Portfolio strategy decides where a company puts its capital and its best people. Which products, in which markets, get investment to grow. Which are held for cash. Which are exited. For a group it applies to business units; for a single company it applies to product lines and customer segments. It is the decision most other decisions depend on.
The unit that matters
Portfolio decisions go wrong when they are made on averages. A product that looks healthy overall can be highly profitable in one market and losing money in three. The useful unit is one product in one market, with four numbers: revenue, margin, profit and volume. Add them all up and you have the whole business, which makes the picture hard to argue with.
How the choices are made
Each product-market is scored against the same weighted criteria: profit, competitive advantage, revenue, growth and execution risk. The scores sort the portfolio into priorities to invest in, positions to hold, and positions that are not strategic even if they are profitable. Criteria agreed in advance are what let an executive team say no to a good idea without a fight.
Why it starts with what to stop
Almost every company has more attractive options than it can fund. The priorities are usually easy to name. What is hard is naming the exits and reallocations that pay for them. A portfolio strategy with no "stop" column is a wish list, and the budget will quietly spread the money across everything as it did last year.
How we build it
This is the product-market matrix at the centre of the MOVE® system. The executive team builds it from its own numbers, scores it, and then tests it against the market from outside. It becomes the base case: when an acquisition or a competitor's move comes along, the scenario is run against it and the team can see what would have to change.
Monday
Write your three most profitable products across the top of a page and your three most valuable markets down the side. Put a profit number in each box. The empty and the negative ones are where the conversation starts.