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Tag : life science business

Managing a Product Portfolio

Carlton Hoyt 7:21 pm , March 31, 2011

Actively manage your bioscience product or service portfolio to maximize revenue, align with strategies, and ensure long term success.All companies making and / or selling life science tools and services have a product portfolio, but often these portfolios are not viewed in a strategic manner. While aligning current company competencies with current marketplace needs is a simple way to have successful products, a broader view of the product or service portfolio is necessary to ensure greater corporate, and long-term, success. In this post, I’ll go over some of the broader considerations of managing a product portfolio.

Note that many companies discuss product portfolio management to effectively be the new product development project selection process. While new product development project selection is an important part of product portfolio management, I believe this viewpoint to be too narrowly focused, as existing products need to be factored into portfolio management as well, and there are issues related to portfolio management that are indeed independent of new product development. I will discuss new product development project selection in more depth in a later post, as it is a critical business process, but for this post I will simply try to address some common questions relating more globally to product portfolio management in the life sciences.

How many products are the right amount?

Deciding how many products should be in your product portfolio is a difficult question, but there is a correct answer that requires balancing a multitude of factors. First of all, and arguably most importantly, is the amount of products that you can profitably develop. If you have the skills and the market need exists for more products, then building more is usually a good idea. Also important, however, are risk and the scope and goals of the company. If your product portfolio is too small or too narrow, then you may be exposing yourself to a large amount of risk by putting too many eggs in one basket, so to speak. On the other hand, if you have too many products you may lose focus of your scope and your goals, or simply lose the ability to effectively maintain or all of your product lines.

Should product X be in our product portfolio?

Again, if you have the skills to build a given product and the market need exists for it, then it is usually a good idea to build it. Before diving in head first, however, be sure you know the opportunities and threats of doing so. Also, if a given product is sufficiently outside the rest of your product portfolio, then other problems may arise. Your customers not view you as having a competency in that area and this can hurt customer confidence in that particular product or product line, adversely affecting sales. Furthermore, a disparate product from others in your portfolio may incur large marketing cots, as the effective economies of scale achieved by co-marketing (effectively marketing for many products at once) may not exist. For older products, you periodically need to ask if the product is still worth supporting. This should not be a simple question of if the product is obsolete, however, but rather will the profits from making or selling the product meet the desired rate of return. Ultimately, strategy and rate of return are the most important deciding factors in deciding if a product should be developed, maintained, or scrapped.

How do I know my product portfolio has the right mix of products?

Your developed product portfolio should accurately reflect your core competencies and the current needs of the life science research market while your product development projects should be addressing anticipated future needs. Make good use of market research to figure out exactly what those needs are with respect to your business.

Notes for life science distribution companies

If you’re a life science distribution company your job of product portfolio management is in many ways much simpler since you have no product development costs. However, there are still costs associated with bringing on a new product or product line, so having as large an offering as possible is often not a good strategy. Also, consider your strategic positioning within the life science marketplace and align your product offerings to that positioning. If your strategy involves certain segments of the life science market, leverage your product portfolio to gain a reputation as an expert “go-to” seller within that market segment. Since you have less variables to deal with than manufacturers, fully-quantitative, even automated, processes for dealing with portfolio management processes are also sometimes possible.

Effectively managing your product portfolio will not only ensure that your business is profitable in the short- and mid-term, but by aligning with strategies and goals can help lead your bioscience company to long-term success.

"Are you concerned that your product portfolio is too large or too small? Want to leverage your product portfolio to mitigate risk while simultaneously increasing revenues? Would you like to know what your product portfolio should look like in the future so you can make more informed decisions regarding product development projects? BioBM’s seasoned business consultants can analyze your product portfolio and help guide your bio-tools or life science services business to a more successful future. Give us a call or send us an e-mail and we’ll discuss your goals and how you can develop and leverage a winning product portfolio to achieve them."
Blog / Marketing Strategy 7:21 pm , March 31, 2011

Fix the Cause, Not the Effect

Carlton Hoyt 5:19 pm , March 10, 2011

To ensure long-term success of your life science company fix the causes of problems, don't just treat the symptoms.In business, problems are an inevitability. No company ever sails completely smoothly to success. In the life sciences and elsewhere, companies often fail to step back to understand their own problems and their own situation as well as they should. Because of this, people often develop an overly simplistic view of their company’s problems and then implement solutions that are designed to merely treat the symptoms of a deeper underlying problem. Without recognizing and fixing the root cause of your company’s problems, the symptoms are certain to manifest again.

Let’s take an example. Life science company X is having a problem with half its sales force missing sales targets. On the surface, this very well may look like a problem with sales personnel. After all, if the half of the sales force is meeting expectations, why can’t the rest? The company may be keen to implement a solution which directly targets the manifestation of the problem – perhaps reprimanding the under-performing personnel or increasing incentives for those who meet performance. Would these solutions treat the problem? They very well may, especially if the cause was with sales personnel motivation, but if not these fixes will be an inefficient solution that will fail to alleviate the symptom or address the underlying problem. The problem may be in marketing and the sales force is simply not able to compensate for poor quality marketing or a lack of sufficient marketing. The problem may be in quality and the customer is just not receptive of the product as a result. Alternatively, perhaps the problem lies in the sales force’s training or a lack of technical sales support. Perhaps there are multiple causes. For the purposes of this example it doesn’t actually matter what the problem is, but you can see how one problem could have a wide variety of underlying causes.

So what can you do about this?

Before you can “do” anything, you need to ensure that you fully understand your company’s operations. What processes feed into other processes, and which have a secondary effect on others? How do these processes fit into the tasks, strategies, and goals of your company? (Answering these questions alone can reveal problems, many of which you may not have even been trying to find.) What feeds into the problem area? Once you know the answer to those questions, you can go about analyzing where the problem is originating.

Finding the cause of a problem is not a simple process, but you have one key ally in your search: information. Gather information from as many relevant sources as possible. This often involves getting input from your employees, and it may also involve gathering feedback from your customers. It could be quantitative data from business metrics. Whatever the appropriate sources, just remember that information is your friends. Different perspectives are also helpful, as they may have different views on the cause of the problem.

Any hunt for the cause of a problem should be scaled to the severity of the problem – a minor problem isn’t worth a major effort – but regardless the above guidelines can help you identify the problems in your company. Solutions that fix the cause of problems instead of treating the effects are longer lasting, more efficient, and critical to ensuring the long-term success of your company.

"Is your company facing challenges that you simply find perplexing? Are you implementing solutions to problems that just don’t seem to work? Don’t hit the panic button just yet. BioBM’s knowledgeable business consultants can help your company identify trouble areas and develop solutions that address the real problems. Don’t let unknowns be a drag on your business. Contact BioBM and we’ll help you get past your problems and resume a course to success."
Blog 5:19 pm , March 10, 2011