Initiative portfolio: Safeguarding for your business

In environments or times characterized by high uncertainty, it is not advisable to put all your attention and resources on one card. In such environments or times, capture the most likely socially, technologically, legally, and/or politically driven scenarios and take initiatives for each of these likely scenarios simultaneously, but cautiously, without “going all out.” Remain mindful of whether there are shifts in probabilities, and shift your deployed resources according to expectations for the future. This will keep you prepared for the major developments. The more strongly one of the scenarios emerges as probable along the way, the more specifically you can focus your resources on that scenario. By then, you will have “served” other scenarios, but you will not be starting from scratch. You are in the game.

Example 1: In the Corona year 2020, the management of a holiday hotel was concerned that no rooms would be allowed to be rented to guests during the Corona period. As an alternative, the hotel was offered the possibility to rent rooms to the municipality for less money to accommodate people in quarantine. If the hotel management chose this option, it could expect some revenue, but would deny itself the option of occupying the hotel normally.

Management opted for a short-term contract with the municipality that could be terminated at short notice. In this way, management secured some revenue, but could have flipped the switch quickly if the situation eased. It opted for a both/and solution and was able to survive the Corona period by making this decision.

Example 2: When video cassette systems were introduced to the market in the late 1970s, various alternative technologies (the Japanese VHS format, Sony’s Betamax, and VCR or Video 2000 from Grundig and Philips) were available but incompatible. Manufacturers of video recorders committed their equipment to one of these formats without knowing which format would become the standard in the market. In the end, the VHS format prevailed because video stores predominantly offered VHS cassettes. All manufacturers had to have their equipment built by the Japanese manufacturer JVC or acquire a license in order to remain in the market.

The European manufacturers had misjudged the market dynamics and had not influenced them in their own interests. However, they had also not positioned themselves broadly enough to remain capable of acting in the event that another format became established.

Example 3: A machine manufacturer produces machines that are used worldwide. In order to diagnose faults on the machines in the field, the company has to send specialists to all the countries to which it sells machines. Alternatively, technology that is now available enables remote diagnostics. Sensors can send data over the Internet to maintenance at the machine builder’s plant. In addition, camera images can be sent. This means that in many cases diagnosis can be carried out without the need for travel. Spare parts can be shipped to customers for on-site assembly. It is still unclear whether customers will embrace this technology or want to see a technician from the machine builder on site. Will customers order new machines when they learn that a technician will not visit them in the event of a machine failure?

Because the development is still unclear, the machine builder is opting for both: on-site service is being expanded and remote maintenance is being developed. Time will tell whether remote maintenance can be implemented.

The success of initiative portfolio strategies depends on a disciplined release of stagegates, i. e. development phases, requiring for a defined decision-making process for innovations and for a good market research.


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