Sharpening your product portfolio

Now that the business climate has been severely affected, we need to make sure our business developers within sales and marketing has an optimized product portfolio so they know what to focus on and invest in. Optimizing your product / service portfolio, sharpening your business models on existing products / services (or carefully design your business model when developing a new one), to increase the attractiveness of your offers and lower buying resistance is essential. Especially in a tougher business climate you want to be even more razor sharp in who you approach with what. Your business development machinery might be operating at full speed but if the changes in the business environment have altered the focus of your customers, your value proposition(s) does no longer address customer needs in an optimal way or maybe there are other business models that would work better. It doesn’t matter how fast your sales people are running if they are equiped with blunt offerings. The results will be affected. Given the prevailing circumstances, we can be sure that fundamental changes will occur and then our offer to the market must be adjusted.

Sharpening your portfolio

One of the first activities in sharpening your product/service offerings can be to optimize the product portfolio so that the business development efforts can focus on the offers that create the most value for the customer (and your company) in the current time. A tool that can help such an exercise is the good old BCG matrix (https://www.bcg.com/about/our-history/growth-share-matrix.aspx). A four-square matrix where you place your products / services based on the variables; size of market share and size of market growth.

The BCG Matrix

Stars: The offerings in the portfolio that has a significant market share and strong growth. These products / services should enjoy your willingness to invest in and be given a lot of focus.

Cash cows: Often yesterday's stars that have reached a large market share but do not have the potential for strong growth. However, they have a good profitability and they are often part of the foundation at the customer base, and that base can be used for additional sales. These offerings should be maintained and their position should be defended.

Dogs (pets): Yesterday's cash cows or potential stars that have remained in the portfolio for too long. Often due to changed market conditions, competitors have caught up (and passed) but also because there are people in the organization who are emotionally connected to the product / service and defend its existence. These products / services consume more resources than they give back and tie up capital. In this context, dogs are not man's best friend but should be phased out or sold to a colleague in the industry.

Question marks: What are the products / services that have the potential to become tomorrow's star offerings, and just as importantly, which ones do not? In tough times, these choices become even more important than ever as resources are limited.

Has the BCG Matrix reach its expiry date?

The matrix has its origins from the 70’ but it is still a valid tool, but you have to use it with a couple of considerations in mind. Because of today’s fast pace business environment and the speed of innovation you should adjust your portfolio more frequently. The movements within the matrix is much higher than before, and it will keep on getting more fast-paced, so you need a higher volume of question marks for refilling your portfolio. When the number of question marks increases but your budget doesn’t you have to be more skilled in selecting the ones to invest in. This also means that your culture should embrace risk taking, tolerate failures and enjoy change. Also, the relationship between market share and sustainable competitiveness is getting weaker but the ability to change is increasing. Therefore, you should add agility of your offering as a value together with market share when evaluating your portfolio.

Behind the BCG's matrix, there is an ocean of tools, approaches, tips and tricks, so the opportunity to get to the bottom of the issue really is there. For most of us who do not have time and resources available, I think that the matrix works good even at a high level as a guiding tool when prioritizing your portfolio.

I hope you found the article somewhat interesting and I look forward to your feedback and comments on how