Tag Archives: Portfolio planning

Product Line Rationalization for Medical Devices

VOC Input for Product Requirements Development

Goals and Objectives in Product Portfolio Planning for the Medical Device Market

Market Risk Identification in Product Portfolio Planning for the Medical Device Market

Portfolio Planning in the Medical Device Market

Assessing Opportunities in the Medical Device Market

Medical Device Marketing Insights

Tag Archives: Portfolio planning

Product Line Rationalization for Medical Devices

VOC Input for Product Requirements Development

Goals and Objectives in Product Portfolio Planning for the Medical Device Market

Market Risk Identification in Product Portfolio Planning for the Medical Device Market

Portfolio Planning in the Medical Device Market

Assessing Opportunities in the Medical Device Market

30 Years of Lessons Learned

February 14, 2019 timwalker317526

The Set Up

It has been some time since I actually performed a Legacy Product Line Rationalization. Two calls this week have prompted me to create this post. This is how I think about it.

As a Product Manager, one of the most necessary and potentially difficult tasks is to rationalize your portfolio product lines for an exit, maintain or invest strategy. If you review your product line performance on an annual basis, see AARP post, you will find that you have most of the data and insights you need.

The Goal of the Review

The goal is to rationalize your current portfolio based on the previous performance changes year over year. You pretty much have 3 options although they can be thought of as on a scale.

Maintain
Invest
Divest

This review will point you toward actions that are needed in support of each product line. Your annual action plan can be driven by your findings.

“The Key is to be intentional about your product line.”

How do you do the review?

Step 1 – Collect and Organize Your Data

Determine a method for objectively determining how well your product lines are performing. Elements that you should consider including in your assessment or scoring tools are:

The volume of revenue, ranking
Change in revenue
Gross profit dollars
Profitability
How ubiquitous the product is geographically
How stable is the supply chain
Quality yields
Number of customers won and lost this past year
What is the status of the treatment it is used on
Of those customers who are buying, where do they stack up on your best customer rankings list
Does it fit in the future strategic plan or will it become an orphan

The examples used here are designed to demonstrate a complex and murky review. Sometimes the answers pop off the page once you have organized all of the relevant data for your portfolio.

Step 2- Build Your Model

There are two aspects to this step. First, collect the data and rank each product line by element. Secondly, rank them all as a portfolio. The first step is fairly mechanical. The second is where the lines are compared by rankings.

So if you have 10 product lines your spreadsheet would look like the one shown below.

Step 3- Analyze the Rankings for Obvious Ins and Outs

Product line 1 is new, so it is IN
Product line 2 this needs a deeper dive, a better understanding of the market conditions are required.
Product line 3 solid performer so IN
Product line 4 solid performer so IN
Product line 5 solid performer with few key accounts so IN
Product line 6 solid performer so IN
Product line 7 this one needs a deeper dive. It is an average performer and seems like it will stay there for a while. If it still fits with your future vision for the portfolio it appears to be IN
Product line 8 too big to cut, needs some mfg. improvements
Product line 9 too big to cut, but needs a deeper dive so IN
Product line 10 this needs a deeper dive but may be too big to cut without a plan

So there are six product lines that should not be cut, 4 that need a bit deeper dive. Another element that we did not take into account was synergy between product lines. Sometimes you keep an underperforming product line to support a high performing one.

So if we plot our choices on to a Boston Consulting Group grid it can really give you a clear picture of your strategic position for each product line.

Combining this review with a go-forward plan you can use a matrix like this:

Follow this simple three-step process to rationalize your product line and defend your position. Keep the grid/worksheet with you in every meeting and you will be able to see at a glance where you are going next.

It is ok to keep all of the product lines. It is unacceptable to not know why you want to keep them.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

Uncategorized

June 19, 2017 timwalker317526

The Set Up

Regardless of how you package or communicate the Product Requirements for a new product there must be a customer input process that precedes finalizing of those requirements. Collecting the Voice Of Customer (VOC) is critical to the success of new product creation.

The Double Diamond Process™

Sometimes a picture is worth 10,000 words. The chart shown to the right is the way I explain the approach to building that VOC into a fully validated set of requirements.

The key in the progression of confidence as you move down the double diamond. As you move through each section you gain the understanding and confidence in the data to which you need to apply your insight to.

Caution

If you want to assure the greatest chance of success don’t skip a step or stop early.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Uncategorized

August 27, 2016 timwalker317526

The Set Up

This post is number three in a series of five or six posts related to Product Portfolio Planning (PPP). Once you have the market risks identified and scored [from the previous blog post] you must then set a revenue goal. This post will deal with revenue goal setting and R&D budget setting. These three elements make up the end game for your product portfolio plan. As a reminder the goal of the PPP is to hit target revenue, at target cost levels with risk that is harmonized with your risk tolerance profile.

PPP Goals

The source of these Product Portfolio Goals (PPG) should come from a strategic plan (SP) that matches the time frame of the Product Portfolio Plan. If there isn’t a SP, then the source of your goals needs to be the CEO, President or VP of Gobal Marketing.

For larger corporations there will most certainly be either a SP or a policy intention. Something to the effect that by 20XX, XX% of our revenue will be provided by products launched within the last 5 years. Not too difficult to get to a number.

Illustration

So lets say that your company launched their first product in 2000 and in it’s first year it produced $20 million in sales. You had a steady release of new products and achieved $500 million by 2005. You had nothing in the R&D pipeline and there were significant shifts occuring in the market with innovation, competition and consolidation. Your CEO announces at a staff meeting that you need a continous flow of new product introductions such that you achieve $750 million in profitable revenue by 2013.

You get back to your desk and do some quick calculations and produce this chart.

You realize that you need $250 million dollars of revenue output from this new PPP within the next 7 years. It takes between 2-5 years to commercialize a product.

In that same staff meeting the CEO indicated that he was willing to invest more than the industry average to achieve that goal. You know from a industry survey and quick review of the competitors Shareholder reports that, on average, companies invest 7-10% on R&D. Taking your CEO at his word it looks like you would have 12% of revenue to invest each year. As sales continue to grow the R&D budget would grow in real dollars as well.

You are feeling a little better now. You know the revenue goal, you know the typical turn time for product development (based on the performance of the nine products that you have launched so far).

But Which Investments?

Where do you place the $60M worth of R&D dollars to guarentee that you reach $750M in revenue? There are two approaches to determine this list of development projects. Top-down or Bottom-up. I suppose there is a third, which is a combination of the two.

For me, an evironmental scan of your market is in order. As a quick starting point a Monte Carlo approach to determine the risks and opportunities in the market (as described in the most recent post). If there is a recent strategic plan (SP) document you could start there to discover the growing segments and review the SWOT anaylisis. If there isn’t a SP, start from scratch.

In parrallel, you take a look at what is being worked on in R&D currently. You discover that there are currently 18 projects under development. It appears that in the absence of an agreed to PPP every pet project has emerged and been funded. This is natural and is exactly why you need a portfolio plan.

So you ask yourself how many projects should you have?

You do a bit more analyis of the current performance of your products and project that same level of performance forward and you see from your chart that you need around five. You feel that you have a good start but realize that you are going to need a group effort to actual develop the plan. You report out your findings to the CEO and are asked to share your finding with the general staff next week. You do. The CEO then announces that you are now in charge of developing the PPP and that everyone is expected to provide their full cooperation.

The following week you get your team together, R&D, NBD, Finance, Marketing and Operations. The big realization that comes out of the organizing meeting are three very fundamental issues. First, that the market has been shifting for a long time, very slowly and now that you stop to look at the impact of those changes they look huge. Secondly, that R&D does not have a standardized method for comparing projects. If you are going to make a decision about which current and future projects to fund, it is critical that you have a very consistent way for comparing them. Third, that none of the 18 projects are fully funded or are driving toward a commercialization date.

So NBD and marketing head off to get a handle on the market and the market trends. R&D, finance and Ops head off to develop a method to compare projects (investments). You have all agreed to comeback in two-weeks with a status report. Meantime you have one of your Product Directors working on the market Risk assessment.

Two weeks later you gather again and there is good progress. R&D, Finance and Ops have come up with a model that scores cost, time, head count, technical risk, and capability. What they have not yet factored in are revenue potential, profitability, market acceptance risk and commercialization costs.

R&D variables

Market variable

· Utility delivered to end user

· Development cost

· Time to regualtory clearance

· Head count requirements

· Technical capabilities

· Technical risk

· Un-met market need

· Revenue potential

· Profitabilty (price target)

· Market acceptance

· Commercialization costs

· Time to commercialize

Discount factor due to combined confidence of success

Marketing and NBD report back that they have priced out several market research projects that would provide all the information they need. The price and lead time seem reasonable for the need, however there is no allocated budget to cover the $2M dollars and the six-month time line seems too long for the sense of urgency the CEO has around this project.

You assign a second Product Director to work with R&D and Finance to round out the balance of the project assessment method. You and NDB develop a survey (discussion guide) and make appointments with ten key opinion leaders, luckly 8 are attending a conference over the week-end and you will be there. While at the conference you speak with a total of 20 physicians and have what you think is a pretty good handle on the market needs.

Your next meeting with the extended team is a half day working session. Everyone reports out their findings. You now have a method for comparing projects, you have a feel for the market trends, you have a risk map that was developed [which your CEO, and all geographic experts, internal experts and two external market expert have scored].

During the half-day session you develop a table that organizes all the relevant information.

Risk or Trend	Source	Importance / Size	Project	Outcome

This chart is critical. It will provide a narrative surrounding the “as is condition” of your portfolio. The format and style is less important that the content. For me I would use 11×17 paper in profile.

What should become obvious from this charting process is the list of projects that are ongoing in R&D that have no bearing on the market reality that you are dealing with. Also, where the large holes are that need to be filled.

The Next Steps

Envision projects that would fill the holes
Rescore the Market Risk Assessment based on these new projects
Re-score the projects using the consistent methodology
Rank the projects using 1) discounted revenue potential, 2) pay back period 3) positive impact to market risk reduction. You can also use NPV or IRR calculations.

Chart the Rankings by Project

Prioritize the list of projects by combined rankings and then pour the R&D budget over the top letting it drip down until it is gone.

Hint: Never partially fund a project. Dry pancakes are just not satisfying.

More about Product Portfolio Planning in future blog posts.

Make sure you are signed up to receive personal notifications for future post relating to this subject.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Uncategorized

August 16, 2016 timwalker317526 1 Comment

The Set Up

Recently I mentioned using a Monte Carlo approach to determining market risk that you should address with your Product Portfolio Plan (PPP). I thought I would take a minute to describe the approach. As a reminder this post deals with only one of three key dimensions of setting your goals for your Portfolio Plan. The PPP should maximize the impact that your new product investment has on your companies performance in the Market.

I developed a tool as a way of garnering agreement with senior management that we were trying to solve the right problem with our Portfolio Planning Process. So that when we started the Portfolio Planning process we had a revenue target, a resource allocation budget and a risk profile projected forward over the 5-8 year period of the Portfolio Plan. The three dimensional aspect of budget, revenue goals and risk profile will help focus your Product Portfolio Plan on the right targets. With out clear targets you can’t optimize the plan. Don’t underestimate the challenge of garnering agreement on the targets.

Einstein indicated that if he were given an hour to solve a problem he would spend the first 55 minutes making sure he understood the question. Using this methodology will make sure that you understand the question.

The tool is the application of the FMEA methodology into a Monte Carlo method for determining the current assessment of risk in your market, or product segment.

What is a Monte Carlo Approach?

In general, a Monte Carlo approach is used when you have insufficient data to make a definitive decision. But, you need to get started, so you are better off polling the true experts in a field and after their consideration of the issue or problem you accept their consensus recommendation or finding as fact. Validate and adjust your actions from that starting point. Long-term experience suggests that you will be 80% correct, at least this is how I think about it.

A Monte Carlo method is not taking a WAG with three of your buddies. The preferred approach would be to spend a bunch of money, do a ton of research and take several years to figure out your portfolio plan. For companies that are resource constrained or time restricted a Monte Carlo approach, as describe here, is a great first step.

When applying a Monte Carlo approach in determining market risk I have adopted the Failure Modes and Effects Analysis (FMEA) methodology that is used through out the industry in product design. Using a specific and well understood method will help in documenting the process and the findings.

So when applying this method to determine the consensus beliefs about market risks you follow the steps below:

Conducting the Modified FMEA Process

Step 1: Identify industry experts (internal and external to your company)

Step 2: Have them write down the issues that give them pause, cause worry or keep them up late at night, etc.

Issues should be as specific as possible. An example of an issue is: Competitor X will launch their version of your new product Z; x number of months before you.

Step 3: Compile the issues lists and combine where duplicates appear. If you get over a dozen you might want to think about re-writing them to combine a few into a boader category.

Step 4: Create a table that have the Issues listed, any description for clarification purposes and two blank columns titled Impact and Probability of occurance.

Step 5: Assign a 1-5 scale for Impact and a 1-5 scale for Probability of occurance. These scale definitions are critical and a bit tricky to develop.

Step 6: Have the same panel of experts score the issues with the two scales. Each issue is scored 1-5 for impact and 1-5 for probability.

Step 7: Compile the results. Distributions and means. With the issues that have bi-modal distributions you need to go back and have a discussions to ensure that the issues was well defined.

Step 8: Once you have one pair of numbers, impact and probability it is time to plot them on a chart that has impact on the y-axis and the probability of the x axis. Let say that you had 11 major issues identified by your panel of experts. The 11 issues would be plotted as shown below. Note this is an illustration only.

Step 9: This chart will give you your market risk profile. Anything clearly in the red needs to be addressed by some aspect of the Strategic plan and if appropriate the Product Portfolio Plan.

So the three issues that are plotted in the red box, 5 x 5 must be addressed, failure to do so would be catastrophic.

Step 10: Reflect each issue that is in the red, back into the portfolio planning process. This will produce a mitigation plan.

Step 11: Have your expert panel re-score the issues taking into account the mitigations (how you changed the plan or added to it). Plot the new scores. You now have a before and after market risk profile.

Step 12: Once you are satisfied with the new profile, rank the impact that each product program produced. You may have 5-12 product programs that are required to mitigate the risks. Each program could impact multiple risk factors. These impacts should be additive in your prioritization scoring.

Example: Let’s say the issue is an emerging trend toward minimally invasive surgery (MIS) [issue number 2] and you had no products in the pipeline that addressed this emerging trend, currently rated a 4,4 risk score. You added a new product development project to the plan that moved [2] to a 4,1 risk score you have reduced the aggregate risk of this issue by 12 (16-4) a reduction in risk by 12 points. Let say that issue 9 was a lack of product innovation with respect to market leadership. The vision for the MIS project also helped reduce that risk issue as well moving [9] producing a risk reduction of 12 points. When ranking the product dev projects the MIS project would receive 24 risk reduction points.

This ranking will provide one of the three key elements for prioritizing the Portfolio for funding. In the end you will use three ranking scales to rank make your investment decision.

When the portfolio plan is completed you need to make sure you have updated the Market risk profile to reflect the final map based on what was ultimately funded.

Seem complicated? It is at first, once you have done it then you will see the simplicity and logic in it. That is why you must be disciplined in this approach.

Caution: The first time you use this approach do not try to do it alone. There are multiple tricky aspects that might lead you down the wrong road. Call me for one on one coaching or to sign me up to consult you through it.

Make sure you are signed up to receive personal notifications for future post relating to this subject. Download the excel workbook at www.theexperiagroup.com to make your learning a bit easier.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Uncategorized

July 8, 2016 timwalker317526 1 Comment

The Set Up

Ok, Ok I give up! A number of my colleagues have asked for a post relating to building a Product or Technology portfolio. I have been reluctant to write this post for a number of reasons. 1) every portfolio planning process needs to be customized to the company and the type of products under development, 2) portfolio planning is very complex, and 3) they need to be preceded by a Corporate Strategic Planning process.

I think the best that we can hope for from this blog is to identify some common elements of every portfolio plan, define what one is and provide some cautions to take into account as you develop your plan.

What is a Portfolio plan?

Essentially a product portfolio plan is one that identifies the New Product contribution to the long-term revenue forecast of the company as made by individual product development projects or acquisitions. Typically, you start with either a collection of opportunities that have already been identified, or a set of market conditions that the strategic plan wants to leverage. Add in a set of current performing products and a competitive threat matrix. Stir all this together and then go crazy.

My preference is to ignore everything that has been done to date and start from the output of the strategic plan and identify the areas for investment. Identify the current products that contribute in those areas, identify un-met customer needs from those areas and identify potential products to resolve those un-met needs, then build the plan from scratch.

The goals of the portfolio plan will be driven off of the Corporate strategic Plan. Profit, revenue growth, competitive action, leadership, share dominance, access, and discovery are all legitimate goals that can be derived from the strategic plan. In economic speak the Portfolio Plan should maximize the combined output, X_p; for the minimum investment, Y_p; at the lowest risk, ß_p.

In finance we often refer to a balanced portfolio as a goal. I tend to believe that instead of balance one should strive for harmony. Balance is a precise thing, harmony has some freedom around it. The ultimate Portfolio will hold many assumptions at multiple levels and we should strive to make it as accurate as possible, but it will never be precise.

No project or combination of products is/are without risk. All known risks can be managed. Managing risk takes time and money. Risk is a big concept in the medical device space. So lets be clear, the risk I am talking about is the chance that your total portfolio does not produce your desired outcome, does not meet the needs of the strategic plan and its inherent goals. Lets refer to that as ß_p There are other ways that the concept of risk sneaks into the portfolio plan. Most notably as a discount factor for the revenue generation of each opportunity that ultimately will be combined to produce the Portfolio Plan.

The Steps in Building a Portfolio Plan

For me:

Step 1 – Read and understand the strategic plan. (Pull out the explicit and implicit measurable goals from the plan)

Step 2 – Interview all the senior managers that were involved with creating the strategic plan to make sure you have a feel for each of their visions for the portfolio

Step 3 – Create a heat map of market and competitive risk, basically a FMEA assessment of your SWOT analysis that should come from the Strategic plan

Step 4 – Create a matrix of segments that the strategic plan identifies that you want to be in, enter or exit.

Step 5 – Survey the clinicans that are the key users or drivers of/in those segments

Step 6 – Identify the opportunities that exsist.

Step 7 – Have teams create an opportunity assessment for each opportunity.

Step 8 – Score each opportunity in terms of it contribution to the objective for that segment that was identified in the strategic plan.

Step 9 – Score each opportunity in how well they reduce risk identified from the heat map.

Step 10 – Score each opportunity by the cost of realizing that opportunity.

Step 11 – Either use a discount factor to fold in the risk of success or failure of the project ( Innovation, core competency, speed, timing, competitive development)

Step 12 – Using the four scores force rank the opportunities separately, so that you have a list that is ranked by score 1, score 2, score 3, score 4 Typically, the high impact / low cost ones will be at the top. Those at the bottom of all four scores are usually out. It is the middle ones that require some discussion.

Step 13 – Allocate the New Product budget to each of the opportunities and see how far down the list the money will go. Ask two questions if we execute this plan will we achieve the strategic intent of the company? Is our portfolio plan in harmony with our willingness to absorb risk?

Last step – Vet the plan with the bosses, dispassionately.

Cautions

The development of a portfolio plan is not an engineering exercise, it is a social-science experiment. An experiment with significant political implication.

Each opportunity must be assessed under a strict set of guidelines. Inconsistency in the approach and definitions will invalidate your portfolio plan.

Marketing can not do this process alone. It must be a team effort between R&D, NBD, Up-stream marketing, finance and operations.

Document in a very obvious manner all the assumptions that are used. Independently vet the assumptions to ensure that everyone is OK with the assumptions and confidence you have in your data. If they are not ok with the assumptions, stop and develop a plan to move the assumptions to facts.
It will be difficult, but don’t take it personally, any of it.

If your organization is not willing to allow the time and dollars to develop a great portfolio plan then you are better off getting the most informed opinions in a room and make the call without data, a modified Montecarlo process.

A portfolio plan needs to be reviewed constantly and changed seldom.

Why do I need a Portfolio Plan?

The life blood of the medical device market has been a continual stream of new products. In todays environment the commercialization process will require 2-5 years from start to finish. If you don’t have a well thought out plan you are already behind the time curve.

At many Med Dev companies the goal is launching a new product every year and a new platform every two-years. If you can accomplish this goal you are on your way to sustained growth, if they are the next right projects. A well thought out portfolio plan will drive your M&A activity as well as R&D. If you as a Marketing organization have effectively laid out where you need to go to accomplish your new product revenue goals, you put yourself in a leadership position and if done well you are moving your organization to be a market driven organization.

Final Thought

A well done product portfolio plan that is in harmony with the strategic plan gets the entire organization on the same page. Having the assumptions well understood and monitored will provide an early warning system if changes are required.

The last thing any organization needs is a whip saw effect in new product development.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Uncategorized

February 29, 2016 timwalker317526

The Story: I attended a recent Med Device investor conference and was approached by a colleague who had been following my blog for a year or so. I’ve known this gentleman for over 20-years, but had not spoken with him in quite a while. He asked when I was going to post something about doing Opportunity Assessments.

It is funny how people pigeonhole you into different skill sets. He remembered a Market Assessment I had done in the 90’s that apparently impressed him. I have done so many assessments, both Product and Market that I had to look it up. I was humbled by the fact he remembered it.

A second gentleman that was at this same conference remembered me for the way I developed a Product Portfolio, he asked when I was going to blog about that topic. Again I was humbled. This guy is as sharp as they come.

Both topics are huge in scope. This post will set up some thoughts and definitions; I will follow-up with a more detail set of posts over the next month or so.

Opportunity Assessment defined: An opportunity assessment is the systematic, fact based, analysis of the market and/or product variables and assumptions that are used to determine the future financial viability of a given “Opportunity”.

Portfolio Plan defined: The Portfolio Plan is the resultant of a systematic decision-making process that combines a series of investment options (opportunities) into a strategic investment across time. When the opportunities are combined they will optimize that investment against a strategic objective set forth by senior management, hopefully that came out of a formal strategic planning process.

Connecting Opportunity Assessments and Portfolio Planning: You can create an Opportunity Assessment completely independently of portfolio considerations. But to do a serious Portfolio Plan you can’t do it without a series of valid Opportunity Assessments. To facilitate a defendable Portfolio Plan you have to make sure that the methodology used to develop the Opportunity Assessments is consistent and not based on opinion.

Side note 1: Even if your organization uses M&A activity to build the Portfolio you still need that Opportunity Assessment. You might just call it Due Diligence. Take care to ensure that all departments use the same Opportunity assessment rules and validation requirements.

Side note 2: Depending on how your organization is structured, you will more than likely need to build the assessment in tiers of certainty. Some of the work takes resources and if you don’t have the resources you need then you will need to convince someone that the opportunity is worth looking into. Think about the following flow:

Vision
Hypothesis
Preliminary
Verification
Validation

What does a good Opportunity Assessment look like? It all starts with defining a problem in a specific therapeutic area or market. Opportunity identification is a whole different topic. For this post I will assume that the problem has been identified.

So the key questions that must be answered are:

Is the opportunity real?
Is it worth going after?
Can your company win, if they go after it?

A NO to any of these basic three questions suggests that it is not viable, for you. Of course everything has many shades of gray and all assessments are nuanced by political, economic and time frame realities. So I will write from a simplified dogmatic position. Take it for what it is worth to you.

Is the opportunity real? There are two parts to this question. Is the problem real? Is the solution real? To answer these questions you must have a clear understanding of the un-met need. You must also have a reasonable belief that full utility can be delivered via the final product design at a cost that is affordable.

Side note 3: A mistake that often occurs is that someone sees a problem and assumes that everyone must see, have, or suffer from the problem. This is seldom the case. A measured assessment of the size of the opportunity is step one.

Side note 4: In almost all cases the problems are already being solved or mitigated today, somehow to some extent. Don’t discount the value of understanding how this happens. In a latent need these substitution solutions maybe your largest competitive hurdle.

Is it worth it? This a unique question that each organization will answer differently. Depending on your grand objectives that have come down from the Strategic Plan there maybe hurdle rates that must be met even to be considered as a viable opportunity to be considered.

In general this is a financial/strategic question that requires a number of models and market/segment/solution assumptions to be made. The more informed these assumptions are, the better the decisions will be.

Typical you will need:

A disease model
A market model
A set of explicit solution assumptions (validated to your comfort level)
A set of explicit market assumptions (validated to your comfort level)
A set of assumptions about the success of your product solution (validated to your comfort level)
Cost of developing the product
Cost of launching the product
Sensitivity analysis of the revenue and profit models
A discount factor is developed (probability of success on all fronts)(project ßeta)
A pricing model
A business model to deliver long-term success
NPV
IRR
Payback period
Strategic value (risk reduction, critical growth objective, etc.)

Side note 5: If, you are going to use this as one of the opportunity assessments in your portfolio planning process, then the there needs to be a pre-set standard quality level for validation of assumptions.

Can you win? This question is primarily an assessment of your internal capabilities and resources. Some of these questions feedback to the “worth it” question. For example, if you need to acquire or invent a new technology to provide an effective solution then you need to make sure the cost of invention or acquisition are in the financial models and it could well impact your discount factor (project ßeta).

Do you have, a cross all functions:

The right people?
Enough capital?
Enough cash?
The right sales force?
The right knowledge?
The right management control system?
The right distribution model?
Access to the right KOL’s?
The right vendor base?
Enough mfg. capacity?
The proper internal systems? Etc.

For any sub-point no, you may plan to acquire the missing aspect that lead to a no; just make sure you discount the probability of success and account for it’s cost.

When you bring it all together the high level scoring is simple, if you don’t have yes, yes, yes, than move on. If you have some narrowly classified no’s, you may want to move to a higher level of accuracy (refer to note 3 above). Just remember that the goal is to eliminate the losers and select the winners. Make a decision and move on.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Project number

Project name

Expected revenue

Payback period

Risk reduction impact

Combined rank scores

Combined rankings