Turning Opportunity into Value
Gorillas are products that dominate a market, placing the company in an extraordinarily powerful position. Companies with gorilla products or services can experience 30 to 40 percent growth per quarter. Gorilla projects require special handling.
Most discussions of the project portfolio describe several different types of projects for the makeup of portfolios. In Chapter 3.2, we introduced three general types: maintenance or utility projects, growth or enhancement projects, and transformation projects.
These discussions suggested that the typical portfolio consists of a balance of these types of projects. The nature of the business will dictate the proper makeup and balance of its portfolio. Balance does not mean that the portfolios are equal. For instance, the three examples stated here have a considerably different effect on the business, with the potential impact of the transformation projects being higher than the other types.
Maintenance or utility projects generally support ongoing products and services. When we prioritize these, they might not register as high on the benefits-value scale as some other type of projects. Yet they can be important even if they are not especially attractive or exciting. These types of projects are essential to maintaining current capabilities even if they don't show a direct return on investment (ROI).
Growth or enhancement projects are likely to fall into medium-to high-benefit and high-alignment segments of the ranking criteria. By design, these should be the projects that support strategic initiatives and represent increasing value. Such projects are needed to keep the firm in a solid competitive position. In today's technological environment, no business can succeed by maintaining the status quo.
Therefore, the typical business will have at least two project portfolios (or divisions of their portfolio): one for utility projects and another for enhancement projects. Strategy buckets will be established with goals and budgets attached to each, as well as resources allocated to each.
A third bucket will often be established for transformation projects. These are the opportunities to move the firm to a new level or to introduce new products or services that will dominate the marketplace. Although the projects in this category might exhibit a higher risk profile, the potential benefits can be so great as to place the project off the scale when plotting net present value or ROI. However, these numbers are extremely sensitive to market timing and success and must be treated with some skepticism.
Transformation projects require special handling. When we compute a benefits number for these projects, we are assuming a particular return based on a specific market position. Whether this assumed market position is attained depends on several factors, and whether this assumed market position is attained will have a monumental effect on benefits. I refer to these as gorilla projects, based on research conducted and reported by Geoffrey Moore.1
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.