Spiral-Up Implementation of NPD Portfolio and Pipeline Management

Almost all organizations have benefited from doing more projects faster. But new product development can only go so fast without increasing the chances of failure or decreasing expected financial return. Still, it is common to see senior managers push harder on the same “more projects faster” approach.

Implementation Challenge

Effective Portfolio and Pipeline Management (PPM) helps overcome this difficult challenge. PPM pulls together project selection, project mix management, and resource assignment management. It enables the organization to emphasize a balance between “Speed-to-market,” “Strategic Impact,” and “Resource-Use-Efficiency.” (Figure 1) The goal is to optimize these orientations simultaneously, in order to realize significant economic gain. Management wants the economic gains, not just “more projects faster.” Unfortunately, understanding what PPM is and getting an organization to do it well are two entirely different issues.

Implementing PPM is a major challenge for every organization. Many factors slow down benefit gains and some factors even worsen the affect of others. For example, at the start of PPM, data is seldom reliable or timely. Often, the exact metrics needed to communicate with management are not known. Even with good data in-hand, some managers may perceive PPM as undermining current decision-making. These three factors (metrics, data gathering and management support) become entwined. An inability to understand such factors and their relationship with one another makes PPM implementations very demanding.

How You Implement PPM Matters 
Consider some of the real concerns stated by managers trying to implement PPM. (Side box) Notice the variety. It would be impossible to address all of these challenges with a single action. Some form of a broad, coordinated approach must be taken.

What, then, is the best way to deploy PPM? What implementation practices deliver the most benefits fastest? These questions led The Adept Group to conduct research specific to PPM implementation. Approximately 175 companies participated, representing a wide distribution of company types, duration of PPM practices, and implementation experiences.

The first step in the implementation research was to compile and categorize the “what’s” and “how’s” of PPM, garnered from multiple sources . The result was a list of twenty-six different components that were divided into seven logical groupings. (Table 1)

Components of PPM
Two of the groups of components are primary or fundamental to PPM:

  1. Mix Management, and;
  2. Throughput Management.

Combined, the components within these two groups form the basics of PPM: identifying which projects to work on, and determining the resources assigned to each. The other five groups are secondary or supportive to the primary groups. Yet, all component groups have notable influence on benefit accrual. Another way of looking at this relationship is that organizations want the gains from Mix Management and Throughput Management. To realize these gains, however, progress must also be made with the components in the supportive groups.

Capability Maturity
A key finding in the implementation research came from the wide distribution of both experience and benefits accrued from PPM. Such distribution of performance is the norm in complex organizational systems. IBM confronted this issue with software development. What they learned was that the quality of resulting software (the output of the system) is dependent upon the maturity of the capabilities a group has in developing software. More notably, they identified maturity levels through which software groups had to progress in order to improve their output. IBM’s work led to what is commonly known as a “Capability Maturity Model” (CMM) for software development. The Software Engineering Institute at Carnegie Melon Institute later put CMM into broad practice across the software industry.

Mix Management Project Selection Criteria
Mix Criteria
Strategic Buckets
Project Impact Dependencies
Mix Optimization Analysis
Throughput Management Project Management Foundation
Project Prioritization
Resources to Project Assignments
Resource Use Forecasts
Critical Chain
Measures Metrics
Financial Priority Listing
Risk Assessment
Software/Data Data Gathering and Handling
View Creation Software
Enterprise System
Processes Portfolio Objects being Managed
Stage-gate redesign
Front-end concept generation
Product line mapping
Management Top Management Involvement
Top Management Proficiency
Top Management Focus
Focus Organizational Challenges
Implementation Team Focus
Table 1: PPM Componets by Group

Rather than seeking a single overall best practice, CMM suggests that, in complex systems, organizations should focus on attaining each maturity level, one at a time. All requisite practices must be in place, in the right order, for the system to be effective. CMM recognizes that certain practices rely on certain other practices. For example, it is difficult to do 1) software user interface planning without first understanding 2) customer use requirements. It is not sufficient to establish only a couple of the practices in the complex system of software development.

The same is true for PPM. Consistent practices on certain PPM components are necessary for other components to be effective. In PPM, for instance, establishing the project mix component without establishing a data gathering component will not yield much benefit to the organization. Such out of sync deployment of practices may even cause harm to the initiative. The implementation of PPM components must be coordinated. The research analysis sought to do this. By using implementation experience, logic, and trial and error to determine required relationships of components, the analysis identified five critical maturity levels for PPM implementation. (A detailed Matrix of “Component versus Maturity Levels” is available from the author: )

Spiral-Up Approach
PPM implementation teams can accelerate the accrual of benefits and leverage the knowledge of the Capability Maturity Model simply by addressing one maturity level at a time. Implementations can proceed to the next maturity level once teams establish the required components for a current maturity level. This iterative approach to components across maturity levels implies that PPM implementation is like moving up a spiral. (Figure 2)

A Spiral-Up Implementation enables organizations to gain benefits faster and to build steadily on investments in each PPM component. Consider the progression of the data storage component. (Table 2)

Maturity Level 1: no data storage
Maturity Level 2-3: data storage in multiple MS Excel/Access sources
Maturity Level 4: data storage in a single database
Maturity Level 5: central storage for a web-based system

Table 2: Progression of Data Component

For most organizations, data storage will advance from having none at all to having a central repository, supporting a web-based system. But the steps in between are very important. The use of tools such as Microsoft Excel and Access in Maturity Levels 2 and 3 enable great flexibility. These tools are easy to use and do not require an IT department’s involvement. The interim practice, in effect, helps teams establish other components such as specific metrics, strategic-buckets, and criteria and guidelines. “Hard wiring” these components into a central data repository before they are both known and accepted would be significantly more difficult and time consuming.

Moving Up the Spiral
“Consistency-in-use” of each component is the most important factor driving the accrual of benefits. The research shows that the total number of components carried out consistently by an organization correlates strongly with the total benefits accrued to the organization. A key factor in Spiral-Up Implementation, therefore, is getting people across the organization to use each component consistently, i.e., at an appropriate frequency and in a quality manner. For each component within each maturity level, the Spiral-Up Implementation steps should be to:

  1. Iron-out the mechanics of each component’s use;
  2. Learn and understand the influences on the components, altering or adapting them as needed; and,
  3. Increase the consistency with which the organization uses each component.

There are some important milestones when implementing PPM. For instance, the percentage of all projects included in an organization’s PPM process has significant bearing on the amount of benefit gained. Organizations greatly undermine benefit accrual when they include less than 80 percent of their projects in PPM. PPM serves little purpose if too many projects run outside of the portfolio. Indeed, consistency of at least an 80 percent inclusion rate is a point of critical mass for effective PPM.

Three other critical turning points also anchor benefit accrual:

  1. The consistent use of portfolio mix criteria and guidelines,
  2. The consistent use of resource and pipeline bottleneck forecasting, and
  3. The consistent use of a centralized data repository.

These three components, when taken together, offer an organization the biggest steps forward in PPM. Collectively, they anchor the PPM implementation. Yet, even though they are necessary practices, they are not sufficient, by themselves, to sustain the initiative.
The progression of benefits from PPM is insightful. (Figure 3) During early maturity levels, PPM seems to impact speed to market negatively. However, once an organization emerges from Maturity Level 3, positive gains appear in all benefit areas (Speed-to-Market, Strategic Impact, and Resource-Use-Efficiency). This is an important turning point for Spiral-Up Implementation. Here, benefits gains are significant enough for the organization to not want to lose them. As a result, managers across the organization will be, for the most part, very supportive of PPM.

Figure 4 displays another way of plotting the normal path of PPM benefits accrual. This U-shaped progression implies that implementations tend to struggle through the first two maturity levels, before delivering net gains. Strong management and leadership support is necessary to get through this negative benefit period. Benefit “break-even” should occur in the third maturity level.

Duration of Maturity Levels

Several factors contribute to how long it takes an organization to progress through each maturity level. (Table 3) The PPM implementation research suggests that the larger the company (i.e., the more people contributing to NPD) or the longer the lifecycle of the resulting products, the more time it takes to realize benefit gains.

This makes perfect sense. Gaining “consistency-in-use” of components, a precursor to benefit gains, will undoubtedly be more difficult and take more time in larger organizations. For companies with long product lifecycles, the perception of economic benefit gain will be discounted due to inherently long lead times. While the focus should be on gaining benefits as quickly as possible, all companies will not progress through maturity levels at the same pace.

Maturity Level 1 Maturity Level 2 Maturity Level 3 Maturity Level 4 Maturity Level 5
2 to 4 months 2 to 6 months 2 to 9 months 4 to 9 months  6 to 9 months

Table 3: Range of Duration for each maturity level

wo significant influences on the speed of benefit accrual are controllable, though:

1. Understanding and counteracting the hindrances to the Spiral-Up Implementation, and
2. Keeping a concerted focus on the right component practices at each maturity level.

Both the implementation team and top management hold responsibility to address these factors effectively. Also, because of the significant economic value of PPM benefits, a strong case can be made for organizations to complement internal skills and capabilities with those of an experienced outsider or consulting firm. Experts from outside of the organization can help organize efforts, minimize hindrances, and speed the consistency-in-use of components. They can offer experience, insights, and an independence from organizational issues. These contributions can be especially valuable to lean organizations. Managers can accelerate economic gains simply by using outside experts to reduce the duration of each maturity level.

The economic benefits of PPM can be tremendous. But putting PPM process in place is not easy. The Spiral-Up Implementation of PPM helps organizations overcome the complexity of PPM implementations by leveraging a Capability Maturity Model. The challenge is to understand and execute each component during each maturity level. Organizations seeking PPM benefits should strive to learn the nuances of doing so.

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