New Product Development (NPD) in most industries today is complicated by intensive competition, rising raw material costs, advancing technologies, increasing demand for functionality, focusing on enhanced safety, and improving supply chain and distribution. Ideas come from consumers, end-users, customers, distributors, suppliers, universities, and in-house research and production staff. Products are regulated and fast-changing (note the recent development trends of nutraceuticals in the food and beverage industry). Even a small company is testing and marketing dozens of product varieties. Managing this vast array of products, ideas, and requirements is a challenge for anyone. Whats a new product development practitioner to do?
Enter Portfolio Management (PM). PM is a decision-making process, utilized in conjunction with the NPD process (such as stage-gate™ (1)), to help senior management strategically align and prioritize projects to add the most value to the firm while optimizing scarce resources (people, time, money, and equipment). Selecting from the broad spectrum of available projects requires company-specific strategic criteria and guidelines to evaluate each project relative to others under consideration. Using PM to wisely choose the right projects to work leads to faster time-to-market, higher return on NPD investment, and earlier selection of exceptional projects.