Dedicating the right people to the process, with the right level of support, is also critical. Cross-functional participation is the leading practice, yet finance or strategy people often prepare most of the portfolio review. Without consensus, it can be difficult to trust any information or data coming out of the various business units or brand teams.
That lack of trust leads to uncertainty and inaction, and hesitation is expensive: when a brand becomes non-core, its value can fall fast.
With the right data and the right people available, companies should look across their brands, classified as either Grow, Sustain, Fix or Exit, and understand the right levels of investments to make. The results of data-driven portfolio optimization reviews should be used to best determine where to focus scarce resources, including capital, marketing spend and talent.
Consider long-term scenarios and focus on attractive markets where you have advantage. But don’t simply abandon weaker brands. Even those you plan to exit may need tactical investment to maintain their value to a potential buyer.
Our survey shows 84% of companies do not think the potential selling price of an underperforming brand is key to their divestment decision. But if an exit strategy doesn’t include sale value, there’s less incentive to make it attractive for buyers — and that could harm growth across the portfolio.
And most companies (80%) say changing market dynamics — that is, factors beyond their control — were a major factor in their decision to exit a brand after attempts at a fix failed. But market dynamics don’t suddenly become an issue. They evolve over time. And new capabilities can offer more of a window into forecasting and planning for contingencies.