One of the central objectives of corporate strategy is for executive management to think holistically about a company’s portfolio of businesses—conceiving and spearheading ways to make the aggregate value of a company’s holdings durable over time, and greater than the sum of its parts.
This vital mission comprises two central questions:
Our experience suggests that the most successful portfolios exhibit four broad characteristics. They are strategically sound, value-creating, resilient and sustainable. Perhaps this seems obvious—but in our experience because it requires consideration and testing across a wide range of seemingly incomparable attributes—companies seldom apply this Sustainably Advantaged Portfolio approach.
Perhaps the greatest difficulty lies in the fact that there is no standard version of a Sustainably Advantaged Portfolio. Every portfolio is different, and it is difficult to weigh trade-offs between strategic soundness, value, resilience, and sustainability.
In our paper we put forward a framework and methodology to manage these trade-offs and to construct a Sustainably Advantaged Portfolio.