Henry Ford and Portfolio Management

Henry Ford isn’t famous about his Portfolio Management skills, but a well-known statement by Henry Ford is:

Force21-if-i-had-asked-people-what-they-wanted-they-would-have-said-faster-horses-henry-ford

Force21-if-i-had-asked-people-what-they-wanted-they-would-have-said-faster-horses-henry-ford

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.

Portfolio Management

Within Portfolio Management, we distinguish two essential tasks:

  1. Finding the New New Thing
  2. 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.

Advice

At Force21, we see that it is in this value perception that a vital task lies for the portfolio manager. When Portfolio Managers are talking to your clients. They can determine the client’s perspective. They will make a crucial connection. Between the customer’s perception and the ISP’s products and services. The portfolio manager has the capabilities to create customer value.

Tip:

Portfolio Management has become an important task within ISPs. In the future, you have to say goodbye to existing products. This portfolio rationalisation will be an essential task for the Portfolio Manager.

In our opinion, a portfolio manager should spend approximately 60% of his time building a portfolio. A portfolio that is in line with the client’s experience. And about 20% with finding the New New Thing. Henry Ford also invented the car first and then looked for the parts, not the other way around.

Conclusion

Due to genius brains like Henry Ford, we don’t ride a horse and carriage anymore. However, there are many successful automobile manufactures today.

So, if you are like me, not as brilliant as Henry Ford, then it is wise to immerse yourself in your customer’s world. And develop a set of services that deliver value for your customer.

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