Product portfolio management best practices for new product development: A review of models

Product portfolio management best practices for new product development: A review of models

1 Introduction 
The development of new and improved products 
is crucial to the survival and prosperity of the 
modern corporation. On an average, new products 
launched often account for over a quarter compa-

nies’ sales (Cooper & Edgett, 2003; Cooper, 
Edgett, & Kleinschmidt, 2004). In the words 
of Von Braun (1997), the product life cycles are 
getting rapidly shorter experiencing, on an aver-

age, about a 400 percent reduction over the past 
five to seven decades, which emphasis the out-

comes of an exacerbating pace of new product 
development. 
According to Patterson (1998), the expectation is 
that investments in new products to increase the 
growth for the business, in terms of increases 
in revenue and profits created by a steady stream 
of new products are needed to fund the growth 
of the business. 
In addition, business leaders expect their new 
product efforts to increase the competitive 
strength of the firm, both now and in the future. 
However, not all the new product projects get 
to succeed, while not more than a half of the new 
product developed achieved their financial target, 
about that also get to be launched on schedule (see 
Cooper, 2005). 
An effective new product development program 
is, nonetheless, a culmination of several factors.

Understanding why new products succeed and 
why some businesses are so much better at new 
product development is essential to effective new 
product management. The invention of new tech-

nology and research and development (R&D) are 
very vital, but these alone cannot ensure business 
success. 
Effective portfolio planning and management ac-

tivities are also needed to aim the new product 
program at a profitable and suitable future and to 
ensure the continuing effectiveness of current pro-

jects. New product expenses are often the largest 
investments that a business enterprise makes and, 
as with any investment, they should be managed 
carefully and with due diligence. Yet, in many 
firms, new product activities get too little mind 
share from business leaders. 
The pivotal role that new product development 
plays in business strategies vis-à-vis the financial 
time and manpower resources deployed for its 
success brings to fore the quest for how best 
to manage products portfolio that will improve on 
the successes recorded on the development of new 
products as a strategy for business growth. 
In the sections that follow, discussions that outline 
the new product development projects processes 
and the key activities pertaining to the effective 
tracking and management of these investments, 
which the business leadership team must own and 
carry out effectively, are presented. 

2 New Product Development 
The set of choices that businesses have to make 
when building a plan of action for converting a new 
product concept into a product are the new product 
strategy addressed in this section. Cooper (1990) 
posits that new product is able to help companies 
much more quickly and efficiently if planning pre-

cedes the commencement of the product development. 
Put more succinctly, the plan addresses issues that, 
when resolved, can create value for desirable cus-

tomers and can capture value for the developers’ 
business unit (Roseneau, Griffin, Castellion and 
Anschuetz, 1996). He further asserted that a skillful-

ly assembled development strategy can play a major 
role in developing a new product concept, which 
encompasses selecting the environment where the 
product will compete and explaining why it can win, 
thus helping to set direction and focuses the devel-

opment work. 
The first mention of new product development pro-

cess was in 1966, which expressed that product de-

velopment go far beyond just internal R&D but that 
every steps in the entire new products evolution pro-

cess must be well laid out and planned (see Griffin, 

2010). Sherman (1966) outlined a six-stage process 
that firms must follow in new product development, 
namely, exploration, screening, business analysis, 
development, testing, and commercialization. Their 
models included proceed and not to precede deci-

sions that managements must make at every stage 
of the development process. 
Since then significant amount of researches have 
been done in this area, prominent among the early 
scholar is Cooper (1990) who put forward the stage-

gate process (see Fig. 1). Cooper (1990) concluded 
based on three case studies that an effective product 
development processes need to consist of a sequence 
of discrete stages, proactively integrate marketing 
and technical activities, allow for activities to be 
conducted in sequence at times and in parallel 
at other times, and provide for making incremental 
commitments to projects over time (see Cooper, 
1976). 
Over the decade that follows, Cooper and other re-

nowned coauthors in the area of new product devel-

opment further developed and refined what effective 
processes include, what impact each step had on the 
outcomes of new product, and how well various 
steps are carried out. 

The main preoccupation of the Cooper’s stage-gate 
process is providing a bespoke product development 
pathway from idea conception till production and 
launch of the product. In other words, it is a simpli-

fied linear illustration of the total process innovation 

and commercialization. A major assumption of the 
model is the apparent linear nature of the process 
aligning with one of the objectives of developing 
formal new product development processes, which is 
to eliminate repetitions back into the earlier phases 

Product portfolio management best practices for new product development: A review of models