3.3 Portfolio

Do it with more opportunity AND less Risk

3.3.1 Our Point of View

Portfolio

The Portfolio approach:

Balances risk and reward by working in the present while investing in the future.
Connects the short, medium and long term allowing leaders to minimize risk and maximize opportunities and value.

Allows leaders to drive sustained competitive advantage and create barriers to entry for the competition.
Need to integrate Both Activities AND Investment into their portfolio priorities in order to generate higher returns, lower risk, and better preparedness for change.

What is the benefit of it?

Create a sustainable competitive advantage and track record with a clear connection to value creation and capture
Decrease risk while maximizing value of the opportunities

What is the cost if you don´t embrace this?

Spend too much time and resources on small and short-term initiatives which provide no sustainable advantage
Miss stretch goals, vision, and targets and undercut the ability to attract and motivate a successful team

Key Takeaway: Having a robust and balanced portfolio of projects allows leaders to drive more sustainable success by working on the present while investing in the future

3.3.2 Global Examples

International leaders and their experience in Portfolio Management

Indra Nooyi

Former CEO, PepsiCo

Indra Nooyi at PepsiCo created three different portfolios of products to appeal to changing consumer needs and also to drive her vision of "Performance with Purpose." These Portfolios were:

Fun for You: These consisted of the existing line of products such as carbonated drinks and snacks with better and fun flavors
Better For You: Salt and sugar were reduced from some products that made them a bit healthier for the new audience who was becoming health-conscious
Good For You: These products included more healthy options such as dried vegetable chips, protein bars, juices, mineral water, etc.

Though this portfolio building required a major transformation, it gave PepsiCo long-term advantage and made their products more relevant to emerging consumer needs and choices.

Example: Product positioning for the portfolio with pipeline at PepsiCo to drive competitive advantage and create barriers to entry

More Info

Steve Jobs

Founder and Former CEO, Apple Inc

When Steve Jobs came back on board as CEO of Apple in 1998, one of the most significant challenges he faced was to simplify product platforms and portfolios.

He started by scrapping most of the platforms and selected only a handful of great products which would provide a foundation for building the next generation of product portfolios for each of the selected platforms. This helped Jobs with:

Reduction in cycle time for new launch: With only a handful of selected great products, the next generation of models for the same product could be launched in half the cycle time.
Scale with Partnerships: The major efforts were then spent on business models, marketing through new partnerships to scale the reach of each product launch.

Differentiation with next gen tech: With a sharper focus on a few great product platforms, the portfolio was enriched by the acquisition of cutting-edge technologies that made Apple products stand out from other similar products.

This portfolio-building strategy of concentrating on a few "Great Products," working with new partners, and acquiring next-generation technologies helped Apple to grow leaps and bounds over their competitors.

Example: Apple Selection of a few "Great Product" portfolios along with a pipeline and scaling strategy through new partnerships

More Info

3.3.3 Brazilian Examples

Brazilian leaders and their experience in cultivating portfolios

Luiz Collier

General Manager, Liberty Coca Cola, NYC

Flavio Pripas

Investor, Redpoint eventures

Renata Freesz

Innovation Project Manager, Klabin

Description: Collier and his team always imagine their business 25 years in advance. They invite open-minded people to come on board and create scenarios that make sense and plan ahead. Nevertheless, he is certain there would be no future without the present: cash is king!

Description: Pripas uses Sarasvathy's theory of effectuation to make decisions and perform actions to identifying his next opportunities.

Description: Renata Freesz, innovation project manager for Brasil's largest paper producer, exporter and recycler, reports that her 80% of focus on core business and 20% on new ventures and disruptive business. For core business projects, the company focuses on cost reduction or increasing profit, while new ventures focus on R & D.

Key insight:

Teams must execute well and aim to maintain efficient management and to generate resources for reinvestments.

Key insight:

Define your means (who you are, what you know, and who you know)
Limit risk by spending only what he can afford to lose at each step
Leverage contingencies to create new opportunities, collaborate with people and organizations, and control the controllable.

Key insight:

Share projects among business units to ensure wide understanding of a project's importance in the company and conduct workshops to hep prioritize on time and resources.