The Product Pulse

The beginning of any new year brings with it a familiar cadence of activities for our organization. Most revolve around ramping up a fiscal year with our sales team and launching the latest version of Planview Enterprise®. This annual cycle certainly represents one of the most intense times of the year. Preparing for sales and consulting meetings, launching the latest release, and the subsequent GA process make Q1 a big push across the country.

Part of our product launch plan is a comprehensive process of touching base and briefing all of the industry analysts that cover the portfolio management space. Every year, as the portfolio management segment continues to grow, this activity gets larger and larger. Globally, we are interacting with close to 30 analysts across a wide range of sectors. This body of work always provides interesting insights I thought I'd share a few highlights.

Enterprise software is a good place to be. In addition to introducing our latest products, part of these briefings is a review of our previous year performance as a company. We were fortunate to have a very strong 2011, a record year across most metrics. From our analyst meetings it was clear that we did better than average, but it was equally clear that enterprise software companies across the board had strong years. As we continue to read varying reports about the state of the economy, software is a strong sector. In short, organizations are still looking to drive efficiencies in their operations and focus their limited capital on innovation -- software is a good investment on both fronts.

Software as a Service (SaaS) continues to gain momentum and drive growth. It is no surprise that the cloud and SaaS are hot trends in software, but the full impact of this trend. We all read about the pure SaaS players that are the poster children for this trend may not be obvious. But the other side are the hybrid companies like Planview that for the past several years have aggressively retooled themselves to leverage the SaaS trend while continuing the commitment to new and existing on-premise customers. In 2011, SaaS represented over half of our new customers, and our SaaS offering created incremental new market opportunities that were not addressable before. The analysts I spoke with recognize that "established" software companies need to be hyper aggressive to serve this new landscape and this has been our approach.

Markets are built by best of breed players. Across the analyst community there is validation that portfolio management is seeing tremendous growth in traditional segments like IT and also in a variety of line-of-business (LoB) segments. IT product portfolio and program management (PPM) has been a vibrant market for many years and these new LoB segments are emerging markets that require commitment and investment to reach their full potential. In my conversations I think it is safe to say that it is the best-of-breed players, like Planview, that are making these investments. The mega-enterprise software players have too broad a product portfolio to apply the focus necessary. They are not agile enough to navigate the dynamics of these new segments. Someday they will look to harvest the opportunities created, but in the mean time, the best-of-breeds will drive forward. This is common in many categories; we are now living it in PPM.

Product Portfolio Management has "Crossed the Chasm." As mentioned previously, we are experiencing a period of rapid growth in the use of portfolio management. One of these areas is the use of PPM by product development teams looking to make the best pipeline selection decisions and ensure the optimal use of their precious engineering resources. This has been a growing trend, but during this year's analyst briefings there was a sense of critical mass to this conversation. Indeed, when posed the question, every analyst I spoke with agreed that this application of PPM has "crossed the chasm." I will spare everyone a lesson on the technology adoption lifecycle, but this is an important moment in the expansion of the portfolio management discipline. If you want to learn more, plan to attend PIPELINE 2012 on May 10.

Just a few observations from our annual analyst briefings, I hope you find them useful.

I recently did some research on how companies can take a practical path to improve PPM decision-making. I won't keep you guessing (if you were), there are some VERY good best practices that have been developed by the new product development (NPD) community. The research consists of interviews with three distinguished manufacturers in different industries, and they all concurred that the best approach is to start small with PPM and grow over time. The report, Improving Portfolio Decision-Making: Marrying PPM Best Practice Processes and Technology to Drive ROI, provides an overview on the value of PPM in addition to laying out a practical plan to leverage best practices tools and techniques to driver better portfolio decision-making and drive up company profitability.

The Research

During the research I had the pleasure of talking to several very knowledgeable PPM practitioners:

• Don Kingsberry, Enterprise PMO, Green Mountain Coffee Roasters (the man should really write a book, I told him I thought so)
• Ian McKenna, IT Business Partner, Infineum (a joint venture between ExxonMobil and Shell)
• The Manager of Quality Management, R&D, and Legal Applications for a medical device company (who unfortunately was not permitted to share his company name in the report, but I promise you I didn't make him up!)

The Value of Improving PPM

The first thing I discussed with them was why they invested in PPM in the first place. I had done some past research in this area, including Issue in Focus: The ROI of Product Portfolio Management, and thought it was important to start with the business in mind. I was very impressed with a statement from the participant from the medical device company. He saw PPM as his responsibility to be a steward for his company. How many companies would love to have that form of dedication, work ethic, and contribution from their employees? He offered that "PPM processes and tools help us be good stewards of our business. It costs a lot of money to develop products and we should do what we can to select them right and do them right -- because then we have more money to invest."

Mr. Kingsberry of Green Mountain Coffee Roasters (GMCR) has implemented PPM multiple times, and shared experiences from GMCR as well as past experiences where he says PPM has a "profound effect" and "each time I have found the return to exceed our expectations." He shared the history from one of his past experiences in a very large, well respected company saying "we cut millions of dollars of projects that were wasting time and we shouldn't have been working on. We got clarity on that immediately and had a huge multi-million dollar return in 6 months. PPM software and process help bring visibility to those things." What more can I say when people that have "been there and done that" are so positive on the value they received?

Taking the Practical Approach

One of the other key findings of the report is that too many companies overthink their PPM implementation. For some of you that know me, you might be falling out of your chairs! I am always a proponent of a well-planned, well thought out implementation. And my PPM benchmark research at Aberdeen Group showed that business processes and metrics were even more crucial to best in class PPM performance than in any other enterprise technology I have researched. So what gives? People need to understand that the goal of PPM is to provide better information, in a standard way, so people can make better decisions about product investments. Too often, even in my own experience when I ran product management for a software company, I have had people want a scoring algorithm to magically spit out an answer. Don't get me wrong, the metrics and analysis are very important. But they are just one input into a decision making process. As such, it's important to find out what information and metrics the decision-makers will actually use and trust (think simple versus black box voodoo) to make decisions.

In fact, the companies interviewed used some really straight-forward metrics that helped them make decisions. "We implemented fairly standard calculations, NPV (net present value) being an example," explained Mr. McKenna of Infineum. Don Kingsberry also suggested that based on his experience companies need to strive for simplicity, particularly as organizations get bigger.

The other aspect of simplification was to start small and grow. I heard this from every company I spoke with, they all agreed that you shouldn't do too much at once and go "big bang" with your PPM implementation. This is particularly true because companies are now integrating and extending PPM processes further into the front end of innovation and trying to develop a more integrated, streamlined innovation process. Now this is where I get back up on my soapbox about planning ahead. Just like with my "PLM Program Approach," you can start small and build -- but you had better have a plan for the bigger picture you are trying to achieve. You should also partner with a software company that can help provide the path to your larger objectives as you mature and improve. Don't paint yourself into a corner, you want to make sure your initial investments and learnings serve as a foundation for even move value over time.

Implications for Manufacturers

So what does this mean to manufacturers? First, there is a lot of value to be had from PPM. Second, you don't have to reinvent the wheel. There are very good methodologies and metrics available, and software solutions that encompass and enable them. Third, don't spend months trying to invent a process or algorithm that automatically makes portfolio decisions. That is not realistic and likely won't be used. Take the time to provide good, trusted, simple information in a consistent way so decision-makers can compare "apples to apples" when reviewing portfolios.

So that was a quick peek into some recent research on product portfolio management, I hope you found it interesting.

Note from Planview: If you would like to read Jim's full report, it is available here: Improving Portfolio Decision-Making: Marrying PPM Best Practice Processes and Technology to Drive ROI

An Excerpt from "New Insights for Driving Innovation in Product Development" Webcast

This is part three of my three-part series on a recent Planview hosted Webcast titled "New Insights for Driving Innovation in Product Development: Is Your Organization a Lean, Mean, Innovating Machine?" featuring Sanjeev Pal, Research Manager of Product, Project and Portfolio Management Solutions at IDC, and me. Previously, I summarized our discussion of market trends and innovation. Now, let's talk about the role software can play in product innovation.

Software as a Solution

Sanjeev recommends that companies not only use industry-specific software, but software that understands the company's processes. Generic software won't be as effective or cost-efficient. Also, this software should be used in conjunction with the lean and operational improvement principles he discussed.

We then highlighted the role software can play in product innovation. Software can manage the mass amount of internal and external ideas companies receive. It links ideas to a product. Of course, not every idea is feasible within the current marketplace. Software allows companies to save these unused ideas for the future to continue the innovation process.

PLM and how product management software can help companies throughout the entire process was our next topic. Sanjeev illustrated steps within the product lifecycle related to product innovation:

• Idea management
• Product management
• Virtual simulation of product
• Product analytics
• Supply management
• Manufacturing process optimization
• After market support

Although the process may vary, there should be a constant flow throughout the product lifecycle of innovation and collaboration. Also, this process doesn't just apply to manufacturers. Product development organizations want to know how to foster innovation and track it throughout the product life cycle as well.

Finally, Sanjeev offered his closing thoughts and recommendations. He predicts that the sluggish economy will continue and has already become the "new normal." Even if you implement several lean principles and practices, if you don't innovate, your company won't have a very secure future. He reiterates that this doesn't have to mean creating a brand new, game-changing product, but rather can occur through incremental innovation.

To hear more, listen to the podcasts on this topic at Software as a Solution Part 1 and Software as a Solution Part 2.

To learn more about the topics I've covered in this series, listen to the complete Webcast New Insights on Driving Innovation.

Related post: The Business of Innovation

An Excerpt from "New Insights for Driving Innovation in Product Development" Webcast

This is part two of my three-part series on a recent Planview hosted webcast titled "New Insights for Driving Innovation in Product Development: Is Your Organization a Lean, Mean, Innovating Machine?" featuring Sanjeev Pal, Research Manager of Product, Project and Portfolio Management Solutions at IDC, and me. Previously, I shared our discussion on trends in the marketplace. Now, let's look at examples of innovation.

Industry Examples of Innovation

Sanjeev discussed three technology companies to illustrate how both software and hardware trends are causing companies to change the way they operate in order to be more flexible and innovative.

1. Google®
   
   Google, a "constant innovator," as Sanjeev calls it, has gone from simply being a search engine to offering services such as Gmail and Google Plus, as well as the Android operating system. Google Plus isn't that different from other social networks, but is a small step towards the social network paradigm of the future. Being innovative doesn't necessarily mean you have to reinvent the wheel. Innovation is really when a company takes an existing product and modifies it to make it more unique and desirable.
   
   
2. Microsoft®
   
   The second company he covered was Microsoft, who is currently trying to redefine itself. Is it a hardware company or a software company? It's also facing a dilemma as to whether it should abandon Windows and develop an entirely new operating system or if it should just improve its existing product to be more like the competition. While Microsoft has an innovative product in the Xbox Kinect, one innovative product can't keep a company profitable for the long haul.
   
   
3. Apple®
   
   Lastly, he discussed Apple, who like Google, has evolved from simply offering computers, to having multiple product lines. He highlights the iPad to illustrate how Apple has used innovation to distinguish its product from the rest of the tablets in the marketplace. He also discussed the impact of the loss of Steve Jobs.

Sanjeev listed various techniques that organizations have used since the 1970s to streamline operational processes for improved efficiency. The techniques include:

• Just-in-time
• Total quality management
• Six Sigma
• Lead production
• Lean Six Sigma

Companies need to be constantly making operational improvements. The faster you can collect innovative ideas and determine feasibility, the quicker it will generate products people want. Not only will it improve the products, but the process to facilitate innovation consistently.

To hear more, listen to the podcast on this topic.

My final installment of this series will cover the role software can play in product innovation. We encourage you to listen to the complete webcast to hear Sanjeev cover these topics in more detail. Listen to the complete webcast.

Related post: Trends in Innovation

An Excerpt from "New Insights for Driving Innovation in Product Development" Webcast

Planview recently hosted a Webcast titled "New Insights for Driving Innovation in Product Development: Is Your Organization a Lean, Mean, Innovating Machine?" featuring Sanjeev Pal, Research Manager of Product, Project and Portfolio Management Solutions at IDC, and me. Here is the first of a 3 part series on the highlights from that discussion.

Insight into Marketplace Trends

I kicked things off with an analogy I found on a blog that compares survivalist training while backpacking and keeping a business running efficiently in the current economy. As any backpacker will tell you, space is always a challenge so you should only carry what is absolutely necessary. Similarly, businesses must keep their pipelines as simple and streamlined as possible, especially in an economic downturn. And, whether backpacking in the wilderness or navigating in the marketplace, good, level-headed decision making will always be valuable in the business world.

Sanjeev then covered several trends he is seeing in the marketplace today:

1. Uncertainty in the economy, both in developed and developing countries, and increased global competition.
2. Changing consumer consumption patterns show increased consumer influence and demand for innovative, high-quality, easy-to-use products at lower prices. The more complex products results in more complex manufacturing processes which require more collaboration throughout the entire manufacturing process. He highlighted the iPad and robot vacuums as examples of products that are the result of companies doing this well. How? Their constant and consistent innovation and tight vertical integration.

Social connectivity plays a huge role in educating consumers on technological innovations and generating excitement around new products. Even kids aren't immune. Children are interacting with technology at an earlier age than ever. As they get older and begin buying these products, they will demand more from technology -- more complex products than can do many things at once.

To hear more, listen to the podcast, on this topic.

My next post will cover examples of innovation, specifically in the technology industry, as well as lessons that can be learned from their successes and failures.

I encourage you to listen to the complete Webcast to hear Sanjeev cover these topics in more detail.

I had the privilege of participating in the 2nd Annual Medical Devices Summit earlier this month in Boston. Not knowing what to expect from the event, I was pleased to be going back to Boston, the cradle of American civilization. After making my way to Quincy Market, I set my sights on a fresh lobster roll and thumbed through the event guide. The event was focused on hot button issues, sharing information among medical device manufacturers and brought together some of the key thought leaders in the industry for two days of presentations, workshops and networking. I and Carrie Nauyalis, Planview Product Line Manager extraordinaire, were eager to meet and greet attendees and learn more about the medical devices industry.

The keynote Monday morning was given by Kamal Ayoub PhD, and Vice President of Operational Excellence at Covidien, a world leader in medical device manufacturing. Dr. Ayoub really set the stage for me at the summit with his opening keynote. He started off sharing success stories about the well-known innovation and poster child for innovation success. Guess who? Yes, some kind of fruit company… er, Apple. He talked about Apple and Netflix, the decline of Kodak, and posed a question to the audience. What if people could see new innovations coming that threatened their product line? How could these corporations better prepare themselves to bring the right new products to market?

He drove it home by sharing that successfully developing new products is critical to the prosperity and organic growth of the modern corporation. It's also one of the biggest challenges facing corporations in an increasingly changing environment. He also pointed out that new products fail at an alarming rate – with only ONE in four product development projects becoming a commercial success.

Think about that. Now think about that as a medical devices corporation. What if your product fails and it has already been implanted or used to treat someone? The repercussions are costly and not just from a dollars perspective, but from a value of human life perspective. It's not a matter of "if" medical devices products are going to fail, it's often about "when" they will fail and/or get recalled. If they fail after harming a patient or they suffer a recall after having been introduced into the market, it can cost millions and millions of dollars – not only to the corporation but to its shareholders. And of course, to the families of the affected patients!

Then Dr. Ayoub zeroed in on something that really resonated with me. He held up a product portfolio management funnel that looked strikingly similar to the one developed by Carrie and team that we use here at Planview. He demonstrated that by taking a disciplined portfolio management approach and aligning that to your innovation strategy and to execution, you can make better decisions to bring the right products to market while prevent the wrong product from going to market.

He was also such a great speaker that I'm going to do my level best to recruit him to present at the upcoming PIPELINE 2011 Online Conference for Innovative Product Development event. But that's a blog post for another day – stay tuned!

Happy New Year, Product Pulse Peeps!

At the end of last year, I was lucky enough to attend the Stage-Gate® Innovation Summit 2010. In addition to getting some quality time to swoon over my professional crush, Dr. Bob Cooper (I even got to get my picture taken with him -- he looks less excited than I do), I was fortunate enough to hear Dr. Scott Edgett speak on raising the bar in product innovation. As always, this dynamic duo got me thinking.

Carrie Nauyalis, Dr. Bob Cooper, and Dr. Scott Edgett
at the Stage-Gate® Innovation Summit 2010

Similar to the 2010 Product Portfolio Management Benchmark Survey sponsored by Planview and presented at Pipeline 2010, Stage-Gate recently completed a study to determine how businesses are doing in the product development innovation arena. One dataset that struck me was this one:

• Average business' rates of commercial success = 52.3%
• Average business' rates of failure = 26.5%
• Average business' rates of "kill prior to launch" = 21.2%

The curious point about this: Stage-Gate reports that this 52% success rate (higher than what I've seen reported from some other research and analyst groups) is actually a bit lower than what they've seen in the past. The reason for this decrease, according to Dr. Edgett? In 2010, companies invested less in innovation. Very interesting, Dr. Scott.

For me, a prime take away from this study is that we must raise that bar if we're going to raise the commercial success rate of our product development efforts. 2010 was a year for retrenching and rethinking. 2011 invites us to raise the bar on innovation.

So, what are your goals for driving innovation in 2011 and for increasing your company's success rates? Click on the Comment link above and share your company's grand plans for 2011! (Dare ya!)

I was re-watching Chris Trimble's PIPELINE 2010 presentation -- if you haven't seen it yet, you should check it out, it's free -- with an eye to doing a post about one of his key themes (the conflict between Operations and innovation) but realized I'll need to come back to it in a future post. Rather, what makes sense to speak to now, seasonally, is something he alludes to a couple of times: that of the responsibility of innovation to change the world.

At the beginning of his talk, he says that "I think we've lost our way a little bit… because we've let innovation become synonymous with the latest cool gadget… To me, innovation is much bigger than that. To me, innovation is about changing the world."

Sure, I like my iPhone. And with my Causeworld app, I can "check in" to local businesses and then donate my points to charities (hint, hint: download it, it's free). But let's take it to the next level, hmm?

I was watching a recently posted TED Talk video of Tata Motors' engineer RA Mashelkar -- a super-inspirational fellow in his own right -- titled "Breakthrough Designs for Ultra-Low-Cost Products." I don't know where you're reading this, but I'm writing it from the comfort of my American desk with all my American creature comforts. Mr. Mashelkar's reality -- the Indian reality -- is one of a country where 4 billion people earn less than $2 a day.

He talks about Tata Motors' founder, Ratan Tata, giving a small team of engineers the charter to design a car that could hold an entire Indian family safely. His only restriction: it could not cost that family more than $2,000. His only edict: question the unquestionable. Tata was so successful with the Tata Nano that every major car company on the subcontinent has now released its own nano-sized vehicle. But just as importantly, he made Indians believe that they, too, were equal to the dream of car ownership. Ratan Tata is India's Henry Ford (one who puts kids through school. Watch the video.)

He also talks about the Jaipur Foot -- prosthetic limb replacements that are fitted on the spot. In the US, this costs $20,000. The Jaipur Foot costs $28 (I’m sure these prosthetics aren't apples-to-apples comparisons, but for the Indian man who could never afford the US version, having this option must be amazing). I'm not going to do it justice, so watch the video, at about 10:35 in, you will see a man climbing a tree, then jump down and run up and down the lane, all with no pain. It's truly joyous.

This, then, is what the business of innovation can be about. Applying our smarts and technology to generate awesome revenue streams while making a difference in the world.

Of all the things I expected to get out of last week's Thanksgiving holiday, a lesson that underscores Forrester's concept of 'disruptive renewal' wasn't one of them.

The holiday saw me and my husband at my parents' home. We had rolled in late the night before, said our good-nights and trundled off to bed. 7 a.m. the next morning we were greeted by opera blaring through the intercom system, a holdover from the house's build in the 60s. Good morning, indeed. The fact that I knew to expect this wake-up from many years of experience did not make it any more palatable.

Fumbling for my morning cup of Joe in the kitchen -- center of the house and also location of the main control panel for the intercom -- I was startled to see innovation had sprouted from this thing that had so aurally colored my teenage years. Perched on a small, purpose-built shelf integral to the console was an iPod. The aria that had roused me from my beauty rest was not issuing from a more-often-than-not staticky FM station, but from a selected track on Apple's slick offering.

(This led me to the inescapable conclusion that my parents are hipper than I suspected, which somehow made me feel even older. Mom and Dad are shopping at the Apple store. What's next? Abercrombie and Fitch?)

It brought to mind the Disruptive Renewal report recently issued by Mark Mulligan of Forrester which he blogs about here. In it, he makes the argument that disruptive technology -- connected devices that empower consumers to make all new kinds of choices about how to interact with your products -- can spell the future for your company or ring its death knell.

Forrester calls this disruptive renewal, which it breaks into three stages: that of disruptive empowerment, when new technology enables customers to make choices about how to interact with products; discontinuous change, when they re-evaluate traditional products and expect more from them; and the critical split of transformational innovation or terminal obsolescence, when businesses either react by transforming to meet (or exceed) the expectation -- or fail to do so, and just plain fail.

The power paradigm, as we know, has shifted. What was once the domain of the manufacturer has irrevocably moved to the consumer. Smart vendors -- like the hero of our little tale, the manufacturer of the intercom system -- hear and respond. Those who don't are likely to get outmaneuvered, become sidelined and irrelevant.

Is your company in danger of this? Forrester tells us that that enterprise products are as impacted as consumer products -- you don't shed your expectations as you walk into the office, do you? But in an October 2010 survey of 200+ product strategists, Forrester found that only 26% think their companies are responding effectively to disruptive technology, and only 5% think they are responding highly effectively.

I get it: it's daunting. The power shift. The weeding out the good ideas from the bad. The sheer costs associated with transforming how you respond. But take another look at our hero -- an iPod adaptor, a shelf, a calculated risk that their target demographic and Apple's intersect enough to make it worthwhile (also supported by the Forrester report, by the way), and boom, they've catapulted themselves from 1960 to 2010 and into relevance, and ya gotta think it's worth it, don't you?