portfolio management pat scanlan 8 critical success factors(csf) (measurement criteria) in product...

Portfolio Management

Pat Scanlan

8 Critical Success Factors(CSF) (Measurement Criteria) in product development life-cycle

• 1. Product (uniqueness & superiority)-> 7 ingredients in recipe• 2. Strong Market Orientation • 3. More Spending Pre-development work - “Up front Homework”• 4. Sharp & Early Product Definition (Voice of Customer)• 5. Appropriate Organisational Structure (X Functional Teams)• 6. Sharper Project Selections Decisions ( Hi Focus )• 7. Speed => competitive advantage (Reduce cycle time)• 8. Hi Q, Disciplined & Systematic New Product Process.


Pat Scanlan

CSF#1 Product Superiority (7 Ingredients)

• 1. Meets customer needs better than competitors• 2. Is better quality than competitor’s ( from customer view )• 3. Has Unique benefits/feature for the customer (Differentiated)• 4. Solves customers problems• 5. Reduces customers costs ( better value in use )• 6. Has highly visible benefits• 7. Is innovative or novel


Pat Scanlan

CSF#6 Predictable New Product Success !

• Sharper Project Selection Decisions : SCORECARD to yield better focus.

• Classic Problem : Too Many Projects and Too few resources• Why ? A Failure to Focus• We need “Funnels” not “Tunnels”

Idea Pre-study Feasibility Develop Launch


Pat Scanlan

CSF#6 Focus on Successful Projects

• Use Score Card Technique with round table assessment & agreement ( e.g. business, r&d, market, finance )

• Apply a standard criteria at all decision gates using scorecard• Include more quantifiable financial criteria e.g. forecasted sales,

ROI, payback period, NPV, IRR, DCF as a judgement criteria.• Assess Risk e.g. probabilities of technical, commercial success


Pat Scanlan

Scoring & Ranking CSF#6

Project Name NPV Prob TS Prob CS Dev Cost Comm Cost ECV Total Score IOTA 30 0.8 0.5 3 5 5 68NoClue 22.5 0.5 0.8 5 6 19 60Plutonius 3 0.75 0.75 2 1 2 80Saturn 44 0.6 0.7 1 0.5 1.5 21Venus 5 1 1 5 3 2.3397 48.6

Ranking of Projects on Financials & Non Financial Indicators

Dimension….Probabaility of Commercial SuccessRating Scale Rating Comment

Key Factor 1 4 7 10

Tachnical Gap Large Gulf Big Change Step Change Incremental 1 big learning curve !Complexity Difficult Many Hurdles Do-able Straightforward 1

Skill Base New Some experince Practiced widely known 4Resouce availability

must hire/ build known shortage

resources tied up

resources available 7

13 total score 13/40

Example Scoring Template


Pat Scanlan

CSF#6 R&D Portfolio for Ericsson A Personal View of How we can view our products !

DATA

TELECOM / VOICEMOBILITY

Where we want to beNew Telecoms World

Where we are, maybe !

More products & combined solutionsfor mobility, voice and data

communication


Pat Scanlan

Ericsson Ireland : 5 Different Product Units Selected in this experiment...

• #1. Mobile Prepaid Systems for New Entrants– Switching Software– Middleware & Database

• 1 Product Line in sample…• customers in Ireland, UAE,Macau, Iceland,

Slovenia, South Africa, Uganda…..


Pat Scanlan

Ericsson Ireland : 5 Different Product Units

• #2 Radio Network Manager• AIRscope-I Product Features

– Designed as an innovative speech quality analysis and diagnosis solution for digital cellular operators

– reduce churn...

– 2 Product variants in sample


Pat Scanlan


• #3 Data, IP, Ecommerce Market Unit

• 5 market solutions for Irish Market in the sample

• Internet Access, Wireless E-commerce, WAP Server, Ipulse & Weboair..


Pat Scanlan


• #4 Business Communications

• VPN ( Virtual Private Networks ) for fixed and mobile networks..– Private networking, Short dialing, cost

savings to corporation

• 4 products in sample– two from fixed operators, two from mobile


Pat Scanlan


• #5 Competence Services– Customer Training Products for Ericsson

customers

• 3 Products in the sample– instructor led and web based training

• GSM, AXE, ATM, IP…….


Pat Scanlan

CSF#8Overlay onto Existing Stage Gates (Go/Kill) Decision Points• R&D + Marketing + Finance participants at each decision

meeting• Senior Management buy-in• “non subjective criteria” SCORING MODEL at Toll Gates• Financial => Estimate Commercial Value of Projects• ECV = { [ (NPV x Pcs x SI) - C ] x Pts} - D • Non financial ( 5 dimensions )

– 1. Probability of Technical Success– 2. Probability of Commercial Success (product c.a & market attractive?)– 3. Reward (NPV,return,payback time,certainty,cost+TTM)– 4. Business Strategy Fit– 5. Leverage of company’s resources & skills


Pat Scanlan

Business Unit Radio Network Solutions

Factor Weighting Review 1 Review 2 Review 3 Review 410-Aug 21-Sep

Product RNM2.0 Airscope - integrityTech 20 67 67Commerc 20 51 53 Slightly improved prospectsLeverage 10 77 77Fit 15 78 50 Not in use by customer yetReward 35 53 53Score 57.75 58.08

Factor Weighting Review 1 Review 2 Review 3 Review 410-Aug 21-Sep

Product RNM3.0 Airscope - Tech 20 37 37 Good Prestudy Results but loss of key resourceCommerc 20 48 50 A new use for product identified…Leverage 10 67 65 Shorter lifespan.. Single release market windowFit 15 60 60Reward 35 60 57 Related to single release market window aboveScore 53.92 52.83

Work in Progress


Pat Scanlan

The Project Plan of Action

• Find Candidate Business Units at Ericsson• Assess current practice ( CSF ) ( 5 Business Units )• Introduce Scoring Template and Educate• Design & Customise to the SBU’s needs.• Perform / Overlay “Hoechst” Scoring Meetings on to existing

Stage Gate System on a monthly basis over 3-4 months• Record and Map Product Attractiveness Portfolio• Complete the Experiment• Assess Performance Improvements, e.g. better decision making

tool found ? Satisfaction level ? Trigger’s change project priority • Report...

portfolio management pat scanlan 8 critical success factors(csf) (measurement criteria) in product...

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