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Tenet #7 - Ten Tenets of Portfolio Management

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by Larry Pendergrass, Principal

Tenet #7: Design tiered portfolios

In last week’s blog, I wrote about the value of using visual methods to cut, examine and present the data in many different ways. Visual methods have the advantage that you can quickly see large, complex data sets on a single page and perhaps best of all, can compare projects easily. This is essential as you are striving for a balance portfolio.

But a balanced project portfolio is fed by and in turn feeds other portfolios. While the exact list may vary with industry, included are typically:

  • Technology Portfolio – Before you can successfully create that breakthrough non-invasive glucose monitoring unit, you need first to develop the technologies for miniature Raman spectroscopy, low noise signal detection, wireless communication and data management. You need to decide which technologies will be developed and which will simply be bought from others. The best new product development organizations are able to recognize key technologies, especially those that present high risk and pull them off of the critical path of a particular project. Running parallel then to the project roadmaps should be another roadmap for the needed technologies beyond the current product roadmap. This requires vision, insight and highly skilled decision-makers. You need to create a Technology Project Portfolio along with processes to balance, authorize and manage these projects, and then have these technologies intersect your product roadmap.
  • Process Portfolio – In order to design and fabricate a new line of high speed semiconductor devices based on 10 nanometer gates, you need processes for ultra-fine line lithography, deposition, etching, and many other processes. Or before you begin that new business in high volume, low mix manufacturing (where all previous products required low volume, high mix) you have much work to do in altering manufacturing processes and/or identifying manufacturing partners. These efforts require projects and roadmaps, and should use portfolio management to balance, authorize and manage the projects.
  • Competency Portfolio – Before you are able to enter a new market like RF test equipment or Pulsed Radar equipment, you need to decide which competencies will be core to the business and therefore owned, and which will be needed on a temporary basis and are candidates for open innovation. Developing the competencies for new areas of business require a plan. They require an inventory of current skills, and a roadmap to get where you need to go. They require development of more than just the product development department competencies, but may also require development of the sales force, application engineering, marketing, manufacturing and other functional areas. Your competency portfolio may at any time require minor or very significant work.

Each of the above can be managed using the same techniques we have discussed for PPM. Whether these portfolios require the rigor used for PPM is dependent on the risk and the importance to the firm. In any case, all require an occasional inventory evaluation, gap assessment, planning for enhancement and alignment with the Project Portfolio.

  • Inventory evaluation: An example of an inventory of the firm’s competency is the employee skills matrix, laying out the level of expertise your employees possess in various critical areas (such as expert level analog IC design or Java software development). The simple act of taking an inventory of your current assets in technology, process and competency is tremendously revealing. It will open your eyes to the strengths and weaknesses of your firm. You might be surprised at the hidden gems, overlooked and taken for granted that may be unleashed to your advantage. Or you may finally realize some of your major shortcomings that have prevented you from successfully competing in the past. Perhaps you can benefit from more cross-training to improve flexibility and response time. This is a snap-shot in time of the technology, process and competency in your firm. But it will be used to plan for the future, and a successful execution of the firm’s strategy.
  • Gap assessment: Having the inventory evaluation in hand, and with an eye toward the corporate and product strategy, you can begin to develop a gap assessment. This assessment will be iterative with the PPM process and essential in the planning and alignment with the project portfolio.
  • Planning and Alignment: Roadmaps can and should be developed for all major elements of success in the implementation of the firm’s strategy. In addition to the product roadmap(s), the firms should develop and manage to roadmaps in technology, process and competency. These roadmaps must show strong linkage to the prodect roadmaps. For example, elements in the process roadmap may include the development of key suppliers for essential materials. It may include a new inventory control process and a set of tools. It may include the ability to automate large parts of the factory. The risk assigned to the entire corporate strategy is not illuminated completely unless careful thought is given to these necessary underpinnings, the timing needed for their roll-out, the cost of their development and the impact on the product roadmaps of any failure in these supporting roadmaps.

Developing a robust PPM process requires linkage with other tiered portfolios. Your technology portfolio, process portfolio and competency portfolios (and potentially others important to your firm) will inform and be informed by your PPM process. Only in this way can you prepare well ahead of the need for the required elements of your project plans.

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TechZecs, LLC
1730 Kearny Street,
Suite F-3
San Francisco,  California
94133 USA

Principal and Founder

Dr. Scott S. Elliott
Telephone: +1.415.830.5520

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