Dr. Robert Cooper	Dr. Scott Edgett

An interview with Dr. Scott Edgett on the latest in Portfolio Management for New Products.

Recently I sat down with Dr. Scott Edgett to learn more about the keynote presentation he delivered at the PDMA’s 12th Annual Strategic & Operational Portfolio Management event in Florida on February 26-28, 2007. His presentation “Portfolio Management: Optimizing for Success. The APQC Benchmarking Results” outlined important findings from the most recent benchmarking study he conducted in partnership with the American Productivity and Quality Center (APQC).

1.  Why is benchmarking such a popular topic in product innovation these days?

Numerous industry analysts and pundits have recently reported innovation as the single most important goal of the modern CEO for this decade.  This media coverage together with the recent product blockbusters launched by companies such as; Apple, Motorola, P&G, RIM and Google have created a visible ‘benchmark’ for companies to aspire to.  It is logical that business executives and innovation professionals would be interested in learning how their company’s innovation program compares with the performance and practices of top performing innovators.  Benchmarking accelerates the improvement process and increases the likelihood of high quality, high impact changes.

2. What was the ‘theme’ of this recent benchmarking study conducted with APQC?

Our goal was to study five specific practices of top performing companies – companies that also excelled in portfolio management for new products:

1) Aligning Portfolio Management to the Business Strategy
2) Tackling Resource and Capacity Management
3) Defining Roles and Responsibilities for Governance and Execution
4) Communicating with and Training all Stakeholders
5) Measuring Portfolio Performance

3.  What are the key takeaways from this benchmarking study?

Organizations that excel in portfolio management have five characteristics in common:

1. Strong executive support with clear ownership and visibility
2. Good available data which has integrity
3. Metrics that are clearly identified, tracked and reported and which facilitate fact-based decision-making
4. Strong alignment with corporate strategy emphasizing clear goals and established decision criteria
5. Strong effective internal communication plan in place

The key takeaway however is just how important it is for organizations preparing to implement portfolio management to begin first by designing a portfolio management process with these five best practices built in.  Far too many companies put the cart before the horse so to speak – they jump straight to creating numerous impressive charts and forget about what truly drives performance.  Sure, this provides instant gratification but it will not result in a high quality decision process capable of driving consistent, superior performance. 

4.  How can organizations go about benchmarking their portfolio management program?

There are three primary options here 1) online benchmarking tools; 2) private group benchmarking study; or 3) do-it-yourself benchmarking.  The option you select will likely depend on your goals and objectives – what you hope to change (e.g. business results, practices, behaviors, opinions, etc.) because of the information you gain by benchmarking.

1. Online Benchmarking Tools.  Probably the quickest, most reliable and least expensive route is to leverage benchmarking tools which are already designed, tested, peer-reviewed, draw from a large sampling of high quality companies across numerous industries and which have stood the test of time.  An example of this is Benchmarker – an instant, online benchmarking service designed by Dr. Cooper and me.    
2. Private Group Benchmarking Study.  This option is more time consuming and expensive (typically ranges from $20,000 to $250,000+), however, as a participant you receive exclusive access to results.  The quality of the group of companies participating in the study is obviously very important here.  The learning opportunity associated with this type of benchmarking is high value because you are often working directly with an industry expert.  An example of this is the recent benchmarking study I conducted in partnership with the APQC.  
3. Do-it-Yourself:  Organizations that select this option do so because of budget constraints.  However, given the investment of time and resources necessary to research best practices in benchmarking itself, research who the top performing organizations are, research the practices associated with their results and design the surveys, conduct the study and prepare the reports, we are seeing fewer  and fewer organizations select this option.  Most executives would prefer to see their talent working on bringing their next revenue-generating product to market.  If you do select this option, start first by confirming whether your goal is to simply audit your performance (internal self-awareness) or to benchmark your performance (compare your performance against top performing organizations).  If you are really after an audit, read “How to Audit Your Product Innovation Program”.

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