Too many products? Project Portfolio Management!

Probably you’ve already faced something like this (otherwise you would not be here): you need to divide your time and effort into two or more products, you have too many things to do in a short time and everything is needed to yesterday.

In this situation, there is no simple answer.

First things first

A group of products or business models is what many call portfolio. To manage all these projects, Project Portfolio Management comes to the rescue.

Portfolio management is much more than just implementing multiple projects at the same time. It is about fulfilling them efficiently, in a way that results in the achievement of the company’s strategic objectives and other benefits such as the correct use of resources.

Ok, now that you know the name, all we need to know is how to do it… Now the thing gets ugly.

There is no formula to choose where to put more resources, but there are some things that weight more than others.

Try to look first into the products that help or impact directly on the company goals. Other issues that should weight a little more are the client satisfaction and the removal of project impediments.

Unfortunately, it doesn’t solve all your problems, so a more visual approach might help.

Alex Osterwalder and Yves Pigneur give us some hope saying to first organize the products in a visual way. In their article in strategyzer.com, they tell us how to represent it in a Business Model Portfolio, so maybe we can solve this enigma.

The Execution Engine: Exploit/Improve

First, they give us a map that you place the products you already have.

This map concists on two axis:

1. Profitability: How much profit does the product generate? Products, with high-profit margins and a lot of profit, sit at the top end of the spectrum. Low-profit margins and low-profit overall sit at the bottom.

2. Sustainability or disruption risk: How sustainable is your product? How likely is it to be disrupted? Products that are prone to disruption of technology, market, or regulatory changes. Those products sit on the left-hand side. Strong products with moats to protect them, on the other hand, are very unlikely to be disrupted. They sit on the right-hand side.

The idea is to keep all products on the top right.

Products that fall from the top right down to the left are dying or sick, you need to take care of them.

New products usually start out at the bottom left.

Ultimately, a healthy portfolio has: a good number of products at the top right, a number of young new products at the bottom left, and as few as possible anywhere else.

The Innovation Engine: Explore/Invent

Then, they give you another map for the new products:

The axis now are:

1. Expected return: Ideas and initiatives that have only limited potential to create substantial future revenues and profits go at the bottom of the spectrum. Limitations include the size of the market, revenue potential, pricing, etc. Products with large potential revenues and profits sit at the top of the spectrum.

2. Innovation risk: On this axis, you evaluate how much you de-risked a good looking product. Ideas for which you have no evidence yet are very risky to invest in — these new initiatives sit on the left-hand side. Ideas for which you rigorously test desirability, viability and feasibility sit on the right-hand side of the spectrum.

When it comes to the Innovation Engine, you want to explore many, many different ideas. New business models and initiatives will start out at the bottom left of the map: their profit potential is unclear and you have little evidence to prove that the idea is likely to work.

All together

With the two maps together you have a vision of all the products, and analyzing them in this way should turn things a little easier to prioritize.

Just be careful to not only to focus on one part, innovation is necessary and the execution pays the bills.