The Upside of Turbulence by Donald Sull

Author:Donald Sull [Sull, Donald]
Language: eng
Format: mobi, epub
Publisher: Harper Collins, Inc.
Published: 2009-09-23T04:00:00+00:00

Portfolio agility is the capacity to quickly and effectively shift resources, including cash, talent, and managerial attention, out of less promising units and into more attractive ones. A recent study of more than two hundred large enterprises found that the reallocation of resources to faster-growing segments within a company’s portfolio of businesses was the largest single driver of revenue growth.6 Diversified enterprises such as Johnson & Johnson, Procter & Gamble, and the Samsung Group have used their portfolio agility to succeed over long periods, while private equity groups such as Blackstone, KKR, Carlyle, and TPG have earned high returns for their investors by actively managing a portfolio of businesses. Chapter 10 explores how organizations can enhance portfolio agility.

Recall that turbulent markets typically produce a steady flow of small opportunities, intermittent midsize ones, and periodic golden opportunities to create significant value. Strategic agility is an organization’s capacity to spot and seize major opportunities when they arise. Such opportunities include scaling a new business, aggressively entering a new market, betting heavily on a new technology, or making significant investments in capacity. The agility to make a big bet quickly does not, of course, guarantee that the gamble will pay off—recall AT&T’s cable acquisitions. But companies that avoid big bets altogether risk falling behind more aggressive competitors. Chapter 11 examines strategic agility in greater detail.

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