Tag Archives: Portfolio

Evolutionary crisis in smartphones?

For ten years now the mobile phone business has been dominated by similar looking device offerings with large touch screens and similar user experiences centred on a responsive touch interface; is this going to continue, how is the market going to evolve?

Competition as a supplier in the mobile phone business is not straightforward -the rules of the game change from time to time. The mobile phone industry has seen a number of such change cycles since the establishment of the first digital mobile phones around 1990, with different players exiting and entering the market according to their ability to compete profitably within the cycle. During each cycle, different business factors become critical within the different phases:

The impact on a supplier’s product portfolio through the change cycle is a gradual increase in the in the lifecycle of individual products, which leads in turn to a widening of the number of products offered and ultimately to a much more consumer segmented product offer.

The voice era

The first change period in the digital era was purely the ability to produce a digital mobile phone at all – leading to the development of proprietary chipsets and software. The first digital products were too large and battery life was terrible, so the following consolidation phase was one of miniaturisation and power optimisation over a period in excess of five years. As the technology reached a point where acceptable size and power consumption was available there followed a plateau period for roughly 3 years when branding, segmentation and physical cosmetics was to the fore.

The multimedia era

The next change period came in 2002 with the advent of camera phones and programmable operating systems in GSM world markets. This heralded a period of multimedia convergence in the mobile devices as music players, video players appeared alongside the ever-present camera. A further complexity was incorporated over the following 2 years as 3G WCDMA became established as a fundamental requirement of a multimedia device. It can be argued that this change cycle was still in its consolidation period when it was disrupted by the next change period in 2007 when the Apple iPhone brought fundamental innovation in the user interface and later in the software application model. For a short period of less than two years products from both cycles were active and successful in the market – it should be noted that always after a change event there is a similar period, but the Apple iPhone product paradigm became the clear winner.

The Smartphone era

Since 2008 there has been a consolidation period in what became the smartphone space with ever better cameras, better quality displays and improved computing performance to deliver a high quality experience. Today the consolidation is reaching a point where the experience difference between high end smartphones and low cost smartphones has never been smaller. The smartphone based on the iPhone of 2007 has made it through its period of consolidation without being fundamentally disrupted.

So today, the smartphone business is in a plateau period- with supplier profitability tied closely to branding and logistical excellence fighting against the gravitational pull of commoditisation.

By retaining its own proprietary platform Apple has maintained differentiation while the rest of the market shares the Android platform and has therefore experienced greater pressures. Since the chipset business in the Android space has also been horizontalised- there is pressure from Qualcomm, Samsung and the like to adopt the very latest generations of their chipsets, however these are not delivering the big improvements in user experience seen in earlier years. Product differentiation is increasingly hard and the mode of the business is moving much more to a fast moving consumer goods model – as it did in the 1998-2002 period. The greater challenge now is that the smartphone form factor does not lend itself to easy cosmetic differentiation since the front face is over 90% glass.

So unless some breakthrough innovation is made, the winners in the smartphone market will be those who possess a good brand and marketing with the operational excellence necessary to deliver really good value to the end user.

Nokia – a good time to make a come back?

After largely disappearing from the mobile phone market following its acquisition by Microsoft, 2017 will see the re-emergence of the Nokia brand with products managed by HMD Global in partnership with FIH Mobile (part of Hon Hai Precision) and brand licensed from Nokia. As someone deeply involved with portfolio management at Nokia during the growth and glory days, I would like to take the opportunity to explore whether this is a good time for them to make a comeback?
In a previous blog I analysed the dynamics of the mobile phone market in terms of what facets of the overall business need to be optimised at a given point in time. In brief, my view is that the smart phone market has moved into a plateauing phase where the key strengths needed are brand, distribution and cost efficiency. So the question is whether this new Nokia set-up is well placed for this challenge?
First of all where is the Nokia brand today? Ten years ago Nokia was the leading mobile phone brand across the world except in North America, South Korea and Japan. This position had been built on fifteen years of growth – how much can this legacy be drawn on now? At its zenith Nokia stood for a perhaps contradictory combination of high technology and reliability – you could expect to get the very latest from Nokia and the products would be really tough in real life. The challenges of the 2008-2013 period largely stripped Nokia of the high technology association but today you still hear stories of how good and tough my Nokia was. The UK press has been full of stories about the resurrection for the 3310 over the last week, all very positive. So if I was to describe the Nokia brand today from a European perspective I would use words like: honest, tough and sentimental.
Distribution is the next major part of competing in today’s market scenario as with any fast moving goods business. Here HMD take responsibility for sales and FIH Mobile for manufacturing and logistics. This has the promise of being a good combination with a lot of personnel coming over from Microsoft devices business while FIH are of course a well-established world class manufacturer. Access to market in countries where operator distribution is critical will depend on the right deals being made but there is no obvious reason why this may not be the case. While a split company setup may struggle in a period where the market is changing fast with product innovation at the fore, since this is not the case at the moment there is no reason to believe this cannot succeed well.
Cost efficiency is the key to offering the value for money proposition essential in a plateauing market and in this case to compete against mainly Chinese companies which offer very keen price points. Clearly the advantage of the resonance of the Nokia brand will give the new venture an edge but as a challenger there can be no expectation of premium pricing at the beginning of sales. With the mobile phone chipset business dominated by only a few suppliers, the size of FIH/Hon Hai as a manufacturer will be important to get good pricing as well as the potential of Nokia branded goods making even a fraction of historical volumes.
So in a nutshell it would appear that the timing for a comeback looks good. Leaving re-entry any later would see the continuing in the decline of Nokia as a consumer brand – furthermore the operational mode of separate sales and manufacturing companies in partnership can work when product innovation is not the main route to success.

When does Product Portfolio Management become relevant for a growing company?

In the start-up phase a new business typically searches for the one product which can initiate some business momentum. Allied to this, following lean start-up methodologies, the product is often limited to a ‘minimum viable product’ and little attention is paid to further products or the evolution of that product into something more complete.
As the business moves into a phase of growth, the initial product becomes more complete and further products may be added to the firm’s line-up – typically products are managed in the same way as in the start-up phase. It is in this period that some Product Portfolio Management discipline can become crucial to maximising the prospects of the business.
However the traditional form of Product Portfolio Management is seen as a process for big companies with lots of activities to keep relatively remote senior management in control. So the question is how can a business benefit from Product Portfolio Management without incurring the overhead of doing so?
In a sense the question returns to one which is very familiar to a start-up: what is the minimum viable method of Product Portfolio Management?

Critical Aspects

Essentially Portfolio Management is about optimising the overall solution rather than focussing totally on the atomic constituents. What this means that any minimum portfolio management method must:
• Consider the business opportunity as a whole and so develop holistic objectives/prioritisation.
• Identify conflicts on resources between products/projects and arbitrate on them.
If these two aspects are addressed then portfolio management is already up and running!
As the business develops and grows further aspects of Portfolio Management can be added such as linkage to formal strategy, defined communications policies, standardised reporting and planned reviews.

A roadmap for Product Portfolio Management

It is recommended that any growing company should implement the minimum viable Product Portfolio Management Solution, anything less does not represent a step forward compared to managing products individually. An example template of this is Portgenie-MVP from All about the Product Ltd.
The first step of Portfolio Management(MVP) is enough to manage the portfolio operationally with consolidated plans and roadmaps without a dedicated Portfolio office, without a significant documentation, reporting burden or process load.
Elements of Product Portfolio Management can be added to the MVP state as needed by the particular business; if the company is operating over several sites then communications may be next key element to add or if strategy is changing then a formal strategic link could be added.
In essence this way of considering Product Portfolio Management makes it modular built onto a minimum core.

Minimum Core

Statement of business priorities
Roadmap of product plan
Resourcing plan of the roadmap
Decision making and conflict resolution

Modular add-ons

Internal/external communications policies
Regularised reporting rules and formats
Portfolio planning projects on a annual/six month cycle
Formal steering and followup processes
Linkage to strategic planning processes
Defined linkage to go to market projects.

Prioritising development initiatives..part1

Part way through my career, I was asked to work on a change activity. One of its goals was to bring together the business priorities for a suite of about 100 software development initiatives which supported the end offering of products and platforms.

This was a great learning exercise, so part 1 of the post covers “what did I learn?”

Answer the “so what”?

Don’t invest too much time without first gaining a clear understanding of the purpose and intended outcomes from the exercise. Stakeholder contribution to this type of exercise is highly important and although I found stakeholders generally supportive, their main concerns were “What is going to happen in 1 week, 1 month or 6 months’ time as a result of this work?”

Be pragmatic

Projects and program briefs come in all shapes and sizes. Even with best intentions, the result is likely to be imperfect due to misunderstandings and the level of information available. By being pragmatic and giving fast feedback, the value obtained will track the 80/20 rule. As an example, it is very important to get the top 10 project rankings correct, but another thing entirely to try and fine tune project priorities lying in the 50^th to 60^th rankings.

Note, I am not suggesting there should be no clarifying dialogue between parties along the way, just that the act of providing the feedback ‘fast’ is a good way to flush out any major misunderstandings.

Decisions require preparation

It is hard to get time from senior stakeholders and harder still to sync their diaries to meet at the same time. A direct discussion of priorities is a challenge without having first developed the proper context. So, the approach for establishing priorities is likely to be an important point for the senior stakeholders along with the consequences of any decision options.

Therefore it is worth establishing a small core team to build and test a prioritisation framework and drive the significant ground work prior to any proposal. More on this in a later post.

Present versus future

“If we don’t secure today’s business then there is no tomorrow”. People tend to attribute higher value to items appearing in the immediate future rather than those slightly further away. This is natural and also a consequence of the time value of money or NPV. However, it is a bad sign when all risk and change gets pushed forward (delayed) further into the future. A balance is necessary and the core team should take care of the present vs. future investment balance according to the industry change clock cycle.

Prioritising development initiatives..part2

This was a historical exercise, but how might I approach matters now? With the benefit of hindsight, I would consider the approach:

Establish a core team
Map the projects to aid understanding
Interpret the strategy to build a framework
Make trial rankings and test result
Prepare for the senior stakeholder review

1. Core team considerations

Fair representation of the business. Functional area owners want to be consulted on matters that impact on their responsibility areas. If you require strong endorsement of the results, you will need representatives of these different functional owners to take part. Enough representation to build a “wide enough” business view, but not so much as to bring the impression of a fully democratic exercise. The functional representation is there to bring insight into relevant areas of the business, not necessarily to pass judgement on the whole spectrum of activities.

Calibre of resources. The qualities of the resources could be summarized as: motivated, capable, respected, possessing a broad knowledge and impartiality. Do the best that you can in ‘borrowing’ resources.

2. Map and understand the projects

The objective here is to make more sense of the project portfolio prior to ranking. The value is in the discussion for the core team, building an understanding how the initiatives create value for the business, their timing, mutual relationships and how they impact across the business.

The precise approach taken will vary somewhat depending on the nature of the precise question being asked and the stakeholders involved e.g. involving the whole business vs. only the product related functions. Some thoughts on potential candidates to include in mapping:

Project Value

Project Investment

Market risk

Technology Risk

Current project timelines

Future projects pipeline

Independent projects

Projects with dependencies

Mutually exclusive project options

Project duration

Resources

involved

# Independent teams

involved

# New assets created

(or types of assets created)

Product type architecture e.g.

Market type architecture e.g.

Core plat-form

Messag-ing /CRM

Scale data support

Customised visualisations

Professional

Services

tools

Core product

platform

Customisation

enablers

EMEA

projects

APAC

projects

NAM Projects

A couple of project maps to show how visualisation can help understanding:

Value vs. Technology risk and Market risk map.

This is a good method to test the rationality and balance of the project approach against the market opportunity. It captures the business value of projects by the radius of the bubbles, so the most valuable projects stand out.

But it is sometimes hard to give every project a business value. An alternate view is to use project investment to scale the bubble radius.

Projects resource/investment vs. timeline map.

This is a good method for seeing the relative and cumulative project resource in use on deliveries now as well as the anticipated future commitments. It is a useful view for testing portfolio “options”, although with future project estimation a challenge, project categories or templates maybe necessary.

3. Interpret strategy to build a prioritisation framework

The business strategy should provide clear guidelines as to what is important to the business, both now and for a few years into the future. Thus for prioritisation of projects/initiatives, strategic alignment is a key criterion. However, strategy alignment can be captured through a variety of measures, so general guidelines for the prioritisation framework include:

Clear meaning for individual criteria	Readily understood by all of the core team
Independent criteria	Cover clearly separate issues
Criteria have different priorities	Some criteria clearly more important in prioritisation
Individual criterion has “values”	Enables ranking on 1 criterion (even if high/mid/low)
Enough elements as necessary	But as few as possible to avoid fatigue with large portfolio

It is especially important that core team members representing the business function stakeholders are fully understanding and supportive of the framework selected.

4. Issues in trial ranking of projects

Fatigue. Large portfolios take time to discuss and must be split over several sessions. Ideally this happens over consecutive days to maintain a consistent “mind set” for the work. Energy is needed to combat fatigue, so the project content should be ordered so that the most relevant (however judged) projects are dealt with first, creating high value and building confidence in the approach.

Maintaining Cadence. Within sessions, it can be useful to “time box” individual project discussions and place those projects that lack conclusion into an open category. If many projects keep getting put in the open category then this can be a sign of:

Low quality project descriptions
Too complex prioritisation framework
Too many people participating

The project lead can directly address the last two issues e.g. by opening up the framework or using a smaller size team to build the draft proposal & review with the wider core team.

Handling “open” category projects. The lead should judge if it is worth investing more time to clarify “open” projects/ priorities or to prepare to return such projects without overall priority but within some identifying category e.g.

Projects lacking in description/benefits
Projects lacking agreement on business priority

Rationality and balance of the result. The trial project rank result should appear to make sense logically. If there are some anomalies, then it is worth rechecking for consistency of prioritisation criteria. The other test which is less obvious is to look for balance using the earlier project mapping. If only the top 25% of projects are considered, what would the portfolio then look like when mapped? This approach picks up cases when there is not enough in effort anticipating future problems e.g. paying back technical debt.

5. Preparing for the senior stakeholder review

The ultimate approach taken for the review depends on the nature of the original question asked and therefore if any explicit decisions are required. The normal recommendations apply e.g. gaining feedback when possible from impacted functions, ensuring issues have solutions for mitigation and that the consequences for decisions are outlined.

It is important to be able to briefly show the “workings” how the team came to its proposal e.g.

This is the issue e.g. project portfolio load unsustainable
Here are the people / functions engaged in this activity to address the issue
Here is the prioritisation methodology used
And here are the conclusions & key decisions…

The visualisations built used for initially understanding the project portfolio are very valuable as a way of communicating the consequences of different options.