By David Cocuzzi, Vice President of the ChemQuest Group, Inc.
In any organization in which product development and commercialization of those products are its lifeblood, the process starts with the collection of ideas regarding products that will be needed—and when they will be needed—in the future. Of course, there are many ideas, and deciding which of the ideas should be resourced is a constant challenge. Clearly a process is needed, but, in today’s corporate world, there is a penchant for rigid, unforgiving processes, which become such an encumbrance that more energy is dedicated to maintaining the process than to developing and delivering products to customers. What is needed is a tool that brings the various business functions willingly together to have a discussion about new ideas, potential projects sitting idly, as well as projects entering—or already in—the product development pipeline. Such a process needs to respect the limited time that today’s managers have to spend, yet yield valuable information regarding the path forward.
The ChemQuest Group, Inc., has developed such a tool, which can be used by any organization no matter the size. The tool—TechValu™—is easily scalable to fit an organization’s specific needs and requirements, and has been streamlined to be a tool that an organization willingly uses, and not a “process” that will–without fail–generate a series of groans. TechValu™ guides the project evaluators through six key factors:
1.The competitive advantage that the product would provide to the company
2.The value to the customer that the product would provide
3.The market attractiveness of the product
4.The technical and commercial feasibility of the product
5.The appropriateness of the product within the company’s overall strategy
6.The cost attractiveness to develop and launch the product, including the costs associated with scale-up, legal, IP, regulatory and the customer’s switching costs.
In addition to these six factors, a number of financial factors are used to measure the economics delivered by the successful development and launch of a product. These factors could include—but are not necessarily limited to—profitability; value and volume at the maturity of the product; contribution margin; return on investment; or any other financial metric that is useful to the organization.
Each TechValu™ factor is weighted according to the organization’s view of its business. For example, perhaps the strategic fit of a particular factor is far more important to the organization than market attractiveness, so it would be weighted more heavily. The organization weighs each of the factors, with the total weight totaling to 100%.
Once this is done, the organization—represented by all functions, such as technical, commercial, marketing, manufacturing, finance, etc.—completes a series of questions for each factor. These questions have been developed by ChemQuest leveraging its decades of experience, working with many companies within many industries. The questions are strategically written to be applicable to all businesses under all circumstances. This exercise is completed in 30-60 minutes for each of the projects being considered, and—based upon ChemQuest’s experience—a company’s entire project portfolio can easily be evaluated in a day or two (depending, of course, on the number of projects being considered).
Once the project portfolio evaluation is completed and the scores are tallied, it is common to graphically display the results, as this gives an organization the ability to clearly “see” projects, and to compare and contrast their potential value, rather than wasting time attempting to make sense of a dizzying set of numbers. An example is shown below:
Using this example, Project B and Project E have the same Market Attractiveness Score, but Project E will be more profitable and has a much larger revenue expectation (when the product is fully mature in the marketplace). Project G has even larger revenue, but is not quite as attractive and does not generate the same profitability as Project E. The business may have to refer to the other TechValu™ factors to make a more informed decision.
TechValu™ is a straight-forward, time-tested portfolio evaluation process, scalable to any company. Its ease of use avoids the problems associated with over-engineered processes that become too onerous to be used effectively. TechValu™ provides any company with the right tool to get the job done, which is after all the whole point of being in business.