No matter what your strategy documents say, no matter what your Board thinks, and no matter what you have told your stock market analysts, your actual strategy is reflected in the portfolio of projects and initiatives that you are investing in. This talk, based on years of research and consulting work with companies, describes the opportunity portfolio, which visualizes how an organization is investing across different levels of uncertainty. When uncertainty is low, investments typically support the core business. They may be innovative indeed, but uncertainty is fairly low. When uncertainty is in the medium range, investments are intended to provide a boost that could bring those projects into the core in the near-term future. With high uncertainty, investments are both the most uncertain, but have the highest potential for outsize returns. The dilemma most firms face is that they don’t manage their portfolios in a strategically coherent way. This talk describes the most common reasons that portfolios are poorly managed, and offers a simple, practical way to begin to tackle the mess. And the 70-20-10 rule is only an example – the encouragement is to have some kind of proactive allocation.
You will learn:
- How to set different performance expectations for projects with low uncertainty vs. high uncertainty
- How to align strategy with budgets, project approval processes and people
- How to use options-style investments to learn about critical new capabilities
- How to use options-style investments to learn about potential new markets
- How to approach very high uncertainty investments by taking a stepping-stone approach
- How to set target budget allocations to different parts of the portfolio