By: MBA / Mélanie Beauregard / NPDP
Innovation is on everyone’s lips as a solution to post-COVID economic recovery. The world of innovation has a very broad definition: It’s often referred to as an information technology innovation… but our worldwide economy is still very reliant on manufacturing. How you select your best innovation project is undoubtedly a starting point!
Like every enterprise, there are always more ideas than resources – human and financial. Hence the importance of focusing resources on the most promising projects. How can this be done? I suggest a few basic steps to build your Product Project Portfolio.
1: List Active Product Projects
The first step is to delimit the sandbox: What are ALL the current Product Projects? Focus your list on projects and not on products (a project can contain several products). Don’t hesitate to approach the teams in the main departments that work on products – mainly Marketing, R&D or Design, among others. Those steps apply for a list of 10 to 12 projects. Above that, more complex and complete tools might be required.
What is an active project? An active project consists of an organized, structured project whose concept allows you to know the number of products, the price, and the schedule, for example. In contrast, ideas, or more embryonic projects, could be placed on a second list: the idea list.
2: Establish Criteria for Evaluating Projects
The next step is to determine how projects will be evaluated, one against the other. I adapted Cooper’s model, the product innovation guru, for SMEs, using the four criteria that I think cover the essential aspects of business and product innovation:
- Alignment with corporate strategy: This criterion ensures that the projects at the top of the list contribute to the company’s ability to achieve its strategic objectives.
- Market alignment: This factor helps prioritize projects that are in known markets with known customers. It can be divided into two subcategories:
- Product and competition: Do customers want the product?
- Market attractiveness: Is there room in the market for the product?
- Alignment with your technical capacity: This criterion puts forward the “easy” projects for the company at the expense of the more technically difficult projects.
- Financial alignment: This criterion favors the projects with the most financial potential.
It is always possible to add or adapt them. The important thing is that the team understands how the project is evaluated in relation to other projects.
3: Evaluate Projects in Relation to Each Other
As the 3rd Step, evaluate the list of projects identified in Step 1, using the criteria from Step 2.
Using a scale of 1 to 10 for each of the criteria, it’s now time to assess the projects against each other. Ideally, the expertise of a multi-disciplinary team to ensure a good calibration to evaluate future projects.
Simply use a scale of 1 – 5 – 10, or only the odd numbers, to force a ranking of the projects. The difference of one unit will not affect the order in the list. The point of the conversation is to determine whether or not the project satisfies the criterion. Then compare all the projects against the same criterion.
- Alignment with business strategy: Does this project enable the company to achieve its strategic objectives?
- Alignment with the market: Is it a known market? Do our customers want the product?
- Alignment with your technical capability: Can we do it? Do we know how to make the product?
- Financial alignment: Is the risk worth the return? Would you invest your own money?
One of the main benefits of these criteria is that they measure the project both internally and externally. For example, a project may be interesting for three criteria but not in your company’s area of expertise. It is not automatically eliminated, as it opens the possibility to considering a new business model, for example. Or, if a product project is financially risky, but is favoured by the other criteria, it remains on the list with less risky projects in order to maintain a relative risk balance.
Finally, it’s now time to average the four criteria, so that each project has a unique value. If you find yourself with tied scores, simply reevaluate the two projects against each other. Otherwise, they will remain of equal value in the list, which is not a bad thing, if it is an exception. All that’s left to do is to put the list in order!
You now have a weighted list of the most relevant projects for your company. It makes it easier to communicate with the managers of the different teams as to which projects to concentrate resources on.
It is certainly possible to add two standards of rating to make discussions between managers better supported by information, while ensuring an alignment with corporate objectives.
4: Weighted Criteria
In the previous list, each of your new product projects are evaluated with an average score ranging from 1 to 10, based on four criteria. Thus, each argument counts for 25% of the final score.
Depending on your business or growth model, it may be relevant to apply a rating to give more weight to criteria. It is common to see a weight of 50% or 60% assigned for financial (#4) or strategic (#1) criteria, and the other criteria are therefore less dominant. The sum of the weights must always total 100%, in order to keep the final score between 1 and 10.
If you choose to add a rating, and thus add complexity, it is important that it has a significant impact on the ranking prioritization. You want to avoid a situation of weighting the four criteria 20-30-25-25: Since the weight of each argument is very close, the ranking will have little or no change. So, no point in adding that complexity if you end up with the same result you can have without it.
To ensure good calibration and team buy-in, the simple method is the way to go.
5: Resource Allocation
Projects are often sidelined in favour of day-to-day operational tasks. Projects do not progress as planned due to human resource capacity constrains! Integrating resource allocation by project is probably the most time-consuming step, as data must be collected during a few weeks. Data is essential to properly represent the reality. You do not want to opt for the easy solution of estimating resources. Managers might tend to over-estimate the actual time their team spends on projects and under-estimate the weight of operational tasks.
Target the teams most involved in your product projects, those that are probably bottlenecked. It depends of your business model and your industry, as it could be R&D, Design, Marketing, Commercialization, Engineering. Using a simple Excel file, share the list of projects and ask your team members to enter the time spent on each project in one week (one week per column). The time may be indicated in hours or as a percentage. The objective here is to get an overall idea of the time involved, no one is chasing minutes, but a bulk part idea is good enough. The task needs to last several weeks, since no two weeks are the same! A minimum of 6 to 8 weeks is recommended to achieve a representative dataset. Once again, it depends on your reality!
Now that you have the actual time spent, managers can assess the time available for these projects with hard data, not only perceptions. For one team, maybe the capacity for projects is 50% of their week while in another, only 10% due to heavy operational tasks.
The only thing left now is to integrate this information in the Project Portfolio file! Two columns per team: one with time by team per project and one cumulative. When the cumulative exceeds the capacity: red! In the blink of an eye, you can now assess the projects that have to wait due to resources constrains.
You can manage product projects, see where they are stalled and where resources need to be added, concentrated, supported, in order to improve your time-to-market. Maybe a promising project needs to be outsourced? Maybe new business models can be explored to bring more products to market and achieve the company’s growth objectives?
The most important key element now is to keep the file updated and review it periodically so you can make informed decisions. You will quickly realize that it’s not about stopping bad projects, but rather deciding to pause good projects to focus resources on better projects.
About the Author
Mélanie Beauregard is a team leader with 20 years of management experience in manufacturing companies, large and small. She provides companies with tools and skills to deliver their strategic plan or innovation.
After completing her MBA in Business Management at Université Laval in 2002, Mélanie quickly turned to product management and she went on to complete her training in product management and development, project management, market analysis and performance indicators with the Product Development and Management Association (PDMA) by obtaining the New Product Development Professional (NPDP) certification in 2007.
In 2011 she built on her strengths with program management, portfolio and organisation by leading and contributing to the programs and project offices. To get more tools and to ensure the performance of the programs she has to deliver, Melanie has successfully completed her Green Belt Lean Six-Sigma certification in 2018.
Her experience in multidisciplinary team management allows her to mobilize teams, structure tasks and define roles so that everyone understands expectations and contributes to the height of their abilities while learning!
Recognized for her empathetic leadership, her ability to solve complex problems quickly and efficiently, and by bringing innovative business models, Melanie has contributed to the success of many product development and partnership projects, optimizing internal processes and clarifying roles in order to achieve the goals entrusted to her.
Featured image via Shutterstock.