By Gary Lundquist

What is your true job? Science? Engineering? Management? Marketing? No, not really. If you work in or around technology, your job is to add value by changing what is possible. To convert a portfolio of ideas into a portfolio opportunities. To manage a portfolio of risks into a portfolio of profits.

Not small tasks! Portfolio management was the topic of this year’s joint conference in Austin, March 4-6, jointly produced by the Technology Transfer Society (T2S) the Product Development Management Association (PDMA). PDMA focuses on the theory and practice of new product development serving functions from R&D through marketing across a range of vertical industries. T2S focuses on theory and methods by which designs, ideas, research, and innovations are moved from concept to higher levels of utilization. T2S serves individuals and organizations from industry, academia, and government.

We came together to discuss portfolio management — how to handle projects all targeting delivery of new or improved products that compete well in one or more markets. This topic is critical to the success of corporations everywhere. The diversity of speakers both broadened the scope and delved into. Portfolio management turns out to be a much bigger topic than many of us imagined.

Portfolios of Change

I oversimplify here to create a mental picture. Imagine a value chain — the steps from initial concept to a product in use by end customers.

At product level, we start the value chain with a portfolio of ideas and raw technologies plus the expertise to prove concepts. To complete the chain, we move an ever-improving technology through a portfolio of development processes. Effective development is constantly in touch with customers. Engineers don’t drive good product development; customers do.

At portfolio level, we manage a suite of products moving along a suite of value chains, each in different stages of development or redevelopment. We evaluate and control risks, ultimate value, and timing of the various projects. We listen to a whole portfolio of customers, as many as are served by our potential products.

At business level, we deal with everything necessary to support a portfolio of developing products plus promotion, delivery, service, and support of finished products. This article focuses on the product side, including portfolios of sources of technologies, business strategies, alliances, and suppliers.

At community level, we conceive of a technopolis, a technology-based city. This is a community with a compatible portfolio of technology companies sharing resources and supporting each other’s efforts.

Portfolio management is what we make of it. Learning the range of viewpoints enriches our abilities to manage our own portfolios.

The Four Levels

Product Level: Cole Dudley of the AM Fund is a venture capitalist specializing in start-up companies. He wants to get a single value chain started, then build a company around it. He funds several companies at a time, creating a portfolio.

Hank Davis of NASA manages a portfolio of technologies available for license. He moves technologies out to industry, enabling new value chains or enhancing existing ones.

Dudley and Davis face similar problems from different perspectives. They must evaluate options and choose the best. NASA wants to enhance American competitiveness, so Davis’ team evaluates technologies for economic impact. Dudley creates wealth, so he looks for just the right product and company for a technology. Factors include low front-end costs, fast development cycles, and the potential to be a platform for a range of products.

John Thompson of Lucent sees each value chain as a tightly linked series of technology transfers. Rather than manage product development as a portfolio of processes (research, development, design engineering, etc.), Thompson suggests managing a portfolio of technology movements.

Thompson’s view enables true quality management of product development. The key is understanding that transfer is not delivery of a prototype to the next stage of the chain, but delivery of the ability to recreate the prototype in a new environment with new criteria for success.

Product development is a portfolio of capabilities all managed to meet customer needs, at a profit, in a complex competitive environment.

Portfolio Level: John Gibson of Landmark Graphics, a top-20 software company, found himself managing a portfolio of 28 products from acquired companies. His job was to integrate both the portfolio and the cultures.

To integrate culture, he transferred people from group to group, got technology involved with distribution channels, and distributed R&D directly into product development. He moved the focus from products to customer solutions and the dialog from “what we do” to “what they need.”

To combine portfolios, he raised integration to the level of a vision, a dream all could share. Landmark put all product development on one software platform with one data management framework and one market focus. Then he rationalized the diverse customer interfaces and training programs. Finally, he froze all development until Y2K had been solved, a process which simply could not have been done without an integrated product portfolio.

Rob Beachy of Axiom Business Products points out that timing is crucial. Optimum timing matches product introduction with market readiness. To forecast the right timing, keep customers involved throughout development.

Beachy invests relative to risks. Products new to the world are greater risks and harder to time than minor additions to existing product lines. When the stakes are high, find out in detail what customers wish for, how they choose between alternatives, and what it will take to get them to substitute a new product for what they use now.

Business Level: As we move from portfolio to business level, we become more strategic, looking beyond tasks to company performance.

Tim Ruefli of the University of Texas asks us to think in terms of a portfolio of strategies. Very briefly:

• Technology: What is our core knowledge base?
• Corporate: Where do we fit?
• Business: How do we compete?
• Functional: How do we coordinate?
• Enterprise: How do we assure legitimacy?
• Cooperative: With whom do we form alliances?
• Hypercompetitive: How do we disrupt the market?
• Change: How do we manage it?

Paul McClure of Xidex Corporation is an entrepreneur who says that “intrapreneurs” face similar issues. Growth takes a portfolio of skills and human factors applied over several stages of company evolution. He says that every business evolves from pre-commitment to new venture to expansion to professionalization, to maturity. Crises typically occur at each transition.

Managers operate today’s business. Leaders prepare us for the next stage and push for transition. Think about that. Two distinct types of individuals, one optimizing the status quo, the other not satisfied, both working together to achieve corporate growth. Portfolios of products are managed within the context of a portfolio of business objectives.

Sean Murphy of Motorola manages the interface with SEMATECH, a consortium of semiconductor companies working together for mutual benefit. He faces the dual problem of managing a portfolio of corporate relationships, then transferring a portfolio of technical advances back into his company.

Collaboration isn't easy when working with competitors. One key has been to create a shared vision on which all companies can align. They built a National Technology Roadmap projecting when critical technology will be required. This is strikingly similar to Gibson's approach at Landmark.

Frank Julian of SBM, Inc., carries collaboration a step further by asking, “What should suppliers be doing for us?” He drives productivity up by outsourcing specialized or repetitive tasks to a portfolio of suppliers.

The Community Level: David Gibson of the IC2 Institute in Austin talked broadly on technology transfer and knowledge diffusion. Let me focus here on one of his side points.

A technopolis enables creation of wealth just as surely as a good company does. A combination of education, large companies, emerging companies, supportive government, networking, infrastructure, visionaries, and quality of life combine to enhance what companies or even industries can accomplish.

At this level, our portfolio can’t be managed; it must be led. That may be the best lesson of this conference.

A Portfolio of Portfolios

This conference caused us to think at four levels: product, portfolio, business and community. Each impacts the other; each includes its own sub-portfolios of resources and processes.

To think about one part without the others is just as short sighted as developing products without constantly listening to the voice of the customer.

Our job isn’t to perform tasks. We have larger roles. My contribution to this diverse dialog is to remind us all that we need to play six core roles: Be a conscious agent of change. Add value every day. Satisfy customer needs better than any alternative. Lead the company toward success. Be a solution and develop new solutions. Generate opportunities.

If we play these roles in the management of our own portfolios, we will be true competitors that generate wealth for our companies.