What is a portfolio and why is it important?
The definition of the word “portfolio” varies greatly based on context, but for this blog series, the word portfolio will not refer to a suite of technology offerings, a financial portfolio, or a static snapshot of a company’s products and services. Rather, we will use portfolio to refer to a solutions portfolio – the strategic way in which a company invests in and delivers a mix of products and services to drive value for the buyers and markets it serves and help it achieve its larger goals. Portfolio defines how your organization is going to fulfill the market’s needs and is informed by the markets you want to play in, the buyer personas you want to engage, and what those markets & buyers need.
Persistent Portfolio Challenges
While most organizations acknowledge portfolio’s strategic role in defining “where to play” and “where to act,” we consistently see organizations use portfolio as a catch-all and as the end result of market sizing and R&D. A failure to analyze market-back information, identify opportunities and align them with their strategies inhibit companies from maximizing their portfolio’s impact. Rather than building a list of existing products and services, companies must avoid constraining themselves to their current capabilities and solution set and understand what their portfolio must include to serve as the linkage between the value and outcomes you provide to a client.
When looking at a solutions portfolio in this way, it becomes clear that many of the problems that companies face today are symptomatic of poor solutions portfolio management. Companies’ struggle with portfolio often manifests in three main problems.
- Organizations lack a dedicated resource who is responsible for solving this problem.
- A solutions portfolio is inherently complex and difficult to manage.
- Organizational symptoms don’t explicitly point to portfolio challenges, therefore, organizations continue to operate, unaware of the portfolio-related issues they are facing.
Now is the time to focus on your solutions portfolio. These Portfolio-related challenges have been exposed and exacerbated by recent market volatility. The arrival of COVID-19 has flipped markets on their head and changed company’s strategies and long-term goals in unprecedented ways. Companies in almost all industries experienced some pandemic-induced market change, and the question now is how to respond. Inevitably, some companies will make changes to their objectives and strategies without altering the critical engine for achieving their desired outcomes: their solutions portfolios. Others will complete overhaul of their solutions portfolios but will fail to align it with the organizational strategy and objectives.
The rest of this blog series will discuss these challenges in more detail and how to combat them to build a solutions portfolio that addresses the market’s needs, capitalizes on opportunities, and continuously drives outcomes.
When evaluating an organization’s portfolio, it is important to consider the following questions:
- Does my portfolio align to my current goals and objectives?
- Do the products and services in my portfolio align to my strategy?
- Understanding the market, should I adjust my portfolio strategy to better meet my goals and objectives?
In order to achieve a company’s long-term goals, the company must align the solutions portfolio to the company’s current goals and objectives. For companies that offer a wide range of products and services, occasionally old solutions will work against the company’s newer goals. Combatting this problem requires organizations to understand the product lifecycle. Not every product lasts forever, and a company must take the time to evaluate if a product is no longer beneficial to the company. Companies must also consider how solutions support the broader strategy. A company that hopes to penetrate a new market through rebranding itself and providing a new service, but still offers the same services that it did 20 years ago, can confuse buyers and work against the company’s strategy.
After evaluating goals and objectives, the product lifecycle, and company strategy, decisions must be made. If there are old services nearing the end of their product life cycle, remove them from the solutions portfolio. If the products and services within the portfolio are strong, it might be time to reevaluate the company strategy and the current goals and objectives. These questions help companies understand just how important solutions portfolios can be, and it isn’t hard to imagine the constant headaches that can arise if the solutions within a portfolio are butting heads with long term goals.
Written by: Anthony Paluska
About the Author: Anthony Paluska is a Partner at McMann & Ransford with experience helping organizations overcome commoditization by developing stronger, more intimate, relationships with their customers. He has leveraged his management consulting, problem-solving, and change management skills to support 15+ Fortune 1000 organizations, across a multitude of industries.