Portfolio Analysis – Resilient Portfolio Strategy

The hyperconnected, modern world has emerged as an uncertain place – stability and the rules of the past do not always apply anymore. Yet, in the recent past, we can observe that the level of uncertainty is rising to stunning heights: Trade wars and new entrants, among many factors, are changing the playing field.
Despite rising uncertainty, decision makers still face various tasks and responsibilities from stakeholders and shareholders, and the key challenge remains how to get the best . In times of low-interest rates, capital markets push executives to find an optimal investment mix. Especially activist investors increasingly criticize executives when they are not maximizing the value of their respective organization and reducing costs. To fulfill these expectations, executives need to find ways to optimally allocate their finite capital resources across a wide range of business units, projects, and investment options. While this task would already be challenging in a stable environment, it becomes almost impossibly complex in an increasingly uncertain environment.

When looking at the global marketplace, we see various players that react to the challenges by reinventing themselves. Reactions of players vary from changing their whole purpose and business model to divesting business units or acquiring new capabilities. However, those decisions entail significant risks – one wrong decision can send things into a downward spiral.
To help decision-makers and organizations to steer with confidence through the uncertain environment and to derive future-proof decisions, the Resilient Portfolio Approach, with its portfolio analysis techniques, provides a new tool based on established scenario planning methods from Monitor Deloitte’s Center for the Long View and classical portfolio analysis for usage in portfolio strategy. The approach supports executives in thinking about plausible ways the future can play out, while reflecting holistically on the company’s portfolio to sustain the aggregate value of holdings in the long run. The method is helping decision-makers and organizations to define how their existing portfolio performs across plausible, alternative scenarios and how to improve this performance. Monitor Deloitte has found that organizations need to build resilience within their portfolios to appropriately address critical uncertainties in the future. A resilient portfolio performs well across a range of plausible industry futures and gives the company the flexibility to change its strategic course. The exercise is a crucial step towards building an portfolio that is not only resilient but also strategically sound and value-generating.

The study provides further insights into the Resilient Portfolio method, illustrated with a case study in the TV and media industry, showing how organizations can build a future-proof, robust corporate portfolio.