Oysters and Pearls All Over Again!

 

Smartorg Dice

Roll the Dice

I was intrigued by Nick Bilton’s article “Movies or Technology: Where’s the Money” http://nyti.ms/1am91rn in the New York Times (15 July). Bilton compares return on investments in Hollywood films vs. Silicon Valley startups; both are highly risky, with most of the investments failing. Very few reward investors with big bucks.

Things are no different in the product development world – various studies show that the success rate of new products is often as low as 20% in terms of forecast ROI. Like movies and investments in new technologies, managing a portfolio of carefully evaluated opportunities is the best way to improve overall ROI. My personal feeling, based on decades of experience with R&D and NPD, is that these investments are a gamble; a “roll of the dice.” You are going to win some and lose some. The big lesson is that since business investments are gambles, you cannot consistently predict individual winners but you can develop and manage portfolios that improve your odds. Improving your odds by just a little bit can add tens of millions, even billions, to your bottom line.

Reference: Optimizing Portfolio Value in Difficult Economic Times.