The portfolio puzzle: Maximize business model value
Four strategic levers for long-term business growth
Today’s leading companies don’t rely on a single way to win. They manage multiple business models to fuel innovation. Learn how four strategic levers can help you unlock the full value of your business model portfolio while reducing complexity, bypassing common pitfalls, and fueling long-term growth.
How to manage multiple business models for long-term growth and value
- Balance complexity and standardization: Managing internal complexity is as important as responding to market changes. Find the sweet spot; too much complexity or rigid uniformity could hold you back.
- Weigh portfolio premium vs. cost: Operating multiple business models can drive value and resilience, but also introduces costs. Regularly consider whether the value (“portfolio premium”) outweighs the complexity and overhead (“portfolio cost”).
- Pull the right levers: Prioritize levers for each business model. Use metrics for new ventures, incentives to drive behavior change, technology for customization, and distinct organization structures for large, independent business units.
- Stay strategically agile: Continuously adapt your business models and portfolio strategy in response to evolving customer needs, industry trends, and enterprise goals to unlock growth, resilience, and long-term value.
Is complexity hurting the value of your business model portfolio?
Has your business grown overly complex? Or do you face the opposite problem, with over-standardization stifling growth and differentiation? While navigating evolving consumer preferences, new technologies and regulatory uncertainty often dominates the headlines, managing internal complexity is an equally critical strategic imperative. Today’s CEO is often the leader of a single firm, but in practice oversees many different component businesses and business models (different offerings, value propositions, capability models, etc.). This diversification is often positive—it can improve resilience and growth—but it can also come with a downside in the form of additional complexity.
To help ensure that your 'portfolio premium' continues to outweigh your 'portfolio costs,' it is essential to assess and optimize how you manage your business models.
Why companies use multiple business models for long-term growth
Operating multiple business models is, in many ways, today’s industry standard. This is especially true of large, mature organizations. Over 80% of Fortune 50 companies span multiple business models. Many technology firms that became known for a single product have long since expanded into both a range of products and services and into adjacent industries.
Companies are increasingly adopting multiple business models to drive top-line growth and improve enterprise valuation by broadening market reach, unlocking new revenue streams, fostering innovation, and improving efficiency. When effectively integrated, these business models can form an “advantaged portfolio”—one that is strategically sound, value-creating, and resilient.
Pull four strategic levers to enhance business model value
To manage the complexities and optimize the potential of each business and the entire organization, it is necessary to understand the specific advantages, disadvantages, and suitable contexts for implementing these strategies. Depending on the size, nature and complexity of the business, companies may benefit from pulling multiple strategic levers to promote innovation, efficiency, and growth.
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