A lot of articles have been written about portfolio management, but not many speak about what separates a successful portfolio of products. This article is about going a level deeper and connect the successful product portfolio with the famous talk by Simon Sinek on Youtube “Start with why”
A successful portfolio is comprised of certain elements that connect its components together. The most important though a portfolio should include is a vision and a mission statement and the means on how to achieve them. In addition, it should include KPI’s and external factors that are about to affect the completion of the projects.
According to portfolio management principles the vision and mission statements should be single thoughts that can be easily understood. The strategic vision statement describes where the business sees itself based on the chosen strategy. The strategic mission statement explains the overall approach for achieving this vision.”
What I would like to keep here is the “single thoughts that can be easily understood. And this is the reason that the video from Simon “Start why why” has more than 11 million views today.
The vision and mission of a company should be able to be remembered by everyone in the organization from the CEO to lower levels of the organization. It goes without saying that the vision and mission should be represented by the products in the portfolio.
According to the standard of portfolio management book. P32 “A vision is what the company aspires to BE, and a mission is what the company is in business to DO”.
p.32 “a mission statement tells WHAT the company is currently in business to DO, WHO it does it for, and HOW.”
According to that:
A sample vision can be “our vision is to have electric cars by 2020”
A sample mission is “Our mission is to offer the safest electric cars to our customers at the lowest cost”
But these statements sound dry
What is missing here is the “WHY”
This is the reason why companies achieve more. A lot of companies can create mission and vision statements but the “why” is not important for them. They just try to find resources, money, funds, and markets but they don’t know the deeper reason why they create their products.
According to Simonk Sinek there is a pattern among these high achieving companies and leaders behind them and this pattern is what guarantees them success. What Simon presented was very simple called the Golden circle:
Regarding the What, some of the companies know how they are doing it – this is the USP, but not all of them know why they do it, and this is not the monetary reward. This is deeply engrained in the mind of strong founders and employees – what is the reason your products exists? What makes you wake up from bed in the morning? What is the reason your employee wants to improve a dashboard at your company? Because you told him as his Manager? The healthy answer is no, but because he wants to serve his customers.
This is the difference between common employees and inspired ones. So this is what Simon found, the great leaders and engaged employees in companies they start from inside out.
People don’t buy what you do, but buy why you do it. For the people, the features, functionalities, colors and material (What) characteristics are not that important as the “Why”.
So many companies are trying to sell us around us products with identical features, but we don’t buy all of them although they cover our needs. What is the reason that Chinese companies are making mobile phones with better features than apple but apple customers still buy Apple? This is because they have associated Apple products with the why of the founder “ To make a contribution to the world by making tools for the mind that advance humankind.”
This happens because of the law of diffused innovation
The law it says you cannot achieve mass success (mature) until you reach 13.5%. It is the gap the Jeffrey Moore on his book “closing the chasm” explained that we need to overcome. The last 3 segments will not try products if they don’t have the proof that it works from the first ones the early innovators.
The first person that bought a Tesla car he bought it because of the why. He knew how successful and trustworthy petrol cars are, but he trusted electrical because of the WHY – his own beliefs.
The role of prioritizing items inside the portfolio is the role of portfolio management but consistent reports have to be delivered to the Management, and this is to avoid biases.
Now that we know Why we should combine it with strategic objectives. According to portfolio management book p.34 we should first answer the below questions:
- Is the objective feasible and achievable?
- Is the objective measurable and verifiable
- is the objective adaptable and flexible
- is the objective consistent with the rest of the strategic plan?
An example is to have a market share of Tesla cars 20% by the next year in Poland in comparison to 10% this year.
Now, this statement may have a lot of risks as the market is covered for a lot of years by other companies that produce petrol cars. In this case, is the risk worth taking? Again this depends on the organization’s risk appetite. This is engrained in the culture and the background of the senior managers. For example, Tesla can take such risks as they still have the start-up culture, but what about VW?, or Mercedes?
Of course, Tesla will not take over every risk, there is a benchmark that they can take over after careful consideration and agree what level of risk is acceptable and the stakeholders can take over. Recently the stock of Tesla rose very high – maybe this is because the risk-taking ability of the stakeholders. The stakeholders should always be informed by the portfolio charter what are the portfolio strategic plan which included vision and objectives, portfolio process assets which includes the benefits of the project undertaken and lastly is the enterprise environmental factors that are included all the constraints of organizational, environmental and governmental variables that can have an impact in our projects for the stakeholderrs to be informed accordingly.
Why we should connect the Portfolio roadmap with the “Why”
According to Portfolio management book p.35 “The portfolio roadmap is a visual, high-level artifact (e.g., usually a graphical representation) that details how the portfolio(s) and its relevant components are tied to the strategic goals of the organization. As we understand is very important to align with every chance with the why of projects inside the portfolio. The roadmap should be updated to be current because the “Why” can change.
For a portfolio roadmap to be successful, the portfolio components should be aligned and this is not only projects (to create the new s6) but it consists of programs (advertise on Facebook), projects and operations. I don’t mean that we need to execute all the elements inside the portfolio but prioritize all of them to achieve the higher priorities. For Tesla to be successful a subset of a program, for example, can be a viral video that should be executed first before th launch of a new model car.
And here comes the risk-taking and the” Why” as every company is different. A contribution value of a portfolio component is affected by the realization factors also which are the costs, duration, expected results, complexity, organizational resistance to change etc. If the organization doesn’t endorse a program although the program inside the portfolio seems promising according to the environment we cannot prioritize it.