Henry Ford and Portfolio Management
Henry Ford isn’t famous about his Portfolio Management skills, but a well-known statement by Henry Ford is:
Faster horses would provide speedier transport. Nobody had yet thought about the possibility that you do not need a horse to drive a coach. It is because of this new invention that Henry Ford has changed our street scene forever.
Within ICT (Information & Communication Technology), we are continually innovating. It is this drive for the New New Thing that has created a rapid growth curve in IT development. And thus, also for portfolio management within ICT and the role of ICT within society as a whole.
Within Portfolio Management, we distinguish two essential tasks:
- Finding the New New Thing
- Building a set of products that meet the needs of our customers
To implement the New New Thing, portfolio managers have a lot of discussions with suppliers. These suppliers come up with improvements to existing products or new solutions. Some of these improvements and solutions have emerged from market research. Others were their irritations. And sometimes because it is technically possible.
To gain insight into our customer’s needs, portfolio managers talk a lot with our salespeople. And of course our customers. Besides, we use material from research institutes such as Gartner and Forrester. To gain insight into the future needs of customers. Insights from Big Data Analyses within our client base also provide new insights.
But, did Henry Ford build the car from the supply of the different parts? Or… from the intrinsic need for fast transport?
What do you prefer?
If you take a critical look at your portfolio development, where do you spend most of your time on?
At Force21, we see that in many ISPs, the emphasis is on finding the New New Thing. Portfolio and Product Managers spend more than 60% of their time finding new products. And those launched products are often sold to a new target group.
We see a 3rd task resulting from the many takeovers that take place within the ISP sector. That is portfolio rationalisation. When you merge different companies. You need to combine those portfolios and build a new consistent portfolio. The motivation behind this is usually to minimise maintenance on the various platforms. And to improve the occupancy rate.
Challenge for Portfolio Management
At Force21, we see that the biggest challenge is to create value within your target group. We continue to see that IT companies focus primarily on functionality in their communications (see also our article: What Service Provider are you?).
Your clients are facing a large number of challenges. For some, your technical solutions may be the answer. But they do not know which solutions will lead to the best results. This leads to a misunderstanding of the value that your companies can create. You have to communicate within the perspective of your target group. And create the value of your solution in the benefits it creates for your customers.