Transforming a portfolio is not one for the faint-hearted in today’s fast-paced technology landscape. It may even seem like the seven labors of Hercules all rolled into one! But let’s get that thought out of our minds and get to know all facets of this challenge. That’s half the battle won. In this two-part article, I’ll outline three portfolio transformation imperatives and share what I’ve learnt from my experience.
What about Portfolio Transformation makes it such a Herculean task?
To answer this question, it’s important to understand what portfolio transformation entails. When rebuilding a portfolio:
- You are innovating what you sell, whether it’s a new product or service or a complete evolution of your offer ecosystem.
- You are also transforming how you sell the service. Think changes to the business model, product pricing, bundling or channel modifications. and/or how you deliver your portfolio to the market (i.e., delivery and deployment models)
If you renovated your home recently, you transformed the real-estate portfolio that is your house with a specific purpose (ex., to increase the value of your home or to enhance its “live-ability”.) Likewise, with portfolio management, the purpose driving your transformation effort is your “true north”. Your mantle is to ensure that the project’s scope and activities are lockstep with your key objectives at all times.
Portfolio transformation objectives need to align with your company’s business goals, i.e., maximize penetration, open new markets, increase present-day and future competitiveness, and/or achieve economies of scale. To meet those objectives, you will have to evolve your product-service lineup and rewire your business model. Make sure you achieve alignment on this journey. If not, the path will be painful.
Let’s take a look at the specific changes that this transformation entails.
What does it take to succeed on this journey?
Three significant shifts are required to make portfolio transformation a success worthy of kudos:
1. Evolving your organization’s product development and portfolio management mindset
To make an obvious statement, yesterday’s portfolio management thinking and engineering design methods won’t serve today’s purpose of blazing a new portfolio trail and super-optimizing the end-to-end customer experience.
From a leadership and product management perspective, general managers and product leaders face big decisions. Invest all at once and you might burn out, invest too little and you might never have the transformation take off. These leaders face the delicate task of evaluating timing, milestones and time targets, and deciding on the strategic battles that will help win the war. The challenge here is executive consensus on the top-down vision, field of focus, and the investment in the overall future customer experience. From a customer experience perspective, building transformative experiences for today’s client demands that teams develop a highly customer-centric mindset, a keen orientation for customer needs and wants, and a laser-sharp focus on building integrated ecosystems.
When moving from a hardware or standalone software portfolio to the as- a-service (aaS) model, your team must build a deep understanding of desired outcomes and the specific steps in the journey(s) to achieving them. Beyond this, there are a slew of top-of-mind items that cannot go by the wayside like solution integration, serviceability, manageability, maintainability, and customer stickiness. We need to think differently and act differently from the ground up at every point in the journey.
2. Reconfiguring your operations backbone to align with your business model
As you evolve your offer portfolio, you must also re-architect the front- and back-office systems that support your organization’s sales, sales compensation, order processing, fulfillment, ERP, accounting, and other related activities. Often, these changes must be ready at the gate well ahead of “Day One”. Beyond the day of launch, the systems will most likely require ongoing tweaks to incorporate lessons learned. In many organizations, the backbone changes are overlooked, not prioritized appropriately, or fail to generate consensus because of their sheer magnitude.
How do you arrive at a migration plan and incentives to move to the new world when you have to also live in the old world simultaneously? It’s another task that is not for the faint-hearted!
Mega-changes to the front- and back-office systems also require training for all impacted functions in the company and for customers. This is a project unto itself, one that is often underestimated, under-executed, and/or or ill-timed.
3. Transforming the culture that may be eating your strategy for lunch!
Change management is key to any portfolio transformation. Large one-time changes in your business and operational models become “the way you do business” only through grassroots tasks repeated daily by employees over time. This repetitive engagement with the new business model helps employees connect the dots between the transformation vision and the firm’s day-to-day operations.
Re-wiring culture also involves modifications to your governance structures, processes, and organizational metrics. Most organizations fail to install culture change stewards who can drive your portfolio transformation. Yet they are the invaluable foot soldiers who can keep the pulse of the organization and ensure we celebrate all the small successes that together drive company-wide momentum.
Clearly, portfolio transformation is a mammoth and pricey initiative that touches almost the entire organization. Yet it is one we can’t do without. In Part 2 of this article, I’ll share my recommendations on how to hone your survival instincts for this journey so you can take a victory lap when it’s all over!