Portfolio Decision Making in a Swiftly Changing Market
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I read an article today targeted at the ecosystem of the automobile supply chain. At the heart of the article was the notion of examining a company’s products through the lens of the Product Portfolio Matrix, a concept created by Bruce Henderson for the Boston Consulting Group. This model helps companies visualize where their products fall in the marketplace and within the product lifecycle. These are defined as Cash Cows, Dogs, Question Marks and Stars.
In a highly competitive market, and one affected by global shifts in geographic demand, a company must take stock of their product portfolio and determine where they must focus their efforts in order to succeed in the new dynamic. Most company’s product portfolios are grown through internal resources as well as mergers and acquisitions with customer demand and profitability as a driving factor. However, yesterday’s decisions were made in a different environment that what might be needed today. New advances in technology render yesterday’s Cash Cows into today’s Dogs or Question Marks.
For instance, in the article, it mentions the Electrical/Electronic product category as high in future innovation potential. A recent Smart City panel in Atlanta discussed the possibility of monitoring vehicles through a “connected car” network for high concentrations of ABS brake activations which may signal a black-ice problem during the winter time and automatically alert other drivers. If your business is providing the ABS electronics to automakers, you better have this capability in your product roadmap for those countries that will demand it, or shift your marketing and sales efforts to less developed countries where the new capabilities will be in less demand and the mature product can still thrive.
Here’s what needs to drive your decision-making process. Where does your company add the most value to your clients today? What value do you provide that makes you a sought-after resource to your business ecosystem? What technology trends do you need to fold into your product mix to remain at the top of your customers’ mind for perceived value?
Your time and resources are limited. Why waste them on Dogs? Find a way to divest yourself of that business. Are your Cash Cows ready for a shot of innovation? Or would you be better off selling a Cash Cow line of business and put the cash to work where you provide the most value? Don’t hang on to Cash Cows if that is not within your core competency of adding value to your clients.
Put your limited time and resources behind your Stars, because those are the products and offerings that likely stem from the passion that flows from the place where your organization delivers the most value to customers. Drive your Question Marks into Stars, or find a way to sell or divest of the business.
© Mark Travis – All Rights Reserved http://www.travis-company.com
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