Product Portfolio Management—Governance for Commercial and Technical Portfolios over Life Cycle

Arto Tolonen, Janne Harkonen, Harri Haapasalo

Industrial Engineering and Management, University of Oulu, Oulu, Finland.

DOI: 10.4236/ti.2014.54016                

Abstract

Companies face an important question on whether they should allow product portfolio renewal to occur without interference by merely adding new products, or should the renewal be governed based on strategic and financial targets over life cycle? New product development phase is well covered in the product portfolio management (PPM) context, but later product life cycle phases are not covered well in this context. Neither are the different product structure levels adequately taken into account, instead the current PPM only discusses the “product” in general terms. Based on analysing the portfolio related practical challenges in ten case companies, and realising the deficiencies of current PPM theory motivated this explorative multiple case study. The principal results of this study involve revealing the need for a new potential PPM governance model that enables managing commercial and technical product portfolios over life cycle phases. A governance model framework, based on horizontal and vertical portfolios managed by two centralised teams, is proposed. Based on the data, and views of industrial experts, the created new PPM governance model has potential to aid business managers in understanding PPM as an entity that has a role in managing existing product portfolios and their renewal based on commercial and technical portfolios over life cycle as collaboration between business and engineering teams in all organisational levels.

Keywords

Product Portfolio Management, Governance Model, Collaboration, Dynamic Decision Making, Product Life Cycle

Conflicts of Interest

The authors declare no conflicts of interest.

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