The article overview
The article under study written by Cooper et al. (2001) is entitled “Portfolio Management for New Product Development: Results of an Industry Practices Study”. It dwells upon the importance of the proper portfolio management and it also provides an analysis of the most effective new product portfolio practices.
The major goals of the present study are as follows: to define the role of portfolio management, to point out the most popular techniques and define which of these dominate, to describe the portfolio methods mentioned, to assess the practices of “the best performers” (Cooper et al., 2001, p. 362).
Cooper et al. (2001) claim that portfolio management is very important for business. The researchers provide eight reasons articulated by seniors.
These reasons are as follows: portfolio management helps to maximize return, to remain competitive and increase sales, to allocate resources properly, to draw a link between projects and business strategy, to remain focused (this helps to allocate resources), to achieve balance, to prioritize projects, to become more objective while selecting projects.
Cooper et al. (2001) report that financial methods dominate as the majority of people rely on these methods while working out their product portfolios. The authors also mention that the methods of business’s strategies are also very important.
The researchers mention two other methods which are less popular: bubble diagram (it is often referred to as portfolio maps), scoring models and checklists. These methods are often ignored. However, Cooper et al. (2001) have found that it is essential to use a mixed approach.
In other words, it is important to use the combination of the methods mentioned above. The researchers stress that it is incorrect to rely on financial methods or the method of business’s strategies. It is important to check the data obtained with the help of bubble diagram, scoring models and checklists.
The researchers conclude that portfolio management is one of the best new product practices if the right methods are used. This practice helps companies to become more competitive in the rapidly changing environment.
Key points
Cooper et al. (2001) provide an analysis of the portfolio management effectiveness. The researchers report that this practice helps companies to become more competitive as they will be able to select their projects objectively, they will be able to allocate their resources properly, they can also tie their new projects to the overall strategy of the company.
It goes without saying that this analysis can help seniors to pay more attention to the use of this practice. Notably, the researchers also point out that there are certain challenges which seniors may face. For instance, Cooper et al. (2001) note that sales managers and the majority of employees are overwhelmed with developing their projects, so they do not see the importance of portfolio management.
They simply do not have time to develop a thorough plan, but focus on particular projects. However, the researchers also point out that the benefits of the practice implementation are worth the efforts. The researchers provide particular data which prove their assumptions.
Of course, these data are really encouraging. One more important finding of the research is that the researchers have come to the conclusion that the most effective method of portfolio management is the mixed method. This mixed method should combine financial method, the method of business’s strategy and bubble diagram, scoring models and checklists.
Cooper et al. (2001) provide a description of these methods defining their advantages and downsides. Importantly, the researchers comment upon the best businesses, i.e. they construct the best models of portfolio management. Finally, the researchers provide several “implications for management action” (Cooper et al., 2001, p.377). Basically, the authors provide a helpful piece of advice.
They stress the importance of portfolio management, they note that it is crucial to use the mixed method, they underline the advantages of each method which can be used effectively.
Admittedly, the researchers report on the most important issues concerning portfolio management. Their findings and conclusions can be taken into account by seniors. The information provided can help many companies remain competitive and develop new products effectively.
Follow-on research
Admittedly, many researchers analyzed the effectiveness of portfolio management. Interestingly, Cooper et al. (2004) focus on the effectiveness of portfolio management in the new products development process. The researchers provide particular examples of companies using certain strategies of portfolio management.
It is necessary to point out that the researchers do not provide the same patter on practices as they articulated in Cooper et al. (2001). The researchers concentrate on the method of business’s strategies. Interestingly, Cooper et al. (2004) conclude that the use of strategic basket is proved to be the weakest method. This finding is supported by particular examples.
The researchers also provide certain pattern to escape difficulties in portfolio management. One more research deals with the effectiveness of a particular method of portfolio management in the development of pharmaceutical products (Blau et al., 2004).
The researchers claim that bubble-chart-based method can be really effective and it can be used by seniors to develop successful plans. The researchers provide particular examples of this method’s effectiveness.
However, even though, positive results were achieved, it is necessary to add that researchers were focused on that particular method. It is important to note that the researchers compare so-called intuitive method and bubble-chart-based method.
Nonetheless, the results could be better if the researchers used the mixed method involving financial methods, strategic method and checklists as articulated by Cooper et al. (2001).
However, it is necessary to admit that the both sources (Cooper et al., 2004; Blau et al., 2004) provide valuable information based on particular examples. These articles supplement the article by Cooper et al. (2001) and help to better understand the effectiveness of different methods used in portfolio management.
Applications
It goes without saying that the article under consideration provides valuable information concerning portfolio management which is one of the most effective practices in new products development. Admittedly, the researchers analyze the most effective methods which can help companies develop their detailed and effective portfolios.
Thus, the mixed method suggested by Cooper et al. (2001) can help companies to allocate their resources more effectively and select their projects more objectively. Of course, seniors can use the methods in accordance with their company’s strategies and objectives.
More so, the researchers point out possible challenges that seniors can face. Notably, the researchers provide arguments which can help seniors to encourage their employees to pay more attention to portfolio management.
Of course, this will require certain changes in some business processes as employees will need to have more time to work on portfolios rather than work on particular projects.
Reference List
Blau, G.E., Pekny, J.F., Varma, V.A., Bunch, P.R. (2004). Managing a Portfolio of Interdependent New Product Candidates in the Pharmaceutical Industry. Journal of Product Innovation Management, 21, 227-245.
Cooper, R., Edgett, S., Kleinschmidt, E. (2001). Portfolio Management for New Product Development: Results of an Industry Practices Study. R&D Management, 31(4), 361-380.
Cooper, R., Edgett, S., Kleinschmidt, E. (2004). Benchmarking Best NPD Practices – II. Research-Technology Management, 47(3), 50-59.