The launch proposal shows healthy customer interest and an ambitious revenue forecast. Product development is nearly complete, sales wants a response to a competitor and several important customers have asked for something similar. At that point, questioning the investment can feel like questioning the team's work.
Yet the forecast may describe sales the new offer could win without explaining how much stronger the business would become. Some customers might move from a more profitable product. Others may need support the price does not cover. The launch could also take scarce people away from another opportunity with a better claim on their time.
Those effects belong in the decision while there is still room to change the offer. They become harder to discuss once a revenue target has become a commitment to deliver a particular launch.
Give the offer a commercial purpose
I faced this question in an earlier portfolio review. A faster, lower-cost analytics service was losing money and overlapped a premium offer. Quality and integration problems compounded the weakness. Expanding it would have put more of the business behind an offer that was already undermining its economics, so we withdrew it.
Customers still needed quicker answers. We developed a software-based analytics replacement around that need, which generated between US$5.5 million and US$6 million in revenue in its launch year.
The review shifted the task from selling a cheaper version of an existing service to developing an offer with its own role in the portfolio.
An offer can serve several legitimate purposes. It might recruit customers, open a route into a market or replace an ageing product. The assessment needs to reflect that purpose and the period over which it should contribute.
If the offer is meant to teach you something, say what you need to learn and which later decision depends on it. If it is meant to renew an ageing product, show what would happen to the existing business without it. Calling an initiative strategic should raise the bar for explaining its contribution.
Ralph Keeney’s value-focused thinking starts with explicit objectives and uses them to develop and assess alternatives. In a portfolio review, that opens up choices beyond approving or rejecting the launch already on the table.
Compare the business added with the business displaced
A simple illustration shows why the distinction matters. Consider two offers over the same first year, using assumed figures.
| First-year comparison | Offer A | Offer B |
|---|---|---|
| New-offer sales | €500,000 | €350,000 |
| Contribution margin | 40% | 50% |
| Contribution from new offer | €200,000 | €175,000 |
| Existing sales displaced | €300,000 | €50,000 |
| Contribution lost on displaced sales, at 50% | €150,000 | €25,000 |
| Additional launch costs | €100,000 | €100,000 |
| Change in contribution | −€50,000 | +€50,000 |
Under those assumptions, the smaller launch contributes more. A live assessment would extend the comparison to later periods and other incremental costs, taking care not to deduct expenses already included in the margin.
The difficult judgement sits behind the displacement estimate. Existing customers might retain the old offer, switch to a competitor or stop buying altogether. A cheaper product might recruit buyers the premium business could never reach. Each possibility changes the comparison.
Protecting today's revenue can therefore be a poor reason to reject a replacement. If the old offer is losing relevance, its current profitability is an unrealistic baseline for the future. Management needs to compare the proposed move with a credible alternative path for the business, including the effects of competitive pressure and changing demand.
That requires evidence about behaviour. Customer records can show previous switching and retention; conversations and tests can help examine a proposed change. The precision of the calculation should reflect how much is known about those choices.
The route to the customer changes the economics
A forecast can remain plausible while leaving the practical means of reaching its customers largely unexplained. A consumer offer might depend on a retailer accepting the range, sufficient availability and a pack that communicates its value quickly. A business service might need a credible implementation partner and a purchasing process the supplier can support.
These conditions can change what should be developed. If the direct sales route costs too much, a partner model may make the opportunity viable. If support consumes the margin, a narrower service or a different onboarding arrangement may change the offer worth selling.
Make those alternatives visible before the budget is approved. Product teams can otherwise finish an attractive offer and hand the difficult commercial assumptions to sales. Sales may then try to compensate through discounts or commitments that make the original investment case less credible.
A useful review brings the offer, route and economics into the same conversation. The team should be able to trace the proposed revenue to a buying situation, a way of reaching it and a delivery model it can sustain.
Commit at a scale the business can support
A sound opportunity can still arrive at the wrong moment for the organisation. It may require engineers already committed elsewhere, a supplier that is not ready or account teams whose targets reward a competing offer. Naming an owner leaves those conditions unchanged.
Establish what management can resolve, at what cost and by when. Some constraints justify investment in capability. Others call for a narrower launch or a different route. Where capacity is scarce, the work that will move aside deserves the same scrutiny as the new proposal.
A staged commitment can help, provided the early step can answer a consequential question. A carefully supported pilot may establish customer value while concealing the service burden of a wider rollout. A short trial may reveal little about repeat purchasing. State what the evidence can support before using it to justify expansion.
At the investment review, put the launch forecast beside the contribution comparison, the assumptions about reaching customers and the capacity required to serve them. If they do not tell the same story, rework the proposal before approving the investment.