rd portfolio management presentationv3

Cambridge Product Management Network

Portfolio Management

Richard Jones

Thanks to our sponsors

2

RESOURCES

R&D

Strategy

Programme

Portfolio

Programme Selection and Review

Programme Implementation

© Ventura Team LLP 2012

Richard Jones

Core Expertise

• Change management

• Strategy

• Business modelling

• Startups

Roles

• Formed consultancy in 2004 that created telecoms operator in Sweden – now with 120,000 subscribers and ranked number 4 in the World for broadband service value

• Mentored startups from 3 people to $40 million invested

• Created startups with up to 75 times returns and flotation on Nasdaq (post-acquisition)

• Recently completed UN change project in Baghdad

Richard Jones +44 7811 166033

3

RESOURCES

R&D

Strategy

Programme

Portfolio




Best practice in programme management?

4

RESOURCES

R&D

Strategy

Programme

Portfolio




Then again sometimes we don’t face the truth…

5

RESOURCES

R&D

Strategy

Programme

Portfolio




And management don’t always listen

6

RESOURCES

R&D

Strategy

Programme

Portfolio




The trouble with innovation is that it often doesn’t deliver!

$

INNOVATION

PIPELINE

Only 46% of total spend is on successful products

ORGANISATION

Resource Groups

Pro

gra

mm

es

R&D FUNDING

7

RESOURCES

R&D

Strategy

Programme

Portfolio




Why Manage Projects as a Portfolio?

R&D project decisions are not made in isolation; they draw on a finite set of resources:

cash

management bandwidth

expertise

hardware resources

......

The effect of each project therefore needs to be understood within the context of the total set of projects

deploy a limited budget most effectively

understand the effect of programme failures

manage risk within R&D

8

RESOURCES

R&D

Strategy

Programme

Portfolio




Portfolio Management

A Definition

Portfolio Management is the set of activities that seek to find and maintain

the optimum current and future balance of R&D programmes to support

the business strategy in terms of criteria such as risk, reward

9

RESOURCES

R&D

Strategy

Programme

Portfolio




RESOURCES

R&D

Strategy

Programme

Portfolio



Integrating R & D Strategy to Implementation

10

RESOURCES

R&D

Strategy

Programme

Portfolio




Reaching the goal

RESOURCES

R&D

Strategy

Programme

Portfolio



RESOURCES

R&D

Strategy

Programme

Portfolio



STRATEGY: Where you want to go

IMPLEMENTATION: How you’re getting there

11

RESOURCES

R&D

Strategy

Programme

Portfolio




A Structured Approach to R&D Portfolio Management

Ranking and

improvement

Rev

iew

Sc

ree

n

Initial Feasibility Ideas

DYNAMIC COMPETITIVE INTENT

Static Improve Shift

TECHNOLOGY

MATURITY

Enabling

Differentiating

Pacing

Emerging

Utility/Options

NPV

Options

Monte Carlo Analysis

Project merit

Sustainability of advantage

Technical viability

Investment to develop

Strategic fit

Investment to exploit

Time horizon for project

Time to product/exploitation

Market viability

Upside

Technology impact

TIME

RISK/EXPOSURE

UTILITY X%

Y%

Z%

a%

b%

c%

d%

e%

f%

g%

h%

i%

j%

X%

X%

X%

X%

Y%

Y%

Y%

Y%

Z%

Z% k%

Project Attractiveness Rating

PR

OJ

EC

T 1

PR

OJ

EC

T 2

PR

OJ

EC

T 3

Grow or

Retain Retain Grow

Grow or

Realise Realise

Retain

or Grow

Retain or

Realise Realise Retain

Project Attractiveness

Medium High Low

Pursue

to

Enhance

Pursue

to

Enhance

PRIORITY

Pursue

then

?

Reject

or

Shift

Pursue

Reject

or

Shift

Reject Pursue

Opportunity Attractiveness

Medium High Low

Str

ate

gic

Fit

MAJOR

MINOR

NOT IN CURRENT

BUSINESS

Opportunity Screening

Rationalisation Matrix IMPORTANCE

Enabling Diff. Pacing Emerging

B

E

G

C

R&

D B

UD

GE

T

H

J

D

F

I

A

B

E

G

C

R&

D B

UD

GE

T

H

J

D

F

I

A

TECHNOLOGY MATURITY TIME TO COMPLETION

1 2 3 4 5 >5


B

E

G

C

R&

D B

UD

GE

T

H

J X

Z I

Y

B

E

G

C

R&

D B

UD

GE

T

H

J X

Z

I

Y

TECHNOLOGY MATURITY

TIME TO COMPLETION

1 2 3 4 5 >5

Idea Generation

Project

Definition

Project

Attractiveness

Assessment

VALUE($)

RIS

K

A

B

C

D

E

Portfolio Assessment: Current

Portfolio Assessment: Future

MA

RK

ET

S

New to

World

New to

Firm

Current

to Firm

Current

to Firm

New to

Firm

New to

World

TECHNOLOGIES

c

D

F

H A B

E

I

G

By Considering Strategy

Risk and Return Investment and Return

Risk / return ratio Estimated Return Estimated Return

Priority

Forget

Forget

Priority

Not Sure Lower

Priority

Forget Not Sure

Priority High Priority

Str

ate

gy f

it

Ris

k

Estim

ate

d c

um

ula

ted c

osts

By Considering Strategy

Risk and Return Investment and Return


Priority

Forget

Forget

Priority

Not Sure Lower

Priority

Forget Not Sure

Priority High Priority

Str

ate

gy f

it

Ris

k

Estim

ate

d c

um

ula

ted c

osts

12

RESOURCES

R&D

Strategy

Programme

Portfolio




Project Concept Generation

IDEAS from:

Individuals

Teams

Idea bank

Universities

Customers

Competitors

Source: Wheelwright/Clark/S_G

HOLD for:

technology

resources

partnership

etc

Ranking and

improvement

Rev

iew

Scre

en

Initial Feasibility

Candidate

Projects

Structured R&D Portfolio Management

13

RESOURCES

R&D

Strategy

Programme

Portfolio




Project Definition

Initial feasibility studies as ideas are generated will sort potential projects to some extent

Need to provide greater level of detail as financial and time investments become greater

Candidate projects can then be defined in terms of:

goals and objectives

major milestones

time, cost and performance constraints

investment requirements

timescales

resources (human and material)

risks

linkages to other projects/programmes

the value of a particular project may only be realised if other projects take place


14

RESOURCES

R&D

Strategy

Programme

Portfolio




Project Attractiveness

Assess attractiveness of projects as independent entities

Can use scoring system (as left) or composite information

For many projects, this judgement based assessment is more valuable than working from project NPVs

Project merit

Sustainability of advantage

Technical viability

Investment to develop

Strategic fit

Investment to exploit

Time horizon for project

Time to product/exploitation

Market viability

Upside

Technology impact

TIME

RISK/EXPOSURE

UTILITY X%

Y%

Z%

a%

b%

c%

d%

e%

f%

g%

h%

i%

j%

X%

X%

X%

X%

Y%

Y%

Y%

Y%

Z%

Z% k%

Project Attractiveness Rating

PR

OJ

EC

T 1

PR

OJ

EC

T 2

PR

OJ

EC

T 3


15

RESOURCES

R&D

Strategy

Programme

Portfolio




Linking Projects and Strategic Requirements

Attractiveness ratings provide the desirability of carrying out a project in isolation

Projects must be rationalised and portfolios selected:

taking account of overlaps and common resource requirements between projects

with respect to the direction provided by the overall strategy and the technology strategy

as an iterative process refining the portfolio to find the optimum balance between available projects and the strategic direction


16

RESOURCES

R&D

Strategy

Programme

Portfolio




Assessing Different Types of Projects

Methods evolve to match the complexity of the technical and competitive change desired

Increasingly difficult to use

simple, predictive techniques

DYNAMIC COMPETITIVE INTENT

Static Improve Shift

TECHNOLOGY

MATURITY

Enabling

Differentiating

Pacing

Emerging

Utility/Options

NPV

Options

Monte Carlo Analysis


17

RESOURCES

R&D

Strategy

Programme

Portfolio




Opportunity Screening against Strategy

Candidate projects can be sorted against simple criteria

The attractiveness of the opportunity can be assessed separately or rolled up into the overall project attractiveness

Grow or

Retain Retain Grow

Grow or

Realise Realise

Retain

or Grow

Retain or

Realise Realise Retain

PROJECT ATTRACTIVENESS

Medium High Low

Pursue

to

Enhance

Pursue

to

Enhance

PRIORITY

Pursue

then

?

Reject

or

Shift

Pursue

Reject

or

Shift

Reject Pursue

Opportunity Attractiveness

Medium High Low

Str

ate

gic

Fit

MAJOR

MINOR

NOT IN CURRENT

BUSINESS Opportunity Screening

Rationalisation Matrix IMPORTANCE


18

RESOURCES

R&D

Strategy

Programme

Portfolio




Examples of Portfolio Prioritisation (1)

High

Medium

Low

Low High

Impact of New Opportunity (Strategic importance x target improvement)

Urgency of New Opportunity

(Strategic importance of being first x Gap in technology position

vis-a-vis leader)

Medium

Full resources Act now

Wait

Important project, Good

position

Low priority


19

RESOURCES

R&D

Strategy

Programme

Portfolio




Examples of Portfolio Prioritisation (2)

Can be used to make decisions about single projects or clusters

of projects

By Considering Strategy Risk and Return Investment and Return


Priority

Forget

Forget

Priority

Not Sure Lower

Priority

Forget Not Sure

Priority

High Priority

Str

ate

gy f

it

Ris

k

Estim

ate

d c

um

ula

ted c

osts


20

RESOURCES

R&D

Strategy

Programme

Portfolio




Understanding the Current Portfolio Impact


B

E

G

C

R&

D B

UD

GE

T

H

J

D

F

I

A

B

E

G

C

R&

D B

UD

GE

T

H

J

D F

I

A


1 2 3 4 5 >5

A potential portfolio can be assessed in terms of the balance and timescales of delivered programmes eg:


21

RESOURCES

R&D

Strategy

Programme

Portfolio




Re-balancing the Future Portfolio

Altering the investment in projects and priorities between them can re-balance the portfolio to better deliver against requirements:


B

E

G

C

R&

D B

UD

GE

T

H

J X

Z I

Y B

E

G

C R

&D

BU

DG

ET

H

J X Z

I

Y

1 2 3 4 5 >5



22

RESOURCES

R&D

Strategy

Programme

Portfolio




Understanding Market/Technology Exposure

The portfolio on the left may be acceptable by some companies whilst others would consider it too conservative

R&D projects form only part of the overall delivery from the Technology Strategy

external links

partnerships

buying in ....

MA

RK

ET

S

New to

World

New to

Firm

Current

to Firm

Current

to Firm

New to

Firm

New to

World

TECHNOLOGIES

c

D

F

H A B

E

I

G

Diameter proportional to

R&D spend on project


23

RESOURCES

R&D

Strategy

Programme

Portfolio




Exposure Trade Off Examples M

AR

KE

TS

New to

World

New to

Firm

Current

to Firm

Current

to Firm

New to

Firm

New to

World

TECHNOLOGIES

c

D

F

H A B

E

I

G

Current

to Firm

New to

Firm

New to

World

TECHNOLOGIES

c

D

F

H A B

E

I

G


24

RESOURCES

R&D

Strategy

Programme

Portfolio




Portfolio Options

Potential Portfolio

Solutions

Efficient Frontier:

Lowest risk for each

portfolio value

Low Value/

High Risk

Frontier defines the range of the most effective compromise of portfolio risk and return

Company selects portfolio based on risk seeking/aversion

VALUE($)

RIS

K

A

B

C

D

E


25

RESOURCES

R&D

Strategy

Programme

Portfolio




SUPPORT SLIDES

Confidential – 26

Information

Requests

Account & Service

Management

Customer Problem

Management

Billing

Enquiries

Internet Quality &

Availability

Voice Quality &

Availability

Activate

Voice

Order Processing &

Fulfillment

Servicing Customers

Rating

Invoicing

Deactivation &

Termination

Collection TV Quality &

Availability

Activate

Internet

Activate

TV

Dunning

Adjustments &

Amendments

Buying Activating Using Paying Leaving Contacting

Activate

Bundle

Data Quality &

Availability

Outbound Customer

Notifications

…and integrating them into the Customer Life Cycle

Outbound

Campaigns

Retention & Follow

Up

Proactive Service

Improvements

Contact Center

Information &

Interaction

Outbound Surveys

Activate

VAS

Pro

ce

ss

Life

cycle

VAS Quality &

Availability

Complex

Sales

Dealer

Sales

CPE

Logistics

Confidential –

…to be ready for Launch

Program

Management

Business

Infrastructure

Space Building

Requirements

Organizational Design

People Policies

Business Systems

Business Plan

Refinement

Market Assessment

(product)

Customer needs

Target Segments

Value propositions

Product Development

& Strategy

Detailed Product Definition

Pricing

Promotional & POS

Collateral Guidelines

Channel Approach

Branding &

Positioning

POS Production

Communication Campaign

Network

development

Overlay

Local Access

International Access

Interconnect

Switch Technology

IN Architecture

Business Process

& IT Strategy

Billing & Collections

CRM

Call Centre

Service delivery

Inventory

Detailed Product Definition

Product Launch

Management Framework

Management Reporting

High Level Launch Plan

Service Rollout Strategy

Go To Market Strategy

Resourcing Plan

Organizational Design

Process Framework

Communication Plan

Customer Experience

Framework

Product Performance

Reporting

Commercial Calendar

Attention & Engagement

Models

Deliverables

Key Milestones e.g. RFS,

Soft launch & Full

Commercial Launch dates

Business Model

Partner Model

Key Business Assumptions

Market Data/Segment Plan

Branding Brief

Network Rollout Strategy,

Plans & Capabilities

IT Strategy & Capabilities

Quality Management Plan

Any key

Regulatory/Compliance

dates

Inputs

Confidential –

Product Lifecycle & Innovation Management Process

Stage 1 Stage 2 Stage 3 Stage 0

Idea

Generation

Assessment

& Development

Stage 5 Stage 6

Market

Management

GATE 1 GATE 2 GATE 3

Go for Initial

description

Go for Detailed

description

Go for

Implementation

Go for

Launch

Go for

Product Change

Idea

Definition

Initial

Description

Detailed

Description

Implementation Market

Management Termination

Sales,

Marketing,

Wholesale

Build Prop

Plan Deployment

Assess

Stage 4

GATE 6 GATE 7 GATE 4 GATE 5

Business

Case

Go for

Business Case

Go for

Termination

Build IT

Build Network Operate / RUN

Sunset

The process is structured into six stages plus innovation pre-phase.

Seven gates are defined in order to help steering decision-making process.

Overview of the PLM - Process Master Architecture