Will our current portfolio deliver our organic growth goals?
It is not uncommon to hear CEOs talk publically and explicitly about growth goals. It is, however, a rarity for these same executives to be able to link those goals to specific innovation initiatives in any tangible way. Proclamations of organic growth expectations can leave those responsible for innovation scratching their heads and wondering which development portfolio the CEO is looking at when making these statements.
That is why I suggest asking this top-level question about the aggregate expected commercial value of the innovation pipeline early in a portfolio review session. Before we dive into mix and balance questions, let’s stop and determine whether there are enough growth-generating initiatives in the pipeline to deliver against expectations. Tweaking the portfolio will not do much good if we are short by an order of magnitude.
Answering this question is difficult. We expect growth from increased distribution, enhanced pricing, and market share gains of our existing product portfolio. Teasing out that portion expected to come from new innovations is the first challenge. Estimating the net impact on the top and bottom line of planned launches is the second. Accounting for cannibalization, timing of launches, and competitor responses is often overlooked in these analyses.
Portfolio management is an important business discipline. Before we focus a lot of energy on pipeline optimization, let’s first determine whether what we’ve got has any prayer of delivering on the promise.