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April 2011

Top 5 Trends for Product Development Companies

Not a day goes by in which I am not asked: Carrie, what do you see as the coming trends for product development companies? (Well, maybe a day or two passes without the question -- but with my travel schedule, I can be awfully hard track down.)

Given that, I thought I'd share with you the Top Five Trends for Product Development Companies that I've collected from gurus around the world.

  1. Portfolio Management: It's not just for IT anymore
    It used to be that IT was the only part of the organization applying the portfolio management discipline to its decision-making process. No more. I'm seeing a tremendous uptick in the number of R&D and Engineering groups applying portfolio management to the product portfolio.

    Why? According to Dr. Bob Cooper, Co-Founder of Stage-Gate and acknowledged braniac, "in order to win when developing new products, you must do products right and do the right products." And portfolio management can help you do both. It's really a natural fit.

  2. Ideas, I need more ideas!
    Here at Planview, we recently surveyed 900+ people in our 2nd annual product development benchmark survey. "Not being able to drive innovation fast enough" has moved up to a top 3 pain point -- from #6 last year -- neatly trading places with "cutting costs without cutting the future."

    Driving innovation by getting more ideas into the funnel, and using smart, collaborative software to manage these ideas, is critical as we all go from cost-cutting recessionary moves to growth- and innovation-intensive tactics in this new economic environment.

  3. People, I need more people!
    Ouch. Year after year -- as validated in our benchmark survey -- "too many projects for our resources" is the dubious winner as top pain point that product organizations face.

    Companies must place greater emphasis on resource capacity planning as part of the investment decision making process. No longer can they afford to look at their product portfolio myopically based solely on financial impact.

  4. Incremental will only get you incremental
    The economy's back: now, it's about the breakthrough ideas -- creating products that are new to the world and that will drive new revenue. Investing only in incremental innovation -- enhancements and modifications -- is safe, which is great when you're hedging your bets. Your competition isn't hedging its bets. Should you be?

    Smart product organizations strive for a balanced product portfolio, with resources (people and money) allocated both to breakthrough and incremental innovation. Just ask our good friends at Kalypso -- they'll point you in the right direction.

  5. It's a green world after all
    Whether it's a household cleaning product or an airline, a product's brand is now encompassing the impact on the environment. Selecting the right offerings for a product portfolio now is as much about their sustainability as it is about price point, market timing, competitive impact, and more.

    But while we all want to buy the world a Coke and sing in perfect harmony, the reality is that companies must make intelligent portfolio selections based not only on their green impact but also on their bottom-line impact, and will be making careful tradeoffs to ensure a pipeline geared to deliver the optimal mix of both.

So there you have it, Product Pulse Peeps… the top five trends I'm seeing for successful product development companies. Tell me what you're seeing!

PLM vs. PPM: What's the Difference?

I recently commented on a blog post written by Chad Jackson of Lifecycle Insights that raised a question on the difference between PLM applications and PPM applications. It sparked an interesting debate amongst several folks in the industry. Here's my point of view:

PLM -- Product Lifecycle Management -- lives more in the design and engineering aspects of the product development lifecycle, which are at the core of the PLM value proposition. The Product Portfolio Management, or PPM, aspect is essential as it relates to improving product innovation, especially in the areas of understanding the front-end of the pipeline, optimizing the portfolio, building credible capacity plans and product roadmaps, and then managing effective project execution. This comprehensive approach really helps product development teams maximize their capacity to innovate with their inherently constrained resources.

Both PLM and PPM can take an end-to-end approach -- it just depends on what "ends" you're focused on -- and bringing the two together is vital, especially for complex manufacturing-type product organizations. PLM operates at the engineering execution platform level, managing detailed processes and the exponential number of design and engineering artifacts required to bring complex products to market. PPM operates closer to the business dimensions of the organization by focusing on managing demand versus resources, tying the total cost of development of new products (and more on that below), as well as maintaining existing products with revenue and margin those products create.

About "total cost of development," note that, from the Planview perspective, this does include all work. Whether it's packaging design work that needs to be completed prior to launch, the ongoing costs of maintaining products and making incremental enhancements, research on new manufacturing techniques, brand and competitive analysis studies that need to be integrated into the marketing campaign, or the actual development of the product, our philosophy is that ALL work that is necessary to get a product to market should be included as part of the total cost of development and thus factored into revenue forecasts and margin projections.