Portfolio Management for New Products 2nd Ed.

Robert G. Cooper, Scott J. Edgett, Elko J. Kleinschmidt

Publisher: Perseus, 2001, 379 pages

ISBN: 978-0-7382-0514-4

Keywords: Product Management

Last modified: Jan. 21, 2014, 11 a.m.

In today's business climate, where speed to market is paramount and there is no margin for error, companies who fail to excel at new products have very little chance of survival. Companies who live and die by their products need better tools for aligning product development to strategy to ensure that resources are deployed efficiently from idea to launch across the full range of products.

In this fully updated and expanded edition of Portfolio Management for New Products, the authors present a rigorous and practical approach to managing a company's product portfolio as you would a financial portfolio - investing for maximum long-term growth. With its field-tested, step-by-step framework, the book provides managers with new strategies to assess and realign their current R&D operations; determine which products are most worthy of resource allocation; design and implement a portfolio management process; maximize the value of their portfolios; and recognize and solve challenges as they arise. This edition reports on the most current research; offers new insights on gathering and analyzing data; and showcases the practices of product market leaders, including, Pfizer, 3M, Caterpillar, Mobil Chemical, and Reckit-Benckiser.

Having established itself as the most comprehensive and authoritative book on the topic, this new edition ensures that Portfolio Management for New Products will continue to be an essential resource for any company whose profitability, and very existence, relies on the products it chooses to develop and the speed with which it brings them to market.

  1. The Quest for the Right Portfolio Management Process
    • What Is Portfolio Management?
    • What Happens When You Lack Effective Portfolio Management
    • A Roadmap of the Book
    • Portfolio Management Is Vital
    • Much Room for Improvement
    • Major Challenges for Portfolio Management
    • Some Definitions
  2. Three Decades of R&D Portfolio Methods: What Progress?
    • Recent Advances in Portfolio Management Methods
    • Where Portfolio Management Stands Today
    • Major Gaps between Theory and Practice
    • Portfolio Management: It’s Not So Easy
    • Requirements for Effective Portfolio Management
    • What the Leaders Do: Three Goals in Portfolio Management
  3. Portfolio Management Methods: Maximizing the Value of the Portfolio
    • Goal 1: Maximizing the Value of the Portfolio
    • Using Net Present Value to Get Bang for Buck
    • Expected Commercial Value
    • The Productivity Index (PI)
    • Options Pricing Theory (OPT)
    • Dynamic Rank-Ordered List
    • The Dark Side of the Financial Approaches to Project Evaluation
    • Valuation Methods: Scoring Models
    • Developing and Using Scoring Models
    • Assessment of Scoring Models
    • Checklists As Portfolio Tools
    • Paired Comparisons
    • Value Maximization Methods: Summing Up
  4. Portfolio Management Methods: Seeking the Right Balance of Projects
    • Goal 2: Achieving a Balanced Portfolio
    • Bubble Diagrams
    • Variants of Risk-Reward Bubble Diagrams
    • Other Bubble Diagrams
    • Bubble Diagram Recap
    • Other Charts for Portfolio Management
    • Balance: Some Critical Comments
  5. Portfolio Management Methods: A Strong Link to Strategy
    • Goal 3: The Need to Build Strategy into the Portfolio
    • Linking Strategy to the Portfolio: Approaches
    • Developing a New Product Strategy for Your Business — A Quick Guide
    • Moving to the Attack Plan
    • Product and Technology Roadmaps
    • Strategic Buckets: A Powerful Top-Down Approach
    • Strengths and Weaknesses of Top-Down Approaches
    • The Special Case of Platform Projects
    • A Variant on Strategic Buckets: Target Spending Levels
    • Bottom-Up Approach: Strategic Criteria Built into Project Selection Tools
    • Top-Down, Bottom-Up Approach
    • But How Much Should We Spend?
    • Summary
  6. Portfolio Management Methods Used and Performance Results Achieved
    • The Average Business
    • The Best and Worst Performers
    • Satisfaction with Portfolio Management Methods
    • The Nature of Portfolio Methods Employed
    • Popularity and Use of the Various Portfolio Methods
    • Which Methods the Best Performers Use
    • Specific Project Selection Criteria Employed
    • Selecting Projects in Rounds
    • How Specific Portfolio Methods Perform
    • The Benchmark Businesses
    • Conclusions and Advice from Our Practices and Performance Study
  7. Challenges and Unresolved Issues
    • General Conclusions
    • Specific Conclusions and Challenges Identified in Effective Portfolio Management
    • Challenges and Issues
    • Portfolio Management Is Not the Complete Answer
    • The Path Forward
  8. Data Integrity: Obtaining Reliable Information
    • Types of Information Required
    • Marketing, Revenue, and Pricing Data
    • Manufacturing or Operations and Related Costs
    • Estimating Probabilities of Success
    • Estimating Resource Requirements
    • Deal with Uncertainties: Sensitivity Analysis and Monte Carlo Simulation
    • Summary
  9. Making Strategic Allocations of Resources: Deployment
    • In Search of the Right Portfolio Method
    • Resource Allocation Across Business Units: The Methods
    • Deciding the Spending Splits: The Strategic Buckets Model
    • Strategic Buckets: A Step-by-Step Guide
    • Some Features of the Strategic Buckets Decision Process
    • Summary
  10. Making Portfolio Management Work for You: Portfolio Management and Project Selection
    • Three Key Components of the Portfolio Management Process
    • Strategy: The First Key Driver of the Portfolio Management Process (PMP)
    • Gating: The Second Key Driver of the Portfolio Management Process
    • Portfolio Reviews: The Third Key Driver of the PMP
    • Two Fundamentally Different Approaches to a Portfolio Management Process
    • Approach 1: The Gates Dominate — An Overview of How It Works
    • Approach 2: The Portfolio Review Dominates
    • Pros and Cons of Approach 1 Versus Approach 2
    • In Conclusion: An Integrated Decision System
  11. Designing and Implementing the Portfolio Management Process: Some Thoughts and Tips Before You Charge In
    • Before You Charge In
    • Stage 1: Defining the Requirements
    • Stage 2: Designing the Portfolio Management Process — Key Action Items
    • Stage 3: Trial Installation and Adjustment
    • Stage 4: Implementing and Improvement
    • Winning at New Products
  • Appendixes
    • Appendix A: Overhauling the New Product Process
    • Appendix B: Sample Gate 3 Screening Criteria (Scored)
    • Appendix C: NewPort Max™ Software: A Tool for New Product Portfolio Management
    • Appendix D: The NewProd™ 3000 Model


Portfolio Management for New Products

Reviewed by Roland Buresund

OK ***** (5 out of 10)

Last modified: Jan. 21, 2014, 11 a.m.

This is in reality more of a teaching book for a course in Portfolio and Product Management. As such, it is pretty boring, but handles the subject with expected thoroughness.

In reality nothing to write home about, but achieves its aims.


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