What does a balanced portfolio look like?

balanceTo determine what a balanced portfolio looks like, lets take a look at an unbalanced portfolio. An unbalanced portfolio usually consists of a large number of small projects. These projects are low risk but also have lower rewards. Companies tend to do most of these projects because these are considered as ‘low hanging fruits.’ These short and small projects usually result in tying up most of the company resources by spreading them too thin. This does not leave room for longer term and high reward strategic projects which would usually make or break a company (say) 5 yeas down the road.

In the absence of long term strategic projects, a company will only be left to churn out different configurations of existing product lines by slightly tweaking one feature or the other – but these are not the kind of products that build a company. Companies which only focus on short term by churning out different flavors of existing products can see a collective boredom set in the workforce as people remain very busy in lots of projects but with nothing very exciting coming out in terms of R&D and professional self-fulfillment. It may result in people leaving jobs for more rewarding challenges.

Therefore in a balanced portfolio some resources should go to small and quick return projects as they keep the revenue coming in while others must be dedicated to longer term strategic projects which will keep the company revitalized in coming years.

Neither short term or long term projects can be neglected.


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