Diverge and Converge. Simplify your Product Portfolio
Yes, it is likely that as consumers become more demanding, companies will need to offer a wider variety of products in order to meet those demands and remain competitive. This can lead to more diverse product portfolios.
Having a diverse product portfolio can be beneficial for a company in several ways. It can help them reach a wider customer base and appeal to a broader range of consumer preferences. It can also provide a buffer against market fluctuations, as having a diverse range of products can help a company weather changes in consumer demand for certain products. Additionally, a diverse product portfolio can provide a competitive advantage, as it allows a company to offer a unique mix of products that may not be available from their competitors.
It becomes more difficult to manage complex product portfolios.
Managing a crowded product portfolio can be challenging for a number of reasons. One difficulty is that it can require a significant amount of resources, such as time, money, and personnel, to develop, produce, and promote a large number of products. This can put pressure on a company’s budget and staffing levels.
Another challenge is that having a crowded product portfolio can make it difficult for a company to market and promote its products effectively. With so many products to choose from, it can be hard for consumers to understand what each product does and how it differs from other products in the portfolio. This can make it harder for a company to communicate the value of its products to potential customers.
Additionally, managing a crowded product portfolio can be complex from an organizational standpoint. It can be challenging to ensure that each product is being managed efficiently and that the overall product portfolio is aligned with the company’s strategic goals. This can lead to inefficiencies and misalignment within the organization.
Best practices to manage your product portfolio.
There are several best practices for managing a product portfolio effectively. Some of these include:
- Conduct regular portfolio reviews: Regularly reviewing the product portfolio can help a company ensure that it is aligned with its strategic goals and that each product performs well. This can help identify any underperforming products and take action to improve their performance or discontinue them if necessary.
- Prioritise product development: A company should prioritise the development of products that align with its strategic goals and have the potential to generate the greatest return on investment. This can help ensure that resources are being allocated effectively and that the product portfolio is focused on high-priority products.
- Monitor market trends and customer needs: Monitoring market trends and customer needs can help a company identify opportunities for new products and adapt its existing products to changing market conditions. This can help ensure the product portfolio remains relevant and appealing to customers.
- Collaborate with cross-functional teams: Effective product portfolio management requires collaboration across different functional areas of the organization, such as marketing, sales, and R&D. By working together, these teams can ensure that the product portfolio is aligned with the company’s strategic goals and that each product is being developed and promoted effectively.
- Use data and analytics: Data and analytics can play a key role in product portfolio management. A company can make more informed decisions about its product portfolio by collecting and analyzing data on product performance, customer preferences, and market trends.This can help it identify opportunities for growth and make more effective decisions about which products to develop and promote.
Simplification is the way forward.
One way to simplify a complex product portfolio is to conduct a regular review of the portfolio to identify any underperforming or unnecessary products. This can help a company focus on products aligned with its strategic goals and have the greatest potential for success.
Another approach is to use data and analytics to evaluate each product’s performance and decide which products to prioritise. This can help a company identify trends and patterns in product performance and make more informed decisions about which products to focus on.
Additionally, a company can simplify its product portfolio by streamlining its product development process and focusing on fewer high-priority products. This can help reduce complexity and ensure that resources are being allocated effectively.
Finally, collaborating with cross-functional teams can also help simplify a complex product portfolio. By working together, different groups within the organisation can ensure that the product portfolio is aligned with the company’s strategic goals and that each product is being developed and promoted effectively.
In the early 2000s, Procter & Gamble streamlined its product portfolio by discontinuing over 100 underperforming products and focusing on its core brands. This helped the company improve its financial performance and focus resources on its most successful products.
In 2013, General Electric announced that it was selling off many of its non-core businesses and focusing on its core industrial operations. This helped the company streamline its operations and focus on its most successful products.
Simplify or die. Maybe not that harsh, but close to.
You could take a few different approaches to simplify a complex product portfolio for an enterprise. Here are some suggestions:
- Identify and prioritize the products or product lines that are most important to the business. This could involve looking at such factors as revenue, profitability, customer demand, and strategic value. Once you clearly understand which products are most important, you can focus on simplifying and streamlining these portfolio areas.
- Consolidate or eliminate products or lines that are no longer relevant or are underperforming. This could involve merging similar products, discontinuing products that are no longer in demand, or divesting products that are not aligned with the company’s overall strategy.
- Implement standardization and modularity across the product portfolio. This can simplify the design and manufacturing process, reduce costs, and improve efficiency. For example, you could use common components or sub-systems across multiple products or adopt a modular design approach for easy customization and upgrades.
- Invest in digital technologies and tools to improve portfolio management and decision-making. It could include using data analytics to gain insights into market trends and customer preferences, and implementing collaboration and project management tools to help teams work more efficiently.
Overall, the key to simplifying a complex product portfolio is to focus on the products and product lines that are most important to the business and to use a systematic approach to streamline and optimize the portfolio. This can help the enterprise to improve its competitiveness and drive growth.