Prevalence and success of portfolio management systems in south african new product development companies

Abstract

Product portfolio management in new product development (NPD) companies in developing economies was investigated to explore the applicability of best-practices and processes established for developed economy NPD companies. Case studies were conducted on South African NPD companies. The focus was on: 1. What is the prevalence of portfolio management processes in the NPD companies? 2. Is the process formalised and institutionalised? 3. How is the effectiveness of the process measured in terms of cost, schedule and quality? 4. How is the process linked to new product strategy? The results from four case studies showed that the companies followed different methods for managing their product portfolios. All did some contract development in addition to NPD. The larger companies followed processes that fit very well with the best practices and theories as implemented in developed economies. The smaller companies did not have many formalised processes for screening, evaluating and reviewing their product portfolios. They also established their product strategies informally and many of their portfolio decisions were taken ad hoc. These companies were not less profitable than the larger companies. The following conclusions could be made: 1. Portfolio management in developing economy NPD companies should recognize the need for contract development they experience in under scarce venture capital conditions. 2. While best practice portfolio management does not improve profitability, it is correlated with size and hence with past growth. 3. The dynamics of growth in portfolio management as contributor to company growth for developing economy NPD companies should be investigated.