For portfolio management to function, the structure must first be established. The hierarchy within the system is the backbone of reporting, budgeting, and authorization. The layered model below represents the structure where corporate practices converge.
Portfolio
The entirety of all products and initiatives at the company/business unit level
Aquarius
The budget is allocated based on a breakdown by market, sector, technology, or strategic theme.
Family
A product group that shares a common platform or common customer needs.
Hat - Line
A product line offered in the same market, categorized into entry-level, mid-range, and upper segments.
Product
The decision unit of the portfolio item — the business case, score, and owner — are defined here.
Variant / SKU
The smallest unit of inventory, price list, and regulatory record that is tracked separately.
Decisions are made at the upper levels, costs are incurred at the lower levels. The job of portfolio management is to connect these two ends.
The function of layers
Bucket level
This is where strategic allocation is made. Decisions such as "Let's allocate 30% of the investment to products for the energy sector" are made here and distributed to lower levels.
Product level
It is a decision-making unit. Every product has an owner, a business case, a score, a lifecycle stage, and the next decision gateway.
SKU level
This is where the cost is realized. While portfolio analysis appears clean at the product level, complexity costs accumulate at the SKU level. Therefore, the transition between the two levels needs to be automatic in the system.
Things to consider when constructing the structure.
Hierarchy should reflect the market , not the organizational chart; the portfolio should not be fragmented when the company is restructured.
A pen should only be attached to one bucket; double counting makes reports unreliable.
The hierarchy will change over time; the system must support historical validity to ensure past reports remain accurate.
Authorization should be delegable downwards from the portfolio level.
Minimum data that each portfolio item must contain