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Meeting Archives Meeting Summary
Andrew Reback, Group Product Manager at Intuit, gave a highly interactive presentation on Product Portfolio Management at the July 9th meeting of the SVPMA. Andrew spoke about how to evaluate multiple opportunities and communicate the basis for product management's decisions to senior management and the rest of the organization. Andrew currently manages Quickbooks Industry-Specific Solutions and evaluates their portfolio regularly. Prior to Quickbooks, Andrew was at Shiva, Resonate, and Napster. He learned first hand about single product companies that were unable to make the leap to become multiple product companies. Sales will often only focus on enhancing the current product and therefore entire opportunities may be missed until it is too late. The crux of portfolio management is how does one manage and prioritize between multiple projects. Andrew opened by asking the audience what technique their companies used. The list included such analytic choices as Revenue and ROI, to more practical methods such as it is the first thing engineering can complete, to more qualitative methods such as the strongest advocate sets the priority. Whatever your current method, we are all trying to accomplish the same task: balance funds and resources for projects to achieve the company's near and long term objectives. Andrew spent the rest of the evening reviewing an approach for assessing and representing product attributes to objectively balance product/project investment with business objectives and risks. The first step in portfolio management is finding an objective set of criteria against which to measure products (figure 1). Andrew divides the criteria into project and market risk. A few categories for product risk are time market, dependence on new technology, and need for new subject matter expertise. Categories for market risk include current competition and risk of market adoption. The risk factors will depend on your own company and industry environment. You need to choose factors that make the most sense for your business. Once the risks have been identified, each project can be ranked. You can rank products numerically or just use low, medium, and high. Because the numeric rankings themselves are subjective, one must keep in mind the output from either ranking system is just a gauge. The ranks are then summed to produce and overall risk rating for the product.
The second step is to visually represent the data. Andrew recommends charting risk on the X-axis and incremental revenue on the Y-axis (figure 2). The Y-axis will depend on the suitable measure for your company, it might be ROI, but it must be on the incremental investment only. You are evaluating the benefit of further investment in the product to doing nothing. Each product is represented by a circle placed on the x and y axis based on the rankings from step one. The size of the circle represents the magnitude of the investment needed measured in developer resources. The color of the circle then represents whether the project is fully staffed, marginally staffed, or understaffed.
You should then use this chart to shift resources to projects that represent greater opportunities. As a product matures and as the market reaches saturation, it will move down and to the left on the chart over time since each new feature will have lower risk and a lower incremental revenue impact. Projects that fall in the lower, right may present opportunities better suited to a partner who is an expert in a niche of the market. It is important to also understand the model's limitations. It is not a project management tool and will not help allocate named resources. Further, any product not requiring incremental development would be missed in this model, even though investments in marketing, sales, or channel partners may result in high returns. It will also not add insight to the decision to end of life a product. If you are still a single product company, the tool may be used to evaluate bundles of features against each other. In summary, there are six easy steps to performing portfolio management:
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