As a product manager or product leader, one of your key responsibilities is to develop and execute a product strategy that will help your organization achieve its business goals. One important aspect of this strategy is the product portfolio strategy, which involves managing your company's product portfolio to ensure that it aligns with your business objectives and delivers maximum value to your customers.
In this blog post, we'll dive into what a product portfolio strategy is, why it's important, and how to develop one.
A product portfolio strategy is a strategic approach to managing a company's product portfolio. It involves evaluating the company's current and potential products to determine which products should be developed, maintained, or retired. The goal is to maximize the return on investment by focusing resources on the most promising products while minimizing risk and ensuring a balanced portfolio.
The first step in developing a product portfolio strategy is to assess your company's current product portfolio. This involves evaluating each product in terms of its market performance, customer satisfaction, profitability, and strategic fit with your overall objectives. You should also consider the product lifecycle stage and any upcoming product launches or retirements.
Once you have assessed your current product portfolio, you can begin to identify potential product opportunities. This involves conducting market research, analyzing customer needs and preferences, and staying up-to-date on industry trends and technological advancements. You should also consider the competitive landscape and any potential disruptors that could impact your product portfolio.
After identifying potential product opportunities, it's important to align them with your organization's business goals and outcomes. This involves evaluating each product opportunity in terms of its strategic fit with your business objectives, its potential for growth and profitability, and its alignment with your overall product vision and roadmap.
Once you have evaluated your current product portfolio and identified potential product opportunities, you can begin to prioritize products based on their strategic fit and potential for growth and profitability. This involves considering factors such as market size, customer demand, revenue potential, and development cost.
With your product priorities established, you can allocate resources to product development and maintenance. This involves determining the appropriate level of investment for each product, setting development timelines, and allocating resources across product management, engineering, and marketing.
It's important to monitor and adjust your product portfolio over time. This involves tracking product performance, evaluating market trends and customer feedback, and adjusting your product priorities and investments accordingly. By regularly evaluating your product portfolio and making adjustments as needed, you can ensure that your product portfolio strategy remains effective and aligned with your organization's business goals.
An evidence-based and measurable product portfolio strategy has numerous benefits for companies. By using data and analytics to inform decision-making, product managers and leaders can make smarter and more informed decisions about their product portfolios.
Here are some of the key benefits of an evidence-based and measurable product portfolio strategy:
You can empower your company to be more agile and responsive to market conditions. By centralizing all of the information and practices required for product identification, prioritization, and management, as a product leader, you can quickly and effectively respond to changes in the market.
Product Portfolio Management strategy offers decision-makers a structured, objective method for developing and implementing corporate strategies. Product portfolio managers can compare product development projects based on their relative costs and possible revenues by categorizing related products into strategic buckets. This enables them to make informed decisions about which products to develop, maintain, or retire, based on objective data.
For better success, you can improve product and corporate strategy alignment. By aligning the portfolio with the company's overall objectives, product managers and leaders can ensure that the portfolio supports the company's long-term success. This has the potential to boost revenue and profitability.
Having a product portfolio strategy process transparency and visibility required to make informed choices about product mix, strategy fit, risk versus opportunity, resource allocation, investments, and scaling. This enables product managers and leaders to make informed decisions based on trustworthy data, which can improve time-to-market and drive differentiation.
A successful product portfolio plan involves distributing funds and resources to the most profitable products. This means that not every idea makes it through the product development pipeline, and not every product completes its lifecycle in the market. Companies can support those who succeed and expand their margins by prioritizing products based on strategic fit and potential for development and profitability. Companies that use a product portfolio strategy consistently report revenue increases due to the successful selection of products that match with strategic objectives.
Product portfolio strategy can also lead to improved resource utilization and efficiency. By avoiding spending on low-value projects and focusing resources on the most promising products, companies can reduce costs and improve efficiency. This can result in higher profits and long-term success.
Executing on a product portfolio strategy requires a clear plan that outlines how the different products in the portfolio will work alongside each other to achieve the desired outcomes. If managing a roadmap is hard work, imagine managing a whole set of products!
A portfolio roadmap is a way to communicate the direction and intention of the entire product suite, showcasing multiple product plans on a single roadmap. It provides a clear picture of how the company plans on moving forward, outlining goals and initiatives, and brings visibility to the important areas of strategic investment.
Portfolio roadmaps also help teams manage the complexity of multiple products by linking the relationships that exist across different products. With a portfolio roadmap, teams can see how the different products in the portfolio are progressing against the broader goals and supporting each other. This makes it easier to track progress and keep the team aligned on the work that matters most.
When building a portfolio roadmap, it is important to ensure that it is aligned with the company's business goals and outcomes, and that it provides a clear overview of the product development pipeline. The roadmap should also prioritize products based on their strategic fit and potential for growth and profitability, and allocate resources to product development and maintenance accordingly.
Studying data and analytics can empower product managers to make more informed decisions, but how?
Here are three key ways that data-driven insights will help:
Market trends come and go. But product teams must understand the best time to release a new product or feature to make the most of that opportunity.
Studying data and analytics can reveal when demand for a specific product or feature is high and how long this trend will likely last. You may not be able to launch a whole new product tailored to a potentially short-lived market trend, but you could update an existing one to capitalize on current or emerging trends.
Understanding your customers is essential to release products that make an impact. Relying on guesswork can lead to inaccurate assumptions about what customers want, which may lead to wasted time and money.
But data analysis will help product managers and their teams learn more about customer preferences, ideally across different audience segments. For example, the needs of enterprise users are likely to differ from others, as they will rely on specific features and processes.
Understanding customer preferences will help product managers and leaders make decisions that benefit their users more.
Data analysis may reveal gaps in your product portfolio that you’ve missed. Those gaps can be big enough to justify an entirely new product built from scratch or new features for an existing product instead.
Once you’re aware of product development and improvement opportunities, you can start understanding how fresh features may redefine an existing product. Continuing to take advantage of opportunities you discover through data-driven insights can help you build a stronger product portfolio that maintains a loyal user base.
Additionally, analytics measuring product performance can help companies in the following two areas:
If a product fails to generate the expected profit level, companies must study the information available to understand what went wrong. It may have been due to changing market trends — perhaps there’s less demand for a product than decision-makers believed. Alternatively, customers could already have many reputable options, and your product fails to register as a worthwhile competitor.
But by studying product-performance analytics, you can gain invaluable insight into the factors affecting profitability and make informed decisions on how to boost its worth. Customer feedback, for example, is critical for understanding where and how you can improve a product.
Alignment with business goals
Each product you create must align with your business goals. When you spot an opportunity to launch a new product or update an existing one, analytics measuring product performance will help you understand how well it fits in with your product portfolio strategy. Does it have the potential to advance your company’s product range? Are customers likely to respond well to it based on past performance data? Keeping these questions in mind will help guide your product portfolio strategy.
A product portfolio strategy is a crucial tool for product managers and leaders to manage a suite of products effectively. By taking a data-informed approach, companies can allocate resources and investments to the most profitable products, while remaining agile and responsive to market conditions. To create a successful product portfolio strategy, companies must assess their current product portfolio, identify potential opportunities, align with organizational goals, prioritize products, and allocate resources accordingly. Regular monitoring and adjustments are also essential to ensure ongoing success.
Overall, the product portfolio strategy and portfolio roadmap are critical tools for product managers and leaders to make informed decisions and maximize the potential of their suite of products. By leveraging these tools, companies can drive long-term success and remain competitive in their market.
Ready to create your product portfolio strategy? You don't need to start from scratch, you can use our product portfolio roadmap template to help you plan your strategy right, and get your team aligned.
To make the best use of this template, try to follow the below steps:
Confirm vision and strategy: talk to heads of departments and make sure you understand any impacts this roadmap can have on products.
Set goals: set goals for the product team, this will help prioritize when it comes to new ideas or features based on its contribution to the team goals.
Review your plan: The product team's plan can then be reviewed in light of the strategy and goals set. Make sure all scheduled initiatives fit with the goals of the team and the company.
Prioritize: decide which goals are for now and which are for later, be careful of the HiPPO effect here, let the strategy guide the prioritization.
The template can be customized to however many products you have and it will help you achieve alignment and consistency across your product line. Try it now.