To build a balanced portfolio and reignite growth, companies must finely calibrate their current mix of assets, capabilities, and processes. We combine expertise in resource allocation, performance improvement, M&A, and divestitures to strengthen companies and build sustainable value. Our rigorous methodology and proprietary tools help our clients plan and execute bold, agile, and decisive portfolio moves.
Here is how we do it:
Ecosystem strategy is a new approach to growth and innovation that helps enterprises build interconnected services to fulfil customers’ primary needs in an integrated experience. Many of the world’s most successful organizations have harnessed the power of ecosystems and already offer services beyond their core business.
Our research over 70 years suggests that growth is overwhelmingly determined by the markets in which companies choose to compete. This is why identifying the right trends and making the big moves to capitalize on them is critical to success. Yet many companies passively manage their portfolios through a yearly, largely financial review of a single overarching budget and miss segment-level opportunities within the existing portfolio of businesses and beyond.
We support clients to improve performance across their existing portfolio and pinpoint opportunities for growth in new business areas. We also help identify areas where they might need to cut back or divest.
Our breadth of expertise, proprietary tools, and experience make us uniquely suited to advise clients on which fine-grained combination of business segments and markets will create the most value.
We’ve found that highly successful companies are consistent and dynamic resource reallocators. These companies continually grow by investing in existing businesses, developing or acquiring new businesses, and exiting unprofitable ones. They are more resilient in the face of increasing change, more likely to stay independent, and create more value, particularly in turbulent economic times.
Yet most companies are slow to move resources between businesses. Every year they stick to the same processes for strategy development, capital planning, talent management, and budgeting, and every year the outcome is only marginally different from that of the year before, and the year before that. To paraphrase Albert Einstein, they do the same thing over and over again but expect different results.
We help clients design more effective strategic-planning and budgeting processes so that they can overcome the inertia that stalls growth and prevents active reallocation of resources. We have developed proven tools and techniques to help executives shake up the status quo and overcome the processes and behavioral barriers that stand in the way of dynamic portfolio renewal.
Recent examples of our work
- We helped a leading oil and gas company define its long-term corporate strategy, exploring new areas to enter and optimizing the existing businesses. To improve the company’s ability to translate the strategy into action, we overhauled the strategic-planning process. The new planning process ensured clear linkages between different planning entities and allowed for more productive interactions among various groups within the organization. This allowed all key stakeholders to have a voice in the process, such that when the strategy was executed, groups were aligned and ready to support it with the necessary resources.
- During the financial crisis, we helped a leading pan-European bank rethink its corporate strategy. With a significant share of its income disappearing due to regulatory reforms, the portfolio of businesses needed to be reevaluated. Taking into account different constraints, largely driven by regulatory restrictions, an optimization model was created to identify the right areas of focus for the future. Intensive discussions regarding the feasibility of the moves and war games to assess possible competitor reactions supported the final recommendation. The resulting corporate strategy was structured as a series of decisions over time that could be continuously evaluated as the market develops.
- Portfolio Analyzer is a fully customizable, user-friendly iPad app that gives you a detailed visual representation of your current portfolio and of potential portfolio moves. This app allows you to quickly review high-growth and high-profit businesses, your current investment levels in them, and the performance of each subsegment relative to the market. It also allows you to change assumptions about market growth and other performance variables to see how it affects your portfolio overall.
- Portfolio Explorer is an easy-to-use iPad app that allows you to create, review, and instantly visualize a potential portfolio of initiatives. You can compare opportunities using a wide range of operational and financial metrics, and then manage priority initiatives to make sure they deliver expected returns and stay on budget.
- McKinsey’s resource-reallocation diagnostic assesses your reallocation history and the barriers you face when attempting to shift resources, including capital expenditures, marketing spending, operational expenditures, talent, and more. This tool allows us to evaluate—from the outside in—your ability to dynamically reallocate resources relative to other companies. Additionally, we work with you to do deeper quantitative assessments, using a proprietary survey and structured interviews, so we can identify your top barriers to dynamic resource reallocation and then design processes that will overcome them.
- Corporate Performance Analytics provides fast, unique and sophisticated insights through an online platform.