27 Jun 2023
Recently, I sat in on the IBP Management Business Review (MBR) meeting with a client. Senior leaders from all functions in the business were discussing the current position. Although the meeting was well run and the people had prepared as well as they could, the mood in this room was bleak. It was four months to year end and a sense of impending doom was in the air as the team was confronted with a large gap to target and limited time left to turn things around. It would be a stretch to say the lights dimmed and you could actually hear the distant rumble of thunder, but it was a grim room.
A discussion began in earnest on how/what they could do to bridge the gap, and it didn’t take long for the supply chain lead to suggest, “We have a complicated product portfolio, we can cut costs quickly if we simplify the range…”
Now, this is not a bad idea, but neither is it a short lead time fix. Quite apart from that, there is a bigger question - why was supply chain coming up with this idea at the MBR only four months out from the end of the year?
Rewind a few weeks to when I sat in on the IBP Product Management Review (PMR) with the same client. On the surface, it looked like a great example of how the PMR meeting should run. The facilitator was a star, who kept the meeting running on time and to the agenda. Not only was the meeting run well, but the whole team showed up well prepared and ready to contribute.
As you would expect in the PMR, they went through a summary of the activities within the stage and gate process and used the opportunity to make decisions on projects. The team had a big picture view, took time to assess progress of individual projects and made go/no go decisions in the light of the bigger picture. The mood was purposeful and positive. They got things done.
This meeting was a pleasant surprise, because in my experience, so few companies get to this point. It’s rare that teams can see the aggregate view of the stage and gate projects and use this perspective to make best-for-business decisions. Nevertheless, I left the meeting knowing that, good as it had been, there were still pieces missing.
But it wasn’t until I went to the MBR meeting that the missing pieces from the PMR fell into place. Because even though the PMR was efficient and good decisions were made, the scope of the meeting simply hadn’t covered all the areas it needed to. The result was an MBR meeting without the right information and the senior leaders distracted and unable to address the gap to target.
Businesses rarely use the PMR forum to its fullest potential because they lose sight of its ultimate purpose, which is so much more than a WIP summary of stage and gate projects. Instead, to effectively feed the remainder of the IBP process, the PMR must provide a forum to assess the health of the product portfolio, to check in on all the activities intended to improve the health of the product portfolio over a horizon of 24-to-36 months. This includes the full lifecycle of products from introduction to obsolescence. Products that no longer drive growth through innovation and are dragging the contribution margin of the portfolio down need to be exited to make room for more profitable innovation. In other words, the projects in the stage and gate process are only half the equation. Just as there are decision-making processes to introduce and support new products to come into the portfolio, there must also be robust and routine processes to decide when it’s time to retire SKUs and the changes must contribute to the overall portfolio health.
Take the example of the problems raised by supply chain in the MBR. Where does that problem really originate? Supply chain see the symptoms of the problem: increased inventory, increased warehousing, shorter manufacturing runs and increased stock write offs.
Why does this happen? Many reasons can drive this problem. They can vary between inadequate strategy through to poorly integrated KPIs, but often it can be reduced to this: those who have the authority to resolve the issue don’t have a line of sight on the problems that are occurring.
The first step is to understand the full function of the PMR within IBP. Simply put, the PMR manages all changes to the product portfolio. It makes and routinely reviews an achievable plan of activities designed to improve the health of the product portfolio across the whole product lifecycle. It ensures alignment with strategy and is the forum to make decisions on product portfolio plan changes.
There are three things you need to nail to get the PMR functioning correctly:
So how can you achieve a PMR that delivers? Here are five actions you can take to get the most out of your PMR:
Implementing these actions will enable you to get control of your portfolio and innovation plans, people won’t bring problems to the MBR that should already have been solved and your strategy for growth will no longer be a wish list.
Oliver Wight has been helping companies improve their new product development speed to market and decision-making processes effectively and sustainably for over 50 years. Get in touch with us here to find out how we can help you.
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