Portfolio Management For New Products Second Edition

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

• ISBN13: 9780738205144
• ISBN10: 0738205141
• Edition: 2nd
• Format: Hardcover
• Copyright: 2002-01-04
• Publisher: Basic Books

Summary

The definitive guide on how to manage your company's product portfolio for maximum long-term growth-fully updated and expanded.

Author Biography

Robert G. Cooper is a professor of marketing at McMaster University. Founder of the widely employed StageGate product development process, he lives in Oakville, Ontario. Scott J. Edgett is associate professor of marketing at McMaster University and director of the Product Development Institute. He lives in Ancaster, Ontario. Elko J. Kleinschmidt is professor of marketing and international business and director of the engineering and management program at McMaster University. He lives in Ancaster, Ontario. Robert G. Cooper is a professor of marketing at McMaster University. Founder of the widely employed StageGate product development process, he lives in Oakville, Ontario. Scott J. Edgett is associate professor of marketing at McMaster University and director of the Product Development Institute. He lives in Ancaster, Ontario. Elko J. Kleinschmidt is professor of marketing and international business and director of the engineering and management program at McMaster University. He lives in Ancaster, Ontario. Robert G. Cooper is a professor of marketing at McMaster University. Founder of the widely employed StageGate product development process, he lives in Oakville, Ontario. Scott J. Edgett is associate professor of marketing at McMaster University and director of the Product Development Institute. He lives in Ancaster, Ontario. Elko J. Kleinschmidt is professor of marketing and international business and director of the engineering and management program at McMaster University. He lives in Ancaster, Ontario.

Table of Contents

Exhibits	ix
Acknowledgments	xiii
The Quest for the Right Portfolio Management Process	1	(14)
What Is Portfolio Management?	3	(1)
What Happens When You Lack Effective Portfolio Management	4	(2)
A Roadmap of the Book	6	(1)
Portfolio Management Is Vital	7	(2)
Much Room for Improvement	9	(1)
Major Challenges for Portfolio Management	10	(3)
Some Definitions	13	(2)
Three Decades of R&D Portfolio Methods: What Progress?	15	(14)
Recent Advances in Portfolio Management Methods	16	(3)
Where Portfolio Management Stands Today	19	(1)
Major Gaps between Theory and Practice	20	(1)
Portfolio Management: It's Not So Easy	21	(2)
Requirements for Effective Portfolio Management	23	(3)
What the Leaders Do: Three Goals in Portfolio Management	26	(3)
Portfolio Management Methods: Maximizing the Value of the Portfolio	29	(44)
Goal 1: Maximizing the Value of the Portfolio	29	(1)
Using Net Present Value to Get Bang for Buck	29	(5)
Expected Commercial Value	34	(6)
The Productivity Index (PI)	40	(2)
Options Pricing Theory (OPT)	42	(1)
Dynamic Rank-Ordered List	43	(2)
The Dark Side of the Financial Approaches to Project Evaluation	45	(1)
Valuation Methods: Scoring Models	46	(10)
Developing and Using Scoring Models	56	(12)
Assessment of Scoring Models	68	(2)
Checklists As Portfolio Tools	70	(1)
Paired Comparisons	71	(1)
Value Maximization Methods: Summing Up	71	(2)
Portfolio Management Methods: Seeking the Right Balance of Projects	73	(32)
Goal 2: Achieving a Balanced Portfolio	73	(1)
Bubble Diagrams	74	(5)
Variants of Risk-Reward Bubble Diagrams	79	(13)
Other Bubble Diagrams	92	(3)
Bubble Diagram Recap	95	(1)
Other Charts for Portfolio Management	95	(8)
Balance: Some Critical Comments	103	(2)
Portfolio Management Methods: A Strong Link to Strategy	105	(40)
Goal 3: The Need to Build Strategy into the Portfolio	105	(1)
Linking Strategy to the Portfolio: Approaches	106	(2)
Developing a New Product Strategy for Your Business---A Quick Guide	108	(11)
Moving to the Attack Plan	119	(2)
Product and Technology Roadmaps	121	(2)
Strategic Buckets: A Powerful Top-Down Approach	123	(6)
Strengths and Weaknesses of Top-Down Approaches	129	(4)
The Special Case of Platform Projects	133	(2)
A Variant on Strategic Buckets: Target Spending Levels	135	(1)
Bottom-Up Approach: Strategic Criteria Built into Project Selection Tools	136	(2)
Top-Down, Bottom-Up Approach	138	(4)
But How Much Should We Spend?	142	(2)
Summary	144	(1)
Portfolio Management Methods Used and Performance Results Achieved	145	(28)
The Average Business	145	(2)
The Best and Worst Performers	147	(1)
Satisfaction with Portfolio Management Methods	148	(2)
The Nature of Portfolio Methods Employed	150	(5)
Popularity and Use of the Various Portfolio Methods	155	(3)
Which Methods the Best Performers Use	158	(1)
Specific Project Selection Criteria Employed	159	(2)
Selecting Projects in Rounds	161	(1)
How Specific Portfolio Methods Perform	162	(4)
The Benchmark Businesses	166	(2)
Conclusions and Advice from Our Practices and Performance Study	168	(5)
Challenges and Unresolved Issues	173	(34)
General Conclusions	173	(3)
Specific Conclusions and Challenges Identified in Effective Portfolio Management	176	(9)
Challenges and Issues	185	(18)
Portfolio Management Is Not the Complete Answer	203	(3)
The Path Forward	206	(1)
Data Integrity: Obtaining Reliable Information	207	(40)
Types of Information Required	208	(2)
Marketing, Revenue, and Pricing Data	210	(18)
Manufacturing or Operations and Related Costs	228	(3)
Estimating Probabilities of Success	231	(5)
Estimating Resource Requirements	236	(6)
Deal with Uncertainties: Sensitivity Analysis and Monte Carlo Simulation	242	(3)
Summary	245	(2)
Making Strategic Allocations of Resources: Deployment	247	(22)
In Search of the Right Portfolio Method	247	(1)
Resource Allocation Across Business Units: The Methods	248	(2)
Deciding the Spending Splits: The Strategic Buckets Model	250	(1)
Strategic Buckets: A Step-by-Step Guide	251	(14)
Some Features of the Strategic Buckets Decision Process	265	(3)
Summary	268	(1)
Making Portfolio Management Work for You: Portfolio Management and Project Selection	269	(34)
Three Key Components of the Portfolio Management Process	269	(1)
Strategy: The First Key Driver of the Portfolio Management Process (PMP)	270	(1)
Gating: The Second Key Driver of the Portfolio Management Process	271	(2)
Portfolio Reviews: The Third Key Driver of the PMP	273	(1)
Two Fundamentally Different Approaches to a Portfolio Management Process	274	(1)
Approach 1: The Gates Dominate---An Overview of How It Works	275	(15)
Approach 2: The Portfolio Review Dominates	290	(10)
Pros and Cons of Approach 1 Versus Approach 2	300	(1)
In Conclusion: An Integrated Decision System	301	(2)
Designing and Implementing the Portfolio Management Process: Some Thoughts and Tips Before You Charge In	303	(46)
Before You Charge In	303	(1)
Stage 1: Defining the Requirements	304	(6)
Stage 2: Designing the Portfolio Management Process---Key Action Items	310	(11)
Stage 3: Trial Installation and Adjustments	321	(4)
Stage 4: Implementation and Improvement	325	(6)
Winning at New Products	331	(2)
Appendixes
Appendix A: Overhauling the New Product Process	333	(8)
Appendix B: Sample Gate 3 Screening Criteria (Scored)	341	(4)
Appendix C: NewPort Max™ Software: A Tool for New Product Portfolio Management	345	(2)
Appendix D: The NewProd™ 3000 Model	347	(2)
Reference Notes	349	(16)
Index	365	(16)
About the Authors	381