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Your Portfolio is telling You Something. Are you Listening?

“One of the most important challenges of any large and complex organization being the balancing act between low, medium and high risk projects with the portfolio. … only about 10% are truly innovative. … about 80% of the new value creation comes from the innovative launches.”

Stephen King, Portfolio Manager and Head of Innovation Support, Nestle R&D


What happens when you listen to your portfolio, really listen to what it is telling you about the future?

If your company is like most, the majority of the projects and initiatives in your portfolio are telling you this: The world will be pretty much the same tomorrow as it is today – just somewhat better. Sure there will be cost reductions, performance improvements, new features, new models, even new products. These will serve the same customers, in similar ways, using familiar business models.

But as we all know, the future holds surprises. Your portfolio needs to prepare you for those surprises.

Tools like Voice-of-the-Portfolio that let your portfolio speak to you may seem counterintuitive at first. After all, the projects in the portfolio were put there, at least in part, as the result of specific market, customer and technology research focused on a specific future relevant to that project. But these futures tend to be narrow (i.e. only about the specific project), short term, and, let’s be honest, they tend to be forgotten. The result is, over time, the portfolio view of the future gradually, perhaps imperceptibly, shrinks to one of risk-adjusted Net-Present-Value (NPV).

It’s the role of your portfolio to project your company’s future, surprises and all. A certain percentage of your portfolio – between 10% and 20% – should be shouting that the world is changing. Dramatically.

The high-impact projects in your portfolio have the potential to provide your company critical information about four key aspects of the world — and your business — in 10 or 15 years. Here’s what those truly innovative projects should be telling you:

  1. Here are the types of customers you will have and what they will want. We will have different customers than we now have, and they will want different things than we now offer. Have we identified these new customer groups and started to design and build offerings they will desire?
  2. Here are the possibilities technology will enable. Technology will help us offer radical new capabilities and experiences that are impossible to deliver today. Are we correctly identifying these capabilities and understanding how best to take advantage of them?
  3. Here are the new business models that will be effective. Our future situation will be dramatically different than our current situation, with the evolution of new competitors, partners, channels and customer relationships. Are we designing and testing new business models to meet these changes?
  4. This is what the ecosystem within which we will be operating will look like. Political, economic and social forces will result in meaningful changes in how our ecosystem works. Are we fully cognizant of those forces and how they are shaping the ecosystem of the future? Are we preparing for it? Better yet, are we helping shape it?

Projecting the future your current portfolio anticipates is an eye-opening exercise that offers companies a new perspective. Listening to what your portfolio is saying by using methods like the Voice-of-the-Portfolio™ enlarges your field of view, from risk-adjusted NPV to a wider view that includes all relevant aspects of the future. In this way, listening to your portfolio brings into clearer focus the potential risk in your future investments.

This expanded perspective leads companies to ask, and answer, new questions, including this one: How well is your portfolio preparing you for the future? Listen to the answers.

Learn more about designing your portfolio for the future

 

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