When to say “No”

The art of portfolio management

Most of us recognise the feeling of great temptation when an opportunity arises. However, if you find yourself in the driver’s seat of a corporation, there’s good reason to think twice before embarking on new, enlarged portfolio adventures. Pursuing new opportunities when they arise, especially the “off-strategy” and “away from the core” ones, entails a risk of being spread too thinly across a broad range of positions. Both Jens Buur Madsen, partner in QVARTZ, and Thomas Kunz, Independent investor and Strategic Advisor, are firm believers in the importance of companies to be faithful to their core business – and to be selective when strengthening their commercial positions in preparation for future (market) storms to come.

“Among our clients, there is a clear correlation between market share and profitability across industries, meaning that it is better for companies to build a few very strong positions rather than many semi-strong positions,” Jens explains, and continues, “on the one hand, your portfolio must be focused and have a clear core. On the other hand, it must be sufficiently diversified in terms of risk and timing. This is the difficult balance to strike when configuring and managing the portfolio”. While ignoring the immediate temptation of expanding your portfolio may seem easier said than done, keeping a steady gaze on both the core and where you want your company to be in the future will be a big help in making the right decisions.

Too many companies don’t achieve their full potential because they fail to allocate sufficient resources to the most important and attractive opportunities.

Jens Buur Madsen

Jens Buur
Partner at QVARTZ

Jens, who lives in London, is an avid traveller and a self-proclaimed foodie with no less than 10 years’ experience in the management consulting business. Jens enjoys sailing and to be put to the test in various physical challenges.


They say that two heads are better than one. Imagine what we can accomplish by adding the 450,000 industry experts within the Gerson Lehrman Group (GLG) network to our business. GLG is an American expert network that operates a membership-based platform, which provides independent ad-hoc consulting services around the world. Since January 2016, QVARTZ has teamed up with GLG on projects, enabling us to include unique industry insights from leading experts from all over the world to secure even better solutions for our clients. Thomas Knuz is one of them. The collaboration is part of our Open Garden approach where we join forces with other companies, representing the best within their individual industries, to create better solutions together.

Thomas Kunz
Independent investor and Strategic Advisor

Thomas – Independent investor and Strategic Advisor – is no novice within the dairy industry, after having spent 25 years of his professional career in Danone. Having worked and lived across the globe, he now works independently from his base in Switzerland. Besides his passion for brands, he is a keen reader and an engaged golfer with an avid interest in politics.

The art of allocating resources

In order to win on the commercial battlefield, you need to be clear on your business priorities and master the art of allocating resources. “Everybody knows that resources are not unlimited. You never have enough resources, so you have to choose. The process of prioritisation and being constrained on resources automatically leads to a process of defining your portfolio. You cannot have a part of your portfolio that really does not create the results needed; all you do is effectively destroying value. You need to manage this actively,” explains Thomas Kunz, a seasonal player within the dairy industry with an extensive CV, counting no less than 25 years and five CEO titles within the French multinational food products corporation Danone. Today, Thomas has made a living of consulting other big co-operations on their brands, portfolio management and innovation. Among other things.

Why, then, do many find it so difficult to maintain an overall focus and direction when it comes to resource allocation? “Too many companies don’t achieve their full potential because they fail to allocate sufficient resources to the most important and attractive opportunities. In order to be able to align an amount and quality of resources that matches the size of the opportunity, it is necessary to say no to other opportunities, even when it means disappointing someone. When selecting between attractive opportunities, the selection criteria should be the following: a) Does it support your overall vision and aspiration, b) Does it play to your core capabilities, and c) Can you build a leading and long-term sustainable position (as opposed to just a secondary position)?”, says Jens Buur. He stresses the importance for companies to be absolutely clear on what defines their core and where they invest to grow – this is where investments and the company’s best people should be allocated and this is what should be followed up on in performance reviews.

Actively managing your resources and not investing further capital into “bad money” may seem as logical as the business opportunity in selling bottled still water at a premium of 560% . However, according to Thomas’ personal experiences, management teams often find it challenging to terminate parts of their portfolio that are not performing sufficiently when faced with the people putting their blood, sweat and tears into these products. “If a brand is not performing well, companies need to refuse the temptation to throw more money into a bad investment. That will only become a loser’s proposition”, Thomas explains, and continues, “The difficult part for every management is to say no. You need to focus on the part of the business that is most in line with the visions of your strategy, and the part of the business where you have the biggest advantages.” Thomas would know. Danone has made some hard choices throughout the years; they sold off their beer segment (e.g. Kronenbourg and 1664) as well as their biscuit segment (e.g. LU and Jacobs) because these did not fit the company’s long-term aspiration and because Danone could not be #1 or #2 in neither Beer nor Biscuits.

A double-edged sword

Striking the right balance between not throwing good money after bad investments and at the same time keeping your people motivated to constantly push new ideas is no easy task. A double-edged sword, some might call it. “You have people working on these brands, and it’s their job to push ideas. They ask you for more money five times a year, and on a human level, it’s difficult to send them back each time. You don’t want to ruin their motivation, because you always have to keep an open ear. Things can change. The person who looks like a loser today can become a winner with the right idea tomorrow. Finding this balance is truly the challenging part for the management”, explains Thomas.

What is your vision or overall aspiration? This should be your starting point when configuring your portfolio. What you prioritise in your portfolio must point directly towards that aspiration, and elements that do not point in this direction should be divested. Here, it is important to be able to say no; even in positions that are financially attractive (the potential sales price should also reflect this attractiveness). When choosing to prioritise an element in your portfolio, the opportunity should of course be attractive (market size and growth, competitive situation, profitability in the industry, etc.), but more importantly, a decisive factor is whether you actually have the ability to win in the given situation and build a leading position in the long term. To what extent can you leverage your core capabilities? What are the synergies to your core business and existing positions? The list of questions continues. Finally, your portfolio must be balanced and diversified against risks and timing. These risks include, among other things, political events, commodity price development, competitor actions and disruption, macro trends and consumer behaviour. In terms of timing, your portfolio must deliver both a short-term return and improve the long-term value of your business. Sounds like a daunting task? It is. But if you don’t make consistent, active choices, someone else will – and it will affect your business. After all, it is better to make the decisions from the driver’s seat than from the sideline.

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Up for a chat about portfolio management?

Jens Buur Madsen
+45 29 69 69 57

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