Our solutions - Portfolio and M&A strategy

“True advantage comes from having a steady stream of offerings that only distinctive capabilities can deliver.”

The problem: Having a product and service portfolio that is not set up for success

A company’s products and services are its most visible activities, to its customers and the outside world. However, too few companies create a product and service portfolio that truly aligns with their strategy. Instead, most companies compose portfolios based on short-term financial performance and shoehorn a strategy to fit around that portfolio.

Mergers and acquisitions are a powerful way to modify a company’s portfolio. But too many companies do deals to become bigger, rather than focusing on becoming better.

Having a product and service portfolio that is not set up for success

Our solution: Determine the optimal portfolio and deals based on fit with your differentiating capabilities

Portfolio management framework

Companies should manage their portfolio in a way that allows them to become more coherent. This may entail divesting profitable products and services that don’t fit a certain capabilities system and finding ways to better integrate those that do fit. By applying the same capabilities across an entire portfolio, companies get better at the few things that matter most and can give their smaller businesses, which would otherwise not warrant the build-up of such distinctive capabilities, a great competitive advantage. Success comes from building relevant scale behind a differentiating capabilities system.

At Strategy&, we have found strong evidence that capabilities-driven deals — those that leverage the buyer’s key capabilities onto new products or help it acquire new capabilities that round off its capabilities system — produce significantly better results, on average, than deals with limited capabilities fit. The pay-off of a capabilities-driven view on portfolio and M&A strategy is immediately visible.

Companies that follow this capabilities-driven approach to portfolio and M&A strategy become better every day at what matters most to their customers. They grow bigger and more coherent and can invest their higher returns in further building out their competitive advantage. They become what we call supercompetitors, dominating the part of the market they have chosen to focus on and becoming almost unstoppable.

Portfolio and M&A strategy

More on portfolio and M&A strategy

The New Supercompetitors
Companies that realize the power of their capabilities can shape how industries evolve.
Deals That Win
Twelve years of data shows that mergers and acquisitions that apply or enhance capabilities produce superior returns.
The Capabilities Premium in M&A
A study of inorganic growth shows that deals made to enhance or leverage the things that companies do well consistently outperform others.
Making the Most of M&A
Mergers and acquisitions are becoming more critical — and more perilous — than ever. You can build your capabilities, even in the midst of turmoil.
The Secret to a Successful Divestiture
When you are selling part of your company, don’t just offer buyers a potential asset; give them the capabilities to gain value from it.

SoundBite: The secret to strategy that works

  • Part 1: Why strategy matters
    In turbulent times, your strategy matters more than ever. The world's greatest companies weather adversity and uncertainty much more adeptly by operating from their core strengths. A strategy built on these differentiating capabilities helps you outpace the competition, achieve faster growth, and earn the right to win.
  • Take your strategy from paper to pavement
    Far too many strategies fail when it comes time to bring them to life. In fact, more than two-thirds of executives say they don’t have what they need to execute their strategy. Find out how your company can avoid falling into the strategy-through-execution gap by asking 3 questions.
  • Transform your company and your industry
    Supercompetitors have a special recipe for success. It’s fueled by capabilities and it makes these iconic companies so powerful that they’re actually influencing and reshaping entire industries. Find out how you can use smart strategy to transform your future.