Henry Ford and Portfolio Management

Henry Ford is not known for his Portfolio Management skills, but and famous quote from Henry Ford is:

If I had asked people what they wanted, they would have said faster horses.

In fact, faster horses would make for faster transportation. No one had yet thought about the possibility that a carriage could also run without a horse as a drive. It was precisely because of this new invention that Henry Ford changed our street scene forever.

Within ICT (Information & Communication Technology), we are constantly innovating. It is precisely this drive for the New New Thing that has created a rapid growth curve in IT development. And with it, for the role of ICT within society as a whole. Like the automobile at the time of Henry Ford. And that does deal with Portfolio Management.

Portfolio Management

Within Portfolio Management, we distinguish two main tasks:

1. Finding the New New Thing
2. Building a set of products that fulfills the needs of our customers

To properly implement the New New Thing, portfolio and product managers of IT providers are in frequent discussions with vendors. These vendors come up with improvements to existing products or entirely new solutions. Some of these improvements and solutions emerged from market surveys, some were own irritations and some because it is finally technically possible. Often these conversations are chance, due to the sales approach of these vendors who want to sell to IT providers.

To understand their customers’ needs, portfolio and product managers talk a lot with their sales teams (read more about our Sales approach) and, of course, customers. It also makes eager use of material from research institutes such as Gartner and Forrester to understand the future needs of customers. Insights from Big Data Analyses within their own customers also provide new insights for portfolio and product managers.

But, did Henry Ford now build the car from the supply of its various parts, or … from the intrinsic need for fast transportation?

Where does your preference lie?

Now if you take a critical look at your own portfolio development, what do you spend the most time on?

At Force21, we see many IT Providers focusing on finding the New Thing. Portfolio and Product Managers spend more than 60% of their time finding new products. And that newly launched products are mostly sold to a new target market.

We also see a^3rd task arising from the many acquisitions taking place within the ISP industry. After all, that is portfolio rationalization. With the merger of several companies, portfolios must be aligned and a new consistent portfolio built. The motivation behind this is usually to minimize maintenance on the various platforms and improve utilization rates.

Challenge

At Force21, we believe that the biggest challenge for IT companies is to create value forthe need in the target market set. What solution do you offer for your customers’ value needs? We continue to see IT companies in communications focused primarily on providing functionality and technology. (See also our article: What kind of Provider are you?).

While the target audience struggles with a host of challenges where technical solutions may be the answer, but not knowing which solution leads to the best results. It is precisely this mismatch in communication from IT companies and the perspective of the target audience that leads to much misunderstanding of the value that IT companies can create.

Opinion

At Force21, we feel that it is precisely in this perception of value that an important task lies for the portfolio and/or product manager. By talking to the customer, the portfolio manager can correctly determine the customer’s perspective. This makes the role of portfolio manager crucial in making the connection between the customer’s experience and the capabilities of the ISP’s products and services.

Tip:

Due to the fact that portfolio and product management has become an increasingly important task within IT Providers, more consideration will also have to be given in the future to parting with existing products. This portfolio rationalization will be an important task within the ISP portfolio.

We therefore believe that a portfolio manager should spend about 60% of his time building a portfolio that matches the customer’s experience. And about 20% with finding the New New Thing. Henry Ford also invented the car first and then found the parts to go with it, not the other way around.

Conclusion

Thanks to genius brains like Henry Ford, we don’t drive a horse and carriage by now. However today many successful car companies exist.

So are you like me, not as genius as Henry Ford, then it makes sense to delve into your customer’s experience worldand develop a set of services for that that directly deliver value foryou customer that is what we call Portfolio Management.