The Hidden Risks of Structural NPD Portfolio Inconsistencies: Experiences from an International Joint Venture

The discussion about the composition of new product development portfolios is quite well established. Several frameworks are offered to determine the risks and the value of NPD project portfolios. These suggested approaches are mainly based on the evaluation of single projects and their aggregation to the portfolio level, but they do not consider technological interactions between the projects within a portfolio and their consequences for the risks. We analyze the joint venture between AT&T and BT (British Telecom) to conceptualize these problems. What started out with a radical innovative technological vision ended in a failure with some losses from three to five billion US$. Our study focuses on the analysis of the NPD portfolio. The data was collected by analyzing public documents and by 18 in-depth interviews with nine key members of the management board. The planned NPD portfolio at the official start of Concert was compared with the finally implemented projects to identify the technological interactions between the projects and their consequences for the portfolio risks. In total we could identify 15 different initially planned projects. In the end, two thirds of the original projects were finished but they did not achieve the intended level of innovativeness due to a technological inconsistent portfolio structure