Evolving to Product Portfolio Management

All executives help guide their organisation through the complexities of change: making informed strategic decisions to help meet the challenges of evolving customer needs and changes in technology while navigating stakeholder requirements, compliance and risk. 

Portfolio management is often adopted to help improve the transparency of alignment between strategic intent, activity, impact and outcome. Its focus is to:

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Ensure strategic alignment

Align efforts with overall business objectives and long-term strategic goals.

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Prioritise ruthlessly

Select and prioritise initiatives that offer the highest potential strategic value, considering internal constraints, market potential, competitive landscape, and customer demand.

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Optimise resource allocation

Allocate resources strategically across the entire portfolio, ensuring that the most promising initiatives receive the necessary support and attention.

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Foster a culture of innovation

Encourage continuous learning and adaptation by regularly reviewing and adjusting investment based on objective data: market research, customer feedback, performance analysis, and emerging trends.

The traditional approach is to articulate investments as projects and use project management as the vehicle for value realisation. Unfortunately,  a project’s traditional task-based management approach and its associated status reporting:

• Turn the project’s focus into progress toward milestone-based deliverables and outputs.
• Reduce transparency of the effectiveness of investments in making the desired customer outcome.

This is a key weakness of a project-based approach: the misinterpretation of value as outputs, not outcomes, hindering executives’ ability to maximise investment strategies and realise strategic goals through a portfolio of products.

Why Most Portfolios Fail

Portfolio management typically falters due to an excessive focus on internal processes and a neglect of the ultimate goal: not just introducing a product, but evolving and maturing them so they continue to meet customer needs. 

This failure is reflected in four key areas:

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Overemphasis on milestone reporting

A common pitfall is an overemphasis on the status on tasks and project milestones, rather than assessing the actual customer outcomes and business impacts. This “check-the-box” mentality can lead to a situation where executives focus the portfolio on policing projects to ensure they are completed on time and within budget, and fail to assess whether products are resonating with customers and continue to achieve the desired business results.

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Customer value doesn’t equal ‘deliverables’

Successful projects certainly engage executive with the findings from their customer research, but fail to successfully navigate the concept of value through the entire product lifecycle. They make the false assumption that the defining requirements and then delivering them equals value, so they optimise for delivery. The result is an overemphasis on a project meeting deadlines, delivering a signed-off scope, and staying within budget, while neglecting key performance indicators (KPIs) related to the reason for the strategic investment — customer outcomes.

Neglecting the product life cycle

Traditional portfolio management often focuses on the initiation and execution of projects, but neglects the ongoing management and evolution of products after launch. This leads to:

• Encrapification due to lack of investment after the product is launched
• Missed opportunities to invest a smaller amount easly to test a product’s viability and impact before investing further
• Missed opportunities to grow the product to meet new and emerging customer needs.
• Failure to recognise as early as possible where a product isn’t creating the intended impacts and pivoting investment to other areas or even shelving the product early.
• Devolving into sunk cost fallacy just to see the project through to its end.
• Failure to recognise the total cost of ownership of the product

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Siloed approach to development

Projects optimise for what they report on to the portfolio — delivery of output on time, on budget. The result is they operate in silos with limited integration with what are considered downstream concerns after a project has concluded: critical functions such as communications, change, marketing, and support. This lack of cross-functional collaboration often hinders the development of customer-centric products and impede valuable feedback loops that can help pivot product development process particularly when change — technology, customer needs, compliance changes, or even risk — emerges in the product lifecycle.

This intense focus on execution can inadvertently lead to a neglect of the bigger picture: the viability of the product itself in addressing the ever-evolving customer satisfaction gap.

It’s time to stop project-centric thinking

Project-centric thinking doesn’t limits executives’ ability to address the success of their suite of products for three key reasons:

• Limited Vision: Project management typically operates in silos, concentrating on the success of individual projects rather than their contribution to overall IT strategy and customer value.
• Missed Opportunities: An excessive focus on project delivery can blind executives to emerging market trends, competitor innovations, and evolving customer needs. This can lead to missed opportunities for improvements to current products: improvement and innovation.
• Neglecting Existing Products: A traditional project-centric portfolio often only considers new projects, overlooking the critical need to monitor customer needs of existing products and evolve them to meet new challenges. This can result in declining product performance and market share.

Product portfolio management is holistic

Product portfolio management takes a broader, more strategic view. It involves:

• Strategic Alignment: Aligning product lifecycle with overall business goals and market opportunities.
• Prioritisation: Selecting and prioritising investment — whether in current products or new ones — based on their potential to impact the customer satisfaction gap and bring strategic benefits to the organisation.
• Continuous Improvement: Regularly reviewing and adjusting the product portfolio based on market research, customer feedback, performance analysis, and changing business conditions.
• Customer Focus: Prioritising customer needs and satisfaction throughout the entire product lifecycle and differentiating ‘customer’ from ‘stakeholders’.

Product portfolio management assesses investments vs outcomes

People measure and report on tasks, status and milestones because it’s easy. Reporting to the portfolio on outcomes is hard. Scrum.org’s Evidence-Based Management (EBM) framework offers executives a powerful framework to support portfolio management by focusing them on evidence-based decision making and continuous improvement. EBM is applied from the portfolio and through to product management to understand value and outcomes in the product portfolio:

• Transparency and Measurable Outcomes: EBM emphasises the importance of defining clear and measurable outcomes for each product in the portfolio. This could include customer satisfaction metrics, market share growth, or revenue generation. By establishing these metrics upfront, the portfolio can track progress and assess the actual value delivered by each product.

• Transparency in Transparency: EBM goes beyond simply defining outcomes. It encourages transparency in how those outcomes are achieved. This involves collecting and analysing evidence throughout the development process. This evidence includes customer feedback, product usage data, and team performance metrics. By analysing this evidence, executives can understand the factors contributing to value creation and identify areas for improvement.

• Continuous Improvement through Inspection and Adaptation: EBM is an iterative process that emphasises continuous inspection and adaptation. Regularly reviewing the evidence collected throughout the development process allows the portfolio to identify what’s working well and what needs to be adjusted. This data-driven approach enables executives to make informed decisions about product roadmap adjustments and potential strategic pivots.

• Focus on Value Delivery, Not Delivery: Unlike traditional portfolio management, EBM shifts the focus from project delivery to delivering actual value. By analysing the evidence of product usage and customer impact, the executives can assess whether investments are translating into meaningful outcomes. This data-driven approach ensures that resources are allocated to projects with the highest potential for value creation.

Effective product portfolio management is a feedback loop

An effective product portfolio acts as a powerful feedback loop, guiding executive investment decisions and ensuring that objectively measurable outcomes are achieved.

This feedback loop for the portfolio encompasses:

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Executive Investment

Executives, based on market analysis, strategic goals, and customer insights, invest resources in a portfolio of products. This investment can take various forms, including funding for research and development, marketing campaigns, and team building.

Product Lifecycle Support

Product Development and Delivery: With the necessary resources, product teams work diligently to develop and deliver high-quality products that meet customer needs. This involves a continuous cycle of planning, execution, and iteration, often leveraging agile methodologies like Scrum.

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Monthly Assessment

Regular monthly assessments are crucial to measure the effectiveness of product investments. Key performance indicators from EBM, such as customer acquisition cost, customer lifetime value, market share, and customer satisfaction should be closely monitored. This improves transparency on the effectiveness of solutions and investments to impact the customer satisfaction gap.

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Pivot, Pause, or Persevere

Based on the insights gained from the monthly assessments, executives must make critical decisions:

• .a{fill:none;stroke:currentColor;stroke-linecap:round;stroke-linejoin:round;stroke-width:1.5px;} Pivot: If a product is consistently underperforming, it may be necessary to pivot, adjusting the product strategy, target market, or even discontinuing the product altogether.

• .a{fill:none;stroke:currentColor;stroke-linecap:round;stroke-linejoin:round;stroke-width:1.5px;} Pause: In some cases, it may be prudent to pause development to further investigate market trends, gather additional customer feedback, or reassess the product’s strategic alignment.

• .a{fill:none;stroke:currentColor;stroke-linecap:round;stroke-linejoin:round;stroke-width:1.5px;} Persevere: If a product is demonstrating strong traction and achieving its desired outcomes, continued investment and support may be warranted to capitalize on its success.

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Feedback Loops

The insights gained from the pivot, pause, or persevere decisions are then fed back to executives, highlighting action and its results in terms of EBM value measures relative to the investment made. This continuous feedback loop allows executives to refine their investment strategies and ensure that the product portfolio is consistently delivering value.

Conclusions

Traditional portfolio management is largely a reporting function to executives on the progress of projects. It does little to address the key executive concern “are our investments in our products making the intended impact on the customer satisfaction gap?”

By adopting the value-based approach EBM provides, executives can evolve their portfolio management from a project-centric view and gain a deeper understanding of the real value delivered by its products across the portfolio. This data-driven approach empowers better decision-making, fosters continuous improvement, and ultimately, ensures that the portfolio is driving sustainable growth through valuable product outcomes.

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