As the world becomes more interconnected, the impacts of disruptions to product development are now felt more widely, which means product-driven organizations need to be more responsive and adaptive in how they manage their portfolios. Fierce competition and market oversaturation are just a few challenges organizations face when struggling to bridge the gap between the innovations they think they need to respond to and disrupt versus those that will offer the most value for the business.
Traditional approaches to product portfolio management — like spreadsheets and other static, siloed solutions — are under increasing pressure in this landscape. The rigidity of these disconnected innovation methods holds companies back from a more adaptive strategy. If organizations fail to expand and evolve innovation throughout the product portfolio process, they may find that the ideas they choose to invest in aren’t quantifiably valued.
Why Now? Restructuring Product Portfolio Management
In the past, when digital transformation was an idea scribbled on a sticky note, it was good enough for organizations to focus on a primarily static portfolio of products delivered to generally localized and mildly competitive markets. While this low-risk approach has helped optimize cash flow and expenditure against portfolio products, increasingly frequent global market changes require a shift. Reactivity is no longer enough. The ability to adapt is crucial.
I recently discussed this need for organizations to push for this adaptability in a podcast with Product Mastery Now that looked into how product managers can improve innovation management. For organizations to remain competitive, they must shift their approach to innovation and view products in a portfolio—their workloads and respective resources—as connected and dependent on each other rather than siloed off. Companies that want to ascend in the modern marketplace must adopt this more adaptive strategy, providing greater flexibility to the company and everyone involved.
“As an organization, you have to think about how you can maintain your position in the market. Think about the structure of getting the product out to market and balancing the portfolio to manage the whole lifecycle.”
From Better product portfolio management with Product Mastery Now
This modern, adaptive mindset involves integrating a culture of innovation throughout the entire product lifecycle. There are a few external pressures that demonstrate the growing need for this integration, such as:
- External competition in a “growth at all costs” market
- Market demands from buyers
- Ever-changing global economic conditions
- Increasingly nuanced regulatory landscapes, particularly with developing pharmaceuticals, medical devices, and products with an environmental impact
Because modern business moves fast, organizations can’t afford to slow down to pivot their product portfolio management strategy to become more adaptive. The slower a company is to innovate and align its portfolio of products, the higher the likelihood that disruption will have a detrimental impact on business.
To prioritize innovations, organizations need holistic visibility into real-time data used to prioritize innovations. To efficiently and quickly move products across the stages of development and ensure their ROI, you need all relevant information accessible, usable, and in one place.
Indicators That Innovation Is Taking a Backseat
The signs are evident when organizations aren’t prioritizing growth and innovation over immediate profit. Some indicators include:
- Low to no complexity in product or service offerings
- Lack of insight into market needs or offerings that miss the mark
- A reactive approach to new offerings or features based on what competitors are doing
When these things happen internally, they can be symptoms of a misalignment between innovation and its role in delivering value for the organization and its customers. Teams are siloed from each other and work towards different outputs and goals; products aren’t placed on the market quickly and always come after the competition; and the portfolio is biased toward specific products that make the most money, with no strategic objective in mind.
How to Integrate Innovation Throughout Product Portfolio Management
Organizations that are the most successful at incorporating innovation into their end-to-end product portfolio management strategy start with a broad funnel for innovative ideas and processes. Customers, external partners and stakeholders, and internal subject matter experts (SMEs) blend to create a collaborative environment to surface innovative ideas and solutions.
At its top, the innovation funnel should be broad but naturally narrow as ideas move through each stage of the product development and portfolio management process. For this approach to be most effective, it is critical to understand how each idea corresponds to a specified innovation horizon.
- Incremental: Is it innovation to enhance what we have today in an incremental way?
- Breakthrough: Is it innovation that would create a new offering or product in a market we already serve?
- Disruptive: Is it innovation that would create a new market or expand our presence into a market we’ve never served?
Once your organization agrees on the details for incremental, breakthrough, and disruptive horizons, you need to focus on getting the right innovations into the proper delivery channels at the right time. What is the best-suited application process or work methodology for the innovation you have in mind?
As incremental and breakthrough innovations become more tangible, your organization must decide on its funding models. These innovations will move past the idea-gathering stage into a more extensive product portfolio management ecosystem. This funding process helps answer questions like:
- Could we use a single funding stream for resources or research and development for these innovations?
- What benefits would we gain from creating that kind of diversity?
On the other hand, as disruptive innovations are fleshed out, they need a space where they can be further evaluated and refined before moving into the product portfolio. This allows some time to decide whether these are products your company will actively invest resources into and develop. Disruptive innovations often require a larger workforce and resource commitment up front and a longer timeline to record ROI, so it’s best to ensure your organization is well-aligned on these ideas before moving further.
Disruptive ideas should be weighed against cost, time to market, revenue potential, required capacity hours, and any other domain-specific data points before moving into the organization’s overall portfolio.
Delivering on innovation requires organizations to shift from traditional product portfolio management to a more adaptive and collaborative method. Parsing out and infusing data from the top of the innovation funnel to inform how and when it is best weaved into the overall portfolio.
To drive innovation as part of your roadmap, begin with the end in mind and involve internal and external stakeholders and SMEs.
Learn How Polaris Streamlined Their Innovation Management Process with Planview
The team at Polaris Industries worked with Planview to streamline their innovation management process and discovered a more effective way to surface and develop new ideas — check out their success story.