio management practices becoming bedded in
The big value add of PPM was in its ability to hedge both technology risk through different delivery paths to market and market risk through an offering of mainstream and niche/discovery products.

I am interested to hear other views from others on PPM vs. business transformation, but for today, I am an advocate for benefits of PPM and indeed our company offers the Portgenie PPM framework to those interested in learning more.

References

[1] https://en.wikipedia.org/wiki/Business_transformation

[2] https://rapidbi.com/what-is-business-transformation-3/

[3]”Leading Change, Why Transformations Efforts Fail”, John P. Kotter, Harvard business Review.

When two worlds collide: Integrated Business Planning & Product Portfolio management.

As a long term practitioner of Product Portfolio Management (PPM), I was really interested to analyse the principles of Integrated Business Planning and compare it to the practises which I was familiar with. In the first place I must declare that in my career rather than labelling practices and processes, the modus operandi was to extend existing ways of working to become more holistic and drive higher overall business value. When looking at Integrated Business Planning, or IBP, I quickly recognised business processes which I had been operating for in excess of a decade.

The same problem from two different ends

The origins of Product Portfolio Planning lie in the desire to transform company strategy into an executable roadmap to deliver the corporate goals. In simple terms, it is about understanding the market opportunity and making decisions which maximally utilise the company’s ability to develop and market products. On the other hand, IBP was born from the world of Sales and Operations Planning (S&OP) which originated with the goal of balancing product sales and product manufacturing delivering the mantra of ‘one set of numbers’ – in other words, delivering operational excellence.

The collision between these two process philosophies is therefore natural once each has developed excellence in its original field of application: product sales performance is key intelligence for Portfolio Management whilst driving change in the selection of products is a key extension for S&OP.

The term, “Integrated Business Planning”, was originally coined by the consultants Oliver Wright who have a foundation in advising on S&OP. The aim of IBP is the integration of more company functions than S&OP, of particular relevance finance and product development, into a single regular planning cycle. The result being very similar to the regular cycles advocated in the portfolio management context.

A personal reflection

At Nokia in 2007 we implemented an organisational change which was characterised as an ‘integrated company’, the aim of which was to bring sales and operations into the same planning and decision making processes as product development. In reality this change had already started to happen ten years previously as operational excellence had developed as well as more structured product line management. Working in an integrated way had already become a way of life with functional decision taking a supporting role to the over-arching process driven, cross functional structures.

So overall it does not matter if the change to integrate a company into a common decision-making, shared-goal oriented organisation comes from S&OP or the Product Portfolio management end. Fundamentally, it makes sense for a company to operate as a single team which was our goal at All about the Product when we created our “Portgenie” Product Portfolio Management process framework.

In the end, so what?

You might accuse me of some bias, but my strongly held opinion is that there is no greater opportunity for medium and large scale businesses, than to look at how to jointly maximise product making and marketing capabilities in relation to market opportunities. Thus, I am really interested to hear the experiences of others in utilising IBP or PPM based approaches to deliver this benefit.

Why we created PORTGENIE

Successfully managing a Portfolio of Products is much more difficult than it seems from afar. Complexity builds as a Portfolio develops from a single product, driven by increasing levels of dependency between potential product options and the reality that neither markets nor technologies stand still. Learning to master these complexities is therefore a steep and long learning curve.
From our experience leading Product Portfolio activities we know of this learning curve only too well. We also realised there was very little support out there to help master the art of Product Portfolio Management. While there are number of frameworks out there to assist with Project Portfolio Management, the case where Strategy, Marketing, Sales and Operations need to be embedded in the process is missing. We therefore decided to distill our decades of experience managing global product portfolios into a product which we call PORTGENIE.

We developed PORTGENIE with several key aims which we had learned the hard way:

A Product Portfolio should be designed to deliver company strategy and not simply evolve.
Sufficient Portfolio space should be created to allow innovation to thrive.
A Product Portfolio needs to track change in the market, competition, technology and progress in its own product development – we have learned that two ‘gears’ are needed to do this tracking.
Ultimately good decisions are the lifeblood of good portfolio management. Good decisions require holistic clarity of the current state and likely future trends as well as good timing.
Organisational commitment is built on common ways of working across functions with clear aims.

At its core PORTGENIE enables a company to get better leverage of its business domain specific knowledge and experience without having to expend effort in learning some hard lessons in the art of Product Portfolio Management.