Product portfolio management is a practice used to manage multiple products as a portfolio. While there are similarities to managing a single product, the differences for portfolios stem from the markets in which the products have their lifecycles and business models. What is the goal of managing a portfolio as opposed to just a single product? Johnson Controls Product VP Narasimha Krishnakumar discusses how PMs can scale to manage a portfolio of products and best practices to use.
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On Portfolio Management Frameworks
What is the optimal portfolio? Narasimha shares that it’s a balance between getting the most bang for your buck and uncovering new opportunities. To map these priorities for the right mix of investments, there are a few frameworks product managers can consider.
“I wanted to shed light on a few different frameworks to drive this optimal allocation of how do you optimize the product portfolio. … One classic framework that I have used, and that’s used in the industry is the Boston Consulting Group framework. Primarily, along the x-axis, you see that there is a market share. This is the relative position of its product in the portfolio, and then there is a business growth rate associated with that. So you have a two-by-two matrix, and toward the right-hand side, on the lower growth, as well as lower market share, you have dogs. The recommendation is you need to liquidate the dogs and exit them as products. Again, you need to really look at the data before you make such a decision, but that is kind of the high-level framework. Then, shifting to the left-hand side, you have a relatively high market share position on the left-hand side. These are your cash cow products, this would be mature products that are generating single-digit growth rates. So you want to cash flow of those products and then use them to invest in hybrid products, which are your starters, looking upon the left-hand side. If you go to a higher growth rate, those are your source, you want to invest in those, you want to cash out scaling products, and you want to invest in those. And then the top right-hand side is where it is interesting: you have new product ideas, you have a relatively low market share, but you have high potential growth. So you need to pick a few of them and invest in those, as well, because they will be tomorrow’s stars. Again, using data as a guideline to make these investment decisions and optimizing the portfolio, that’s what the BCG matrix is all about.
The framework being used in technology companies is the innovation ambition matrix. This is typically when you’re in a startup stage, you start with a core product where you’re solving a customer problem, you’re investing in developing technology to solve that customer problem. … When you’re ready to expand to the next level, you’re thinking about expanding this solution to adjacent markets. You discover whether there are adjacent opportunities that you can leverage your core product, enhance it, but you can create a new offering for a different set of customers or even the same set of customers with a new product. So you’re going to go look into the next ideation to see if that is available. …
A couple of other things that I had seen are the ANSOFF matrix, as well as the GE McKinsey metrics. The ANSOFF matrix is pretty similar to the Boston Consulting Group matrix. There is guidance in terms of how you go about investing, so there are existing products and new products. Along the y axis, you have existing markets as well as new markets. This is another view of looking at it and it provides you investment guidance in terms of how to think about it across the portfolio.
The final one, the GE McKinsey matrix, is applicable to very large companies that have business units, and each business unit has a portfolio of products or multiple portfolio products. You’re looking at what is the relative strength of the business unit, and then what is the industry attractiveness of the product portfolio being considered. This is a little bit more of a complex matrix because you are looking at multiple dimensions, multiple product portfolios, multiple business units, and multiple industries that you are participating in. …They have a portfolio of diverse products that attack different market segments and solve problems of different markets. Anyone that is in a large company will find this matrix very useful.”
On Product Management vs Portfolio Management
Whether you are looking to break into a product management role or level up your role to VP or CPO, it’s important to understand the difference between product management and portfolio management. Narasimha shares some differences, as well as some possible areas for similarities.
“This is not an extensive be-all, end-all list. There are multiple differences. … Typically, when you’re looking at the product, a number of products in product management are focused on one product, meaning one product, whereas, in a portfolio, you’re looking at multiple products. The multiple products could be based on a core foundation. If you look at Facebook, one could argue that it is a single product, one could argue that there are multiple products, because there are offshoots from Facebook. … Typically a product manager is focused on one product whereas the portfolio manager is looking at a portfolio of multiple products.
From a process standpoint, there could be different product processes that one uses in developing a single product, but typically you have a product backlog, you go through the backlog grooming process, and you typically have an agile or waterfall, where you have the engineering team constantly scrubbing and developing the product. Whereas in a portfolio, the portfolio maps through individual product processes, you need to really look at how we drive the portfolio as a whole from a process standpoint, and here’s where the product operations view comes into play.
Look at what is the progress of the portfolio aligning with the business goals. How is the portfolio doing from an execution standpoint, from a process standpoint? You do product operations to view across the portfolio, check in with the teams in terms of where they are given the roadmap priorities and business goals that you need to align. … If you’re looking at single products, and you’re a product manager, you’re looking at product level goals. Your product level goal will be to increase the Net Promoter Score of that particular product, increase customer satisfaction, though it really depends on the stage of the product lifecycle. … But when you’re looking at the portfolio, you want to look at the overall what are we trying to do with the portfolio? What are the metrics for the portfolio, and how goals are defined when the portfolio? This is primarily coming in line with the business objectives. You get cascaded to product goals, but you also want to look at a higher-level set of goals where you are aligned with the company goals. …”
On Opportunities to Portfolio Management
In his own experience, Narasimha shares that there are a number of opportunities to managing a portfolio of products as opposed to just one.
“One of the opportunities, as we talked about, is the optimal investment mix. How do you arrive at the optimal investment? This is assuming that most companies are resource-constrained. How do we get the maximum bang for the buck, based on the resources that you have, the constraints that you have? One area that is really helpful here is the frameworks, which can be used to guide the process of investment where you have the data, you have all the relevant metrics associated with various products. You can design it to get any situation and arrive at an optimal mix, using data as a guideline, as well as applying the right frameworks.
Then there is the question of balancing resources because you have a fixed resource pool. How do you achieve balance and what’s the right allocation of resources to various initiatives that you’re trying? Here’s where prioritization will come into play. What do you think about prioritization across the portfolio? Do certain products carry higher priority in the portfolio versus others that carry lower priority? Within those products, how do you really prioritize? You need to look both within the product as well as across the product to drive this resourcing conversation….
The final piece is the product roadmap. What do you think about the overall roadmap of the portfolio? What do you think about aligning the product roadmap to that of the portfolio? That’s the challenge that will come up, but that’s also a significant opportunity, as long as there is alignment with the higher-level company goals, it can be very useful in constructing that overall roadmap view and a portfolio view from an execution standpoint.”
About the speaker
About the host
Maheep is a customer-focused Product Leader. He believes that a Product Manager wears multiple hats but should always champion the voice of the customer.