All too often we see companies with great products but mediocre profits. Time after time we identify the reason as a wild portfolio.
One of the reasons is that the Strategy has been outsourced to sales and the customers. We are delivering projects instead of products. You need to find a way to support Customer projects while executing your strategy. To manage and avoid a Wild Portfolio we introduce the concept of Opportunity Areas. The concept of Opportunity Areas has proven successful, for IT, Electronics, Mechanical and telecom enterprises. The Concept of Opportunity Areas is a tool for Quantum Leap.
Your portfolio of products might have grown via customer projects and sales driven organization. Where short term sales are prioritized over the long term profits and sustainable business. Don't get me wrong we always need strong sales, but letting your sales decide over your products and your product strategy will turn your portfolio WILD. You will lose control and the planning is made impossible. The maintenance costs will increase, your speed in the market will decrease and you will not reach the profits you deserve. Once you handle more than one product, or life cycles, you are automatically within the domain of product portfolio management (PPM). Download our whitepaper and see why PPM is important and how you can apply it.
We need to work with the portfolio from a technology point of view and from a market point of view. This blog focus on how we deal with the market perspective. How we choose the right projects.
We notice in most B2B companies that projects are driving the business instead of the strategy. When companies are letting individual customer projects define the future we are in trouble. We shall use the projects to execute the strategy! The projects should not give us the strategy. The answer is in finding more projects – not less.
The model is to define your Opportunity Areas and let product management guide sales. Define in what markets, applications and maybe with what technology you have identified opportunities. Where can we grow! And where shall we grow! Make the agreement with your sales management and start guiding your sales into the right direction.
To make the concept of Opportunity Areas more powerful we limit the opportunities. Let’s take an example. We can identify 4 opportunity areas but we will only have resources to pursue 2 Opportunity Areas. When projects appear we firstly see if they fit in an Opportunity Area. Then we make a choice if we can/shall support them. We will only be able to support two areas but possible multiple project in these areas.
By inviting companies to join you in developing great tools within the Opportunity Area is a powerful sales concept. The sales activity becomes more focused and the customer and the sales must sell the project to Product Management.
To make the program successful we need a modern view on the roadmapping, allowing uncertainty and opportunism. Requirement management is key to success. Seven out of ten development projects are failing to reach profitability. Often due to lack of market insight and alignment with strategies. Do you have the knowledge and methods in place to secure success?
But most of all we need insights. Not just an understanding of the market - but deep insights - in the driving forces of the market, the nurturing systems of the ecosystem and understanding the pulse of the customers. Learn more on Building Insights in this blog Create Market Insight using Driving Forces
Opportunity areas is one way to tame your wild portfolio - but you need build great insights to succeed.
Want to learn more? Check out Product Strategy Knowledge Hub, where you can find other product strategy resources.