Customer Reviews

Portfolio Management For New Products: Second Edition

5 star:		(9)
4 star:		(4)
3 star:		(0)
2 star:		(1)
1 star:		(0)

 

 

Huge disappointment. Chapter 1, page 1 starts with "Those
companies that succeed at new product dvelopment are the future
Mercks, HPs, 3Ms, and Microsofts; those companies that fail to excel
at developing new products will invariably disappear or be gobbed up
by the winners. .....". Despite this quite promising catch
phrase you will not find a single word on how the above mentioned
companies develope new products.

Things actually get worse. What you
will find in this book are random generated case studies on various
portfolio models the authors encountered in the few firms willing to
meet them - no theoretical framework is given on portfolio management,
criteria to be included and best practices in various industries.

As
a major disappointment I found the fact that not a single case/best
practise study came from the pharmaceutical industry and the software
industry, those industries where portfolio management/selection are at
the very heart of the strategic management process. It would have been
a huge (and logical) opportunity to cover in this book how Merck or
Pfizer steer their new product development processes. But don`t look
for clues to this questions in this book. The case studies you will
find in this book are about a small Canadian bank, a small US chemical
company, and about Hoechst US. The last case study offered at least
some ideas useful for improving the portfolio management process (that
is the main reason for the second star).

Somewhat disturbing are
platidudes widely used throughout the book (e.g. " ....Remember:
understanding the problem is the first step to a solution!
.... (p. 184)). If esclamation marks after platitudes make you
nervous, then you will probably throw this book away before reaching
page 100.

The only bright side of this book are the first 20 pages,
where the authors discribe present shortfalls of the portfolio
management process currently used in some firms (i.e. in the firms
they interview, and these firms are underperformers). It helps to get
an idea of what effective portfolio management should do - and these
points are very agreeable indeed (e.g. value creation, balance,
strategic fit). That these questions are inadequeately and only
empirically adressed in this book, is a source of frustration for its
readers. I would give only a very very weak recommendation for this
book....

databaseU

The purpose of this book is to provide the reader with an actionable approach for implementing a product-oriented project portfolio management process which corporate leaders can use to ensure that the organization's portfolio delivers value, is balanced, and is aligned with strategy.
While the book addresses product-oriented projects, it seems well suited to limited generalization to aid the non-product based project portfolio.

The Thesis
The authors state that a portfolio process is key to success since projects operationalize strategy. To determine how well organizations manage their product project portfolio, they evaluate leader satisfaction with the process the organization uses along six metrics:
* Projects aligned with business's objectives
* Portfolio contains very high value projects
* Spending reflects the business's strategy
* Projects are done on time (no gridlock)
* Portfolio has good balance of projects
* Portfolio has right number of projects

While I think this is a good list for any project portfolio manager to begin using, I note that this survey is simply a ranking of leader satisfaction with leaders in organizations which use portfolio management. The authors did not try to link leader satisfaction with business success. It is difficult to prove that portfolio management led to business success, but one might assert that a measure of portfolio management on business is not fair because what one is really measuring is strategy success. The goal of portfolio management then might be stated as alignment with strategy, not business success. I think an organizational survey asking senior leaders to rank satisfaction along the six metrics might be interesting - how many of the questions can they answer at all? Presumably, knowing the answers and being dissatisfied with them might be better than not knowing the answers.

Actionable Information
This book is well organized and appears well researched. This is not surprising given that it was written by academic professionals. What is a little surprising, given the authors' profession, is that is so thoroughly action-oriented. The authors never seem to loose sight of the fact that if portfolio management is to help an organization it must be implemented. Over and over again, they point out pitfalls, limitations, cautions, and implementation steps for overcoming these. I expect to use this book often to fill in the gaps in other approaches, leaning heavily on the best-practice implementation suggestions they authors recommend in suggestions tailored to specific goals.

Among the useful, researched insights was this one: "Those businesses that use financial models as the dominant portfolio selection method end up with the poorest-performing portfolios!" (p 169). One reason for this (in product portfolios) is that the sophistication of the financial tools exceeds the quality of the predictive value data. Conversely, businesses that rely principally on strategic models outperform the rest. Allocating resources to strategic areas seems to work well, and we are reminded that "strategy begins when you start spending money" (Ibid).

Conclusion
Many books are over-blown magazine articles. This is not one of those books. The authors did a lot of plain hard work bringing this book together and it shows. They authors never forget that someone must sell the notion of portfolio management to senior leaders, then provide them with specific, relevant and actionable information to make difficult and important project decisions with strategic impact. I appreciate the fact that the authors frequently provide suggestions on how to keep thinks simple, starting small and scaling sophistication as processes are prototyped, then refined and adapted in specific organizations.

There is a possible limitation in how appropriately one may generalize these approaches to non-product-oriented project portfolios. This book does such a good job talking about project portfolio management that the reader can forget at times that the book is about product project portfolio management. It may be that some of the research findings do not apply or cannot be generalized with validity to other types of project portfolios. The reader should keep his grain of salt handy. However, there are still too few project portfolio management books available, especially books based on research, so this is a very useful reference. By way of balance, it does not seem too far a stretch to use this book for other, non-product project portfolio management since the aim of the process is to align projects with strategy, obtain high value from projects, and obtain a balanced portfolio of projects. These are good goals for any portfolio, and organizations are free to define and measure dimensions however they wish.
Possibly the highest compliment I can pay the authors is to say that having read the book, my copy is full of underlined passages and pages encumbered with sticky-notes. This book will not gather much dust on my shelf - at least not for quite some time.

Edgett, et al provide an easy to read summary of their research findings on how various companies conduct portfolio management. They provide examples, pitfalls to avoid, and structures to use in building your own company's portfolio management program.

If you are already conducting portfolio reviews, this is a good book as a reference to see how to improve the process. If you are not using portfolio reviews in your company, here is a good reference to learn how to do it.

There is no earth-shattering new information in this book. I would have liked to have seen information on portfolio management based on the type of product such as high tech, consumer, etc. If you're just learning about portfolio management this is a good starting place, if you are already knowledgeable about the area, search out other books.

I was skeptical about Portfolio Management for New Products, as I've not been a big fan of Coopers writing, but this book did surprise me and I have learned from it.

I'd say that the book consists of four different parts. The first two chapters are the introduction chapter where the authors go over their research on portfolio management and try to convince the reader that portfolio management is a really good idea. In the second chapter they define the three goals for portfolio management: maximizing value, link to strategy and balancing the portfolio.

The next three chapters three looks at different portfolio management techniques for the three different goals. Chapter three looks at the value side and draws some rather interesting conclusions. I liked the examples of how different companies work. The fourth chapter looks at the balancing part and spends most of its time on the bubble diagrams and how/why to make them. The fifth chapter then covers the link with strategy and how to make sure the products in your portfolio are aligned with the companies strategic goals. The sixth chapter was almost a summary of the previous three and looks at how to combine them and which methods are best.

Chapter 7 and 8 seems kind-of "in between chapters". Seven covers some of the challenges related to portfolio management and chapter Eight covers data integrity. Some points made related to the reliability of the data are good and valid, though the recommendations for increasing data validity were weak.

The last part talked about the actual portfolio management process. First it looks at the high level, the strategy level and how to make the decisions there. Next it looks on the business unit specific level and especially talks about the relationship between portfolio management and a stage-gate process. The last chapter of the book is the "change" chapter which gives hints about how to implement portfolio management in your organization.

The book surprised me, though I had low expectations, so it might have been easy. It was thorough on techniques and gave lots of case examples. It discussed several advantages and disadvantages, which I enjoyed.

Though! I do think there were also some serious problems with this book. First of all, its way too big. It repeats and repeats and requires too much words. The whole book could be 1/3rd of the current size and then it would still cover all the topics. I hate this since I rather read a tense 100 page book than a fluffy 350 page book. Next, I was extremely annoyed by the authors self-promotion for their services and their products. At times, I felt I was reading a Cooper marketing brochure instead of a book on portfolio management.

But, by far, the biggest problem is that I felt the books was very traditional. It talks about command-control hierarchical way of working in an organization. It makes lots of assumptions about the role of senior management, the role of strategy and budgeting. I know, this is a fact of life in most organizations, but still... some more insight in modern organizations would have been nice.

Overall... I enjoyed the book. I was thinking about a rating between three and four stars. It's definitively not a five-star book due to the mentioned drawbacks. I decided to go for four because, at this moment, I do not know a better book on this subject. Recommended to read for those who do not mind about the mentioned drawbacks.

I find Robert Cooper to be a bit grandiose in all of his publications in his conclusions from various studies (including his own) and thus you have to take them with a grain of salt. However, this book is very good in showing lots of different ways of approaching the problem of portfolio management. You can be assured that the right answer is different for every company, so read how others have done it and decide which version or hybrid may be right for you.

I'd highly recommend this book to anyone establishing and/or revising a portfolio management process. There are several real-company examples that can be used as a starting point for discussion for your own organization.

Great guide for those with multiple NPD projects in the pipeline. Best when used in conjunction with "The PDMA Handbook of New Product Development, Second Edition."

In this text, the authors thoroughly review the methods currently being practiced in companies to make decisions about their investments in new products and technologies, and the success of these various methods. They recognize the difficulties of making such decisions, especially by relying on simple processes without understanding shorfalls of the process and the robustness of the data. They focus on the goals of maximizing value, achieving a balanced portfolio and linking the decisions to business strategy. They tie this process into other key processes in the company, including the product development process and the new product strategy. By far the most valuable aspect of the book, however, is the link between process and real operation provided by the "Points for Management to Ponder" commentary which runs throughout the book. This is a current, encyclopedic and practical guide to this very difficult business process.

Developing new industrial and commercial products is one of the most expensive and risky tasks facing management. New product development is bound to be difficult because new technology or new markets are always involved. Risk in selecting new projects for R&D to spend the company's money on can be managed in a similar way to managing financial investments. You assemble a portfolio, which is collection of investments (i.e. projects) having thought-out risks and an estimated probability of meeting your requirements. This book shows you how. Cooper's team in Canada have been working on new product management for over 20 years and they are the world experts.

Three professors, Robert G. Cooper, Scott J. Edgett and Elko J. Kleinschmidt, wrote this book. The good news is that they really know their stuff; the less-than-great news is that they write like, well, professors. The book is hampered by academic prose, qualifiers, tangents and a scholarly, if balanced, reluctance to commit completely to most propositions. We find that readers seeking a comprehensive catalog of product portfolio management techniques will benefit from the detailed initial chapters. Meanwhile, readers who are in search of practical, applicable information will find more of what they want in the later chapters.