Why Industrial Portfolio Management is More Than a Financial Exercise
Weโve all heard the saying โDonโt put all your eggs in one basket.โ
But what if your problem isnโt too few eggs โ itโs too many baskets?
Thatโs the challenge many industrial businesses face when managing complex portfolios. Think:
- Multiple SBUs with vastly different dynamics
- Product lines operating under the same umbrella but with unequal performance
- Regional strategies that follow legacy patterns rather than customer logic
- Sales reps achieving wildly different price points for the same product
And what makes it even harder? The true performance often hides in the details.
๐ญ Cross-subsidies: The Hidden Performance Killer
Too often, businesses run with blended P&Ls that obscure the profitability of individual portfolio components.
I’ve seen it repeatedly:
- High performers carry the weight of low-margin products or regions
- Headquarters allocations are spread evenly, with no correlation to actual value creation
- IT, accounting, and sales & marketing overheads wash out product-level insights
- Net sales price deviations go unnoticed or unchallenged
The result? Poor decisions, wrong investments, and missed opportunities.
๐ The Case for Granular Portfolio Analysis
If you want to improve portfolio performance, you need to treat different parts of your business differently.
That requires:
- Breakdown of overheads to the lowest reasonable unit โ be it product, region, or customer segment
- Inclusion of true supply chain cost โ from procurement to storage to shipping
- Identification of price realization gaps โ not just list price vs. net price, but actual value delivered
Portfolio analysis should start high โ for example at the SBU level โ and then cascade:
- From product groups to individual products
- From global view to regional profitability
- Across multiple years to identify trends, not snapshots
๐ From Insight to Impact: Portfolio Management as a Transformation Driver
Industrial portfolio management is not just a financial transparency exercise โ it’s a strategic transformation lever.
With real, reliable profitability data:
- You can scale the stars โ and feed them with the right attention and resources
- You can fix or exit the underperformers โ often with dramatic impact on margins
- You can re-align sales and pricing strategies โ where people are leaving money on the table
- You can inform make-or-buy decisions โ and optimize your footprint
Too many businesses live with complexity they neither understand nor manage.
๐ค How do ๐ฎ๐ค๐ช manage your industrial portfolio?
Are you confident that your eggs are in the right baskets?
Can you clearly see which ones are golden โ and which might be starting to rot?
If that question makes you pause, it might be time to take a closer look.
Letโs talk about building the visibility you need to take better decisions โ with less guesswork.
If youโre about to kick off a transformation and want to get it right from Day One, letโs talk. I work with senior teams to structure, drive, and sustain transformation effortsโwith clarity and traction from the start.