IOSR Journal of Economics and Finance (IOSR-JEF) e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 6, Issue 4. Ver. I (Jul. - Aug. 2015), PP 08-20 www.iosrjournals.org DOI: 10.9790/5933-06410820 www.iosrjournals.org 8 | Page An Assessment of Project Portfolio Management Techniques on Product and Service Innovation: Evidence from Nigerian Selected Industries Adesina, Oluseyi Temitope, Phd. 1, Ikhu – Omoregbe, Sunday 2, Oyewole, Olabode Michael 3 1,2,3 Federal Polytechnic, P.M.B. 402, Department of Accountancy, Offa. Abstract: The crises of product and service innovation in most organisations due to global competition and the need for scientific research in the project portfolio management discipline were factors that motivated this research. The purpose of this study is to investigate how project portfolio management(ppm) contributes to product and service innovation. A questionnaire was developed to gather data to compare the PPM methods used, PPM performance and resulting new product success measures in sixty Nigeria organisations in a diverse range of service and manufacturing industries. The study findings indicated that PPM practices have a greater impact in the new product and services success rate. Also, business strategy method result in better alignment of the projects in the portfolio. This conclusion is supported by the 0.630 Pearson correlations at 0.000 significance between percentage of successful products and PPM performance level. The results reveal that for better innovation outcomes, management should place a priority on developing and improving PPM. Keywords: Project Portfolio Management, Innovation, New Product Development (NPD), Service Development, Service product. I. Introduction The widespread of information technology in a corporate organization globally has caused the information technology processing and strategies to out weight the traditional way of processing in an organization. The most perilous time for an organization is when the old strategies are cast-off and new ones are developed to respond to competitive opportunities. The changes that are appearing in the global market place have no precedence; survival in today‟s vindictive marketplace requires extraordinary changes in or ganizational products, services and the organizational processes needed to identify, conceptualize, develop, produce and market something of value to customers. Projects, as building blocks in the design and execution of organizational strategies, provide the means for bringing about realizable changes in products and processes (Cleland, 1999). In today‟s vindictive global economy Portfolio management for product innovation has come into limelight as a significant management function. The impact of information technology, new systems and improvements in distribution and services has changed the environment in which organizations compete. The companies now extremely susceptible to shorter product life cycles and shifts in consumer taste that compel them to review their existing products and to launch new ones. Projects provide the means for an enterprise to respond to rapid change and to gain competitive advantage, helping in the design and execution of organizational strategies that yield innovative products and services (Cooper and Kleinschimdt, 1996) .Competition is characterized by the appearance of „unknown, uncertain, not obvious products and services‟, which requires „project-driven strategic planning‟ .Projects function as „building blocks of strategy‟ (Cleland 1999) allowing organizations to pool their financial and human resources towards the achievement of new products and processes that can win significant market share and strengthen the company‟s positioning. Companies that are most successful have been found to have a continuous flow of projects in which ideas are generated, evaluated and implemented. These multiple projects, when consolidated and integrated for analysis and decision-making become part of the firm‟s project portfolio. Project portfolio management can be defined as the management of multiple projects with a focus on single project contribution to the success of the enterprise (Dye and Pennypacker,1999). A portfolio of projects, when managed in a coordinated way can deliver benefits which would not be possible were the projects managed independently (Cleland,1999) Wideman (2005), suggested that in portfolio management, the determination of the strategic fit of a project based on the integration of the senior manager and the project manager, together with an adequate allocation of resources through a project selection framework, result on benefits that are aligned with the company‟s mission and market focus. This in turn, enables the organization to compete on the basis of strategic performance, rather than on operational improvements, treating its product or process development projects as a business venture.
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An Assessment of Project Portfolio Management Techniques on Product and Service Innovation:
Abstract: The crises of product and service innovation in most organisations due to global competition and the need for scientific research in the project portfolio management discipline were factors that motivated this research. The purpose of this study is to investigate how project portfolio management(ppm) contributes to product and service innovation. A questionnaire was developed to gather data to compare the PPM methods used, PPM performance and resulting new product success measures in sixty Nigeria organisations in a diverse range of service and manufacturing industries. The study findings indicated that PPM practices have a greater impact in the new product and services success rate. Also, business strategy method result in better alignment of the projects in the portfolio.
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IOSR Journal of Economics and Finance (IOSR-JEF)
e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 6, Issue 4. Ver. I (Jul. - Aug. 2015), PP 08-20
Important research has also been done in the field of innovation and competitive advantage. Studies
confirmed that innovation leads to competitive advantage and that innovative firms outperform their competitors
in terms of market share, profitability, growth or market capitalization (Tidd et al., 2005). Another example that
demonstrates the need to innovate in order to compete was the study conducted by Peters and Waterman (1982)
quoted in Kandampully and Duddy (1999) that included forty-three of the best run companies in the USA, but
by the time they finished their book, only two years later, fourteen companies were in financial trouble. A
Business Week study later reported that those companies had failed to anticipate, react and respond to changes
in the market place (Kandampully and Duddy, 1999). These authors also demonstrated in their research how
continuous improvement does not guarantee competitive advantage, emphasizing the need for market
knowledge and strategic planning in the innovation process.
V. Research Methodology In order to test the hypotheses H01 and H02, a Comprehensive survey instrument was developed to
capture PPM practices in use, outcomes from the PPM process and to identify PPM challenges. This survey was
completed by sixty organisations in Nigeria. A pilot test of the survey was conducted with five organisations
and the main phase of data collection from the sixty respondents was completed during 2012. The survey
contains eighty-eight questions (some with sub-questions) on the importance of PPM to the organisation, PPM
structures in the organisation and details of methods used, PPM performance measures, new product success
measures and challenges for PPM. Survey instruments were mailed out to 166 organisations who manage a
portfolio of new product development products. Individual e-mail and telephone contact was used to follow-up
and to enhance the survey return rate. The final return rate of sixty valid responses represents a thirty-six percent
return rate. The responding organisations represent a wide range of industries in 21 separate industrial
classifications. Seventy percent of respondents fit within these nine classifications: Finance and Insurance;
Basic Products, Agriculture; Computer and related; Communications and Telecomm; Health and Community
Services; Electrical and Electronics; Food and Beverage; Petroleum, Coal and Chemical; and Construction.
Findings And Hypothesis Testing
1. H0: PPM performance measures’ correlate negatively to ‘new product and services success
Measures’ Respondents in Nigeria organisation in a separate industrial classification rated their PPM performance
on six „PPM performance measurements‟. These measures represent the primary desired outcomes of a PPM
system on a five-point Likert scale (five represents high performance on the measures). To improve the
consistency of responses, anchoring statements were provided for the end points of the scales for each „PPM
performance measure‟ as shown in Table I. Similar anchoring statements were used throughout the survey.
Table I: PPM Performance Measure results
(Presented in order of average response, standard deviation between 1.0 and 1.1) PPM Performance Measure Statement Average
response
The projects in our portfolio are aligned with our business objectives
and our business‟s strategy. 1 = no, many are off strategy or have no strategy;
5 = aligned and on strategy.
3.8
Our portfolio of new product projects contains only high value ones to our business – profitable, high return
projects with solid commercial prospects. 1 = no, many poor, mediocre, low value projects;
5 = definitely yes, high value projects to the business
4.3
The breakdown of spending (resources) in our portfolio of projects truly reflects our business‟s strategy. 1 = no, spending breakdown is inconsistent with our business strategy or have no strategy;
5 = spending consistent with strategy.
4.2
Our projects are done on time – in a timely and time efficient fashion.
1 = no, they‟re slow and late; 5 = on time and timely
4.0
Our portfolio of new product projects has an excellent balance in terms of long
versus short term, high versus low risk, across markets and technologies, and so on.
1 = no, unbalanced and skewed; 5 = excellent balance.
3.9
We have the right number of new product projects for our resources – people, time and money – available. 1 = no, we‟re spread far too thin;
5 = right number of projects for our resources.
2.6
To graphically illustrate the wide spread in PPM performance across the respondents, respondents are
grouped according to „top‟ PPM performance representing the top twenty percent of scores for these six PPM
performance measures and „poor‟ PPM performance representing the bottom twenty percent. Responses for
these groups are displayed with the average responses across the entire survey population in Figure 5. Although
An Assessment of Project Portfolio Management Techniques on Product and…
Financial data is usually not very accurate at the stage where new product project portfolio decisions must be
made, and may be skewed by optimism or enthusiasm.
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