Platt Perspective on Business and Technology

Building for an effective portfolio of marketable offerings 3: building an analytical tool set 2

Posted in macroeconomics, startups by Timothy Platt on November 15, 2014

This is the third posting to a series on the factors and considerations that would help a business to more effectively determine its best range and selection of offerings that it would bring to its market, focusing here on manufacturers (see Part 1 and Part 2.)

I conceptually divided tools and approaches for determining a right mix of products and services to offer from a manufacturer’s perspective in Part 1 of this series, organizing them according to whether they have a focus that is internal to the portfolio of offerings, or external to it. And I began to explicitly discuss internal-to-portfolio tools and analytical approaches in Part 2.

Then at the end of Part 2, I stated that I would continue its discussion here by, among other things, turning to consider external-to-portfolio approaches to this same production offering challenge, and I begin this posting with that. And I begin that by noting that in a fundamental sense I have already begun this posting and its discussion in Part 2, as issues of cost-effectiveness and business capability enter into any realistic discussion of what combinations of offerings it would make sense, for any single manufacturing or producing business to develop and offer and even when your primary focus is on what potential offerings would go together effectively in meeting marketplace and consumer needs and expectations.

• Finding the right balance in this involves trade-offs of what would work together synergistically and both for the marketplace and customers and for the producing business, as discussed in Part 2.
• Consideration from this perspective, of which entries in an offerings portfolio would make the others there look like more attractive buys to end-users leads to portfolio expansion.
• Consideration of the cost-effectiveness of producing, marketing and distributing all of a potentially wide range of possible portfolio of offerings and of how producing and offering too wide and disjointed an assortment of market offerings can dilute the effectiveness of the business as a whole, can lead to portfolio contraction. Here, the emphasis is on what types and levels of production capability it would be cost-effective to develop and maintain,
• And on what offerings can be produced in-house so as to make economically effective use of production resources, with that including personnel, capital resources and all else.
• Balancing the findings realized from these two approaches means finding a better balance of what to include and what to leave out entirely from an offerings portfolio, or to outsource to supply chain partners to provide and with cobranding as appropriate.

So while Part 2 looked at the issues of how portfolios of offerings fit together from the consumer demand perspective, this one looks at how a portfolio would cost-effectively and competitively fit together from the manufacturing perspective and in terms of cost-effective use of lean and agile manufacturing capability.

And with that noted, I turn to consider some specific analytical tools that would be used here. I at least briefly discussed sales correlations and the issues of what types of products and services consumers would want to buy together in Part 2. And within that larger set, I discussed the issues of determining which of these correlated purchase items it might make sense for any one manufacturer to produce and provide. That, as I said in Part 2 represents an after the fact and reactive analytical approach.

Reactive tools of that sort are generally quite useful, and can even be relatively sufficient in and of themselves where products and services have stable, ongoing markets and levels of marketplace demand. As an extreme opposite, fad-driven sales might be finished and over for the products and services in question by the time a strictly reactive analysis of what to produce and offer can be completed. So predictive, proactive approaches are necessary too, and particularly for fast moving and rapidly evolving markets and where changing consumer demands drive that rapid change. And this is where the emerging 21st century marketplace with its capacity to offer proactive crowdsourced insight can offer defining value. And this is where it is just as important for original source producers and manufacturers to connect into social media and the online conversation, as it is for any retail businesses.

I am going to explicitly discuss crowdsourced insight and how a manufacturer can tap into this as a source of defining value in my next series installment. But before doing that, I return to an issue that I raised without explicitly discussing in my above offered bullet point list.

I offered two analytical approaches for determining an effective manufacturer’s portfolio of marketable offerings, and identified one as being more oriented towards expanding out the portfolio, and the other as being more oriented towards contracting and limiting it. Both approaches are crucially needed if a business is to arrive at anything like an optimal assortment of offerings to produce and provide.

We have all seen, or at least read about businesses that overreach in what they seek to produce, losing their competitive edge from this loss of focus on what could be their defining core strengths and capabilities. While the cause of set back from dysfunctional contractions can be less immediately obvious as cause for a business to lose ground competitively, we have also all seen and read about businesses that fail to expand into new and emerging opportunity and even when opportunity to do so had in retrospect been clear and obvious. Both of these forms of business challenge are in most cases avoidable where they do arise, and both stem in large part from a failure to actively pursue both of these analytical approaches and on an ongoing basis, and with continual ongoing review of what types and sources of input data need to be taped into. And as a simple and quick example there, offered here in admittedly cartoonish outline, consider a business that fails to identify and as such respond to changing marketplace demographics and to new and emerging consumer groups and needs, and to the diminution of old needs and preferences.

Finding the right balance here is an ongoing, dynamic process where finding the right portfolio of offerings in the here and now means identifying and balancing the trade-offs of meeting sometimes at least seemingly competing metrics and analytical visions.

With that noted, and with my above comment already stated as to what I will delve into in my next series installment, I finish this one. Meanwhile, you can find this and related material at Macroeconomics and Business and its Page 2 continuation, and also at Startups and Early Stage Businesses. And also see Business Strategy and Operations and Page 2 and Page 3 of that directory.

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