The Product Pulse

Is it possible to be innovative and risk averse at the same time? Sure, I suppose so at some level but there must be a measure of calculated risk to achieve innovative breakthroughs.

Recently at PIPELINE 2011, we reviewed the research for the 2nd Annual Product Portfolio Benchmark Study with my colleagues at Appleseed Partners and OpenSky Research. We found enlightening contradictions in terms of innovation priorities and risk-averse cultures (or at least the perception of risk aversion by participants).

To give some background, we surveyed 922 product development professionals at large product-driven companies such as global manufacturers of a myriad of industries including technology, medical devices, consumer packaged goods and financial products among others. Our objective was to understand how they manage complex product portfolios, their most critical pain points and risks, as well as priorities for the coming year.

Here are a couple of interesting findings:

• Not being able to drive innovation fast enough was in the top 3 pain points this year and was identified by nearly 40% of respondents. Yet, 61% of respondents indicated that their organizations are risk averse to highly risk-averse on new product innovation.
• The results indicated that their greatest risk is managing priorities as business conditions change and the greatest pain point is having too many projects for their resources.
• Compared with a year ago, missing growth opportunities is a greater concern than cutting costs.
• 70% are refining their product development processes as a result of the recession.

I personally spoke to several R&D executives as part of the process to define our study and methodology this year. When asked whether the companies pulled back on innovation during the recession and whether their pipelines shriveled, most claimed that they maintained their innovation budget and did not slash it dramatically, therefore keeping the product pipeline healthy. Having said that, they all expressed a renewed focus on extreme prioritization in light of limited resources.

It seems that now more than ever, making data-driven decisions and calculated risks are important and filling the innovation pipeline is crucial. This report reveals that there may not be sufficient, accurate data and visibility into the product development process for prioritization and decision-making. That could make executives and managers feel risk-averse because no one wants to make bets without information. Are we over-relying on spreadsheets for one of the most strategic roles in the company?

Find out what your peers are looking at in terms of solutions to manage their product portfolios. Download the full report: 2nd Annual Product Portfolio Management Benchmark Study.