The first stage of portfolio management is the layer that links company strategy to product decisions. In most organizations, strategy is presented in one meeting, while product decisions are made in a completely different meeting. The gap between them is noticed at the end of the year with the phrase, "We didn't get where we planned."
Scope
Defining strategic objectives: Measurably recording targets for growth, profitability, market share, new market entry, sustainability, and customer satisfaction.
Establishing allocation rules: Determining the ratios in which investment will be distributed among the buckets. For example, 70% for core businesses, 20% for adjacent opportunities, and 10% for transformative ventures.
Each portfolio item is linked to a purpose: Items that do not serve any purpose are automatically screened during portfolio review.
Gap analysis: Which strategic objective lacks sufficient portfolio items? This determines the direction of the search for new ideas.
Target-achievement tracking: Periodically measuring the portfolio's contribution to the strategy.
Core (~70%)
Improving existing products in existing markets. Short-term, low-risk investments that generate today's cash.
Adjacent (~20%)
Transferring existing expertise to a neighboring market or customer segment. Medium term, medium risk.
Converter (~10%)
A new business model, new technology, a new market. Long-term, high-risk; but this is what will generate the portfolio's return ten years from now.
Rates vary by sector; what matters is not the number of the rate, but that it is a consciously determined and monitored rate.
In the real business world
In most medium and large-sized enterprises in Türkiye, the budgeting process and product planning are separate. The budget is for financial matters, the product plan for marketing, and the capacity plan for production. Since the three plans do not align, mid-year revisions are inevitable.
The strategy linking layer brings these three plans together on a single data model. The budget item, portfolio item, and capacity plan become different views of the same object.
Benefit to the customer
The purpose served by each investment can be seen on a single screen.
"Strategic" initiatives emerge that don't receive the necessary resources.
Budget discussions cease to be a defense meeting and turn into an allocation meeting.
Changes throughout the year are evaluated along with their impact on strategic ratios.