We have been teaching Product Portfolio Management to many senior product leaders and the question that is often raised in those classes is “How to practically organize a process of selecting products for development? ” Although it might seem like a simple process, there are many caveats. 

1. Create a list of selection criteria (screening) so you can always analyze product ideas with the same framework.

Figure 1 – Example of scoring

2. Create a process of reviewing these ideas e.g. a committee that reviews the proposals.

3. Agree who sits on the committee. These committee members should be people with authority to assign financial, technical and human resources – for example the board members and departments’ directors.

4.Agree what form proposals should be made in. They can be made in a form of a standardised startup-like pitch deck.

5. Reviewing ideas should be complemented with effective resource allocation process. This not only ensures that approved projects are well-supported but also maximizes the overall efficiency and productivity of the NPD process.

6. Even though you have a framework, decision can vary depending on the current market situation, number of products you have (existing portfolio) and your financial condition.

 7. Each person making a proposal should incorporate insights from market research and testing, potential customers feedback to provide evidence that market will need the product.

8. The execution plan and required resources should be agreed internally with R&D, marketing and sales before submitting the idea for approval. Therefore, a person provides a proof that proposed solution is technically feasible and that the project plan is realistic.

9. People who submit product ideas should always make a risk assessment. This includes market, technological, financial or legal uncertainties. By receiving the result of thorough assessments, you will be able to make informed go/no-go decisions and proactively develop strategies to address potential challenges e.g the cost of certification, changes in market dynamics etc. To do the assessment, you can use tools like PESTLE Analysis.

10. Some potential products may be important even though they won’t be profitable. They can fill the functional gap in the portfolio or draw attention of the clients at fairs or on the website – like a marketing hook.

11. Implement a continuous learning culture, where past experiences are documented and analyzed and incorporated into the process as improvement. This can significantly enhance future project success rate. This involves reviewing and analyzing past product launches, conducting sessions to learn from experiences, and keeping organized collection of insights

12. Companies that have well digitalized processes and use ERP, CRM, Project & Portfolio Management software and good communication between departments (Finance, Marketing, R&D) will have a big advantage in collating the date for analysis. Hint: there are specialized tools for Product Portfolio Management like Sopheon or PlanView.

1. Here are some criteria you should use. This list is not closed, there may be other criteria that are specific to a given industry or a company:  

Strategic Fit and Portfolio Alignment

Does the proposed product fit our overall strategy? Will it help to achieve our strategic goals? Will this new solution create a synergy with existing products providing value added to customer? Will we be able to upsell it to existing customers? Companies often have great ideas that are not aligned with overall strategic direction and competencies. 

Market Trends, Consumer needs and Value Proposition

Before submitting the idea a person, should conduct market research and identify consumer needs and market gaps, which can be addressed with a new product. He/she should validate wheatear a proposed solution solves identified problems with potential customers. 

Competitive Analysis and Market Saturation

Analyzing the competitive landscape allows companies to position their new products uniquely and asses a potential issue with going to market.  Understanding competitors’ offerings, strengths, and weaknesses helps in identifying opportunities for differentiation and innovation. This analysis should be provided in the proposal. 

Scalability

Assessing whether a new product can be scaled or adapted for different markets is important for long-term growth. Products with high scalability potential offer greater returns and are more likely to justify larger investments. 

Sustainability and Compliance

In today’s market, sustainability is a key factor. Evaluating the environmental impact and regulatory compliance of new products ensures that they meet the necessary standards and contribute positively to the company’s corporate social responsibility goals.

Do we have experience & skills 

If the proposed idea is very new to your company, this is a risk as you will have to learn new technologies, build new processes and this mean that your initial execution plan is not realistic and you will need more time and resources that you think. 

Financial Projections and Return on Investment (ROI)

Detailed financial projections, including cost estimates and revenue forecasts, provide a quantitative basis for decision-making. This financial analysis helps in prioritizing projects that promise the best financial returns and align with the company’s growth objectives.

2. Mature Product Portfolio Management is more than just selecting new products. It has other subprocess like balancing the existing portfolio of projects and resource management. They heavily influence the process of selecting new products. Companies that have many ongoing projects and a many high-risk initiatives going on, we will be less likely investing to invest in the given moment.  We will write about it in another article.

3. Having a complex portfolio has its drawbacks. If you wonder what strategy to choose – one product vs. multi-product, stay tuned – we will issue another article about it.

Figure 2 –  Product Portfolio Management in the organisational context

(source: PDMA)

By taking in considerations above strategies, you can make well-informed decisions in selecting new products for development. This approach not only helps you to align your product efforts with the strategic goals but also ensures that resources are utilized efficiently, risks are managed effectively.

We would like the invite to our certified Product Portfolio Management training that is held online on 26-27 September. During this course we will guide you step-by-step through the entire process of selecting new products and balancing your existing portfolio.  This training covers essential strategies, tools, and best practices to help succeed as a Portfolio Manager. 

If you want join the group of Certified Product Portfolio Managers, check the details here

Thank you for your time.