What is portfolio agility?
A working definition from MIT Sloan
portfolio agility (noun)
An organization’s ability to quickly and effectively shift resources across different parts of the business.
During uncertain times, resilient and agile companies are most likely to come out on top. This is especially true of companies with portfolio agility, or the ability “to move resources (including cash, talent, and managerial attention) from the least promising uses and reinvest them in the most attractive opportunities,” writes MIT Sloan senior lecturer Donald Sull in MIT Sloan Management Review.
According to Sull, organizations can implement “simple rules” to improve portfolio agility. They can start by identifying bottlenecks in strategic priorities. For example, an oil industry equipment supplier was struggling to win project bids during the Great Recession despite responding to 90% of the requests for proposals it received. Sull, who studied the anonymous supplier, explains that the company’s management team developed simple rules to prioritize RFPs, such as focusing on turnkey projects and growing its bases in eight target countries. The company then looked at the common denominators of its past winning bids and used those commonalities to create rules around whether it would allocate resources to a project. Under the rules, the supplier cut its project bids from 90% to 60%, increased its rate of winning bids, and reduced the time needed to review proposals in its pipeline from one day to one hour.
Working Definitions: Strategy
MIT Sloan's Working Definitions explore the words and phrases behind emerging management ideas.
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