Jan 16, 2011

Apple's R&D portfolio strategy - "Get Rid of the Crappy Stuff"

Some interesting R&D portfolio management advice in the Fast Company article Steve Jobs's Strategy? "Get Rid of the Crappy Stuff"
"Do you have any advice?" Parker asked Jobs.
"Well, just one thing," said Jobs. "Nike makes some of the best products in the world. Products that you lust after. Absolutely beautiful, stunning products. But you also make a lot of crap. Just get rid of the crappy stuff and focus on the good stuff."
There are two fundamental problems in executing this advice:
  1. How do you decide what is crap? Sales to date, forecasts, executive opinion?
  2. Why did the crap get into the portfolio to start with?  Should it not have been eliminated before development was concluded?
Clearly an executive like Steve Jobs can answer these questions.  As the article points out:
It takes courage to reduce the number of products a company offers from 350 to 10, as Jobs did in 1998. It takes courage to remove a keyboard from the face of a smartphone and replace those buttons with a giant screen, as Jobs did with the iPhone. It takes courage to eliminate code from an operating system to make it more stable and reliable, as Apple did with Snow Leopard.
In most companies, answers to two questions are much more difficult.  There are pet projects for executives that can not be touched.  A R&D portfolio manager I know went through an elaborate exercise to evaluate the portfolio and find duds.  He found many projects that had gone on for years and were no closer to delivering results.  He brought the list up to the senior executive's attention.  The answer from the CEO was immediate and clear - you can not touch these.  No explanation was given nor any improvements suggested to the portfolio management process to ensure it did not bring up the same projects again.

Another problem is interdependencies between different projects in the R&D portfolio.  Killing one project means others get impacted.  Companies need to really invest in maturing and enhancing their portfolio balancing processes.

2 comments:

  1. I do really appreciate your conclusion about
    portfolio balancing, but don't you think that
    companies are right now unable to operate on there
    portfolio because they don't have enough money to do so,even if they abandon there agonizing products??

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  2. This is a very good point. Perhaps we could keep one point in mind: Whether we like it or not, we only have a finite amount of resources for our R&D portfolio. In bad times, the amount may be smaller, but it is still some amount. So, portfolio balancing is still as important as ever. Perhaps, it is even more important to determine where we are going to invest our scarce resources. One more thing to keep in mind: Change is hard. Difficult times are probably appropriate to make difficult change regarding balancing the R&D portfolio and removing dead wood. Hope this make sense.

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