Businesses use several portfolio models for project selection. The authors of Portfolio Management for New Products have made studies on the popularity and success of alternative models. The financial method that includes various profitability and return metrics has been the most popular. It does not, however, perform well when compered to other three leading methods.
Cooper, Edgett, and Kleinschimdt who made the studies compared the popularity of the methods in top-performing companies (top 20%) and poor performers (bottom 20%). The popularity of the methods among the two groups were as follows:
- Financial method (Top performers: 77.5 % / Poor performers: 78 %)
- Business strategy (72.5 / 64.8)
- Bubble diagram (42.1 / 21.21)
- Scoring model (30.8 / 32.5)
- Checklists (23.1 / 17.5)
- Others (36.1 / 18.9)
Another interesting comparison between the methods is summarized in the following table. It shows the strengths and weaknesses for each main portfolio method. The ratings are 1 to 5 mean scores for each method when used as a dominant portfolio method.
