The PDMA Handbook of Innovation and New Product Development, 4th Edition

CHAPTER SEVEN TOWARD EFFECTIVE PORTFOLIO MANAGEMENT

Hans van der Bij and Eelko K.R.E. Huizingh

7.1 Introduction

Already in 1997 Brown and Eisenhardt (1997) argued that due to severe competition firms are forced to continuously change. Developing new products and services must be part of the core of a firm’s culture. This also requires that firms continuously adapt their strategy and, even more importantly, their strategy implementation, which is much more difficult than simply changing the formulation of a strategy (Hrebiniak 2006; Meskendahl 2010). A crucial building block to connect strategy formulation and strategy implementation is new product portfolio management (Meskendahl 2010). The firm’s new product portfolio has to follow changes in strategy formulation as it represents the way a firm implements a (new) strategy.

The innovation literature has dealt extensively with the design and organization of individual New Product Development (NPD) projects (Eggers 2012). In particular, the classical work on the stage gate model of Cooper and colleagues has been very influential (e.g., Cooper 1990, 2008; Cooper et al. 2002a). However, to create a continuous flow of new products and services that match revised strategic priorities, adequate management of individual NPD projects is necessary, but not sufficient. At least as crucial is how a firm deals with the entire set of current ...