The document discusses introducing a new business model and portfolio anatomy tool for a struggling surfing brand. It proposes focusing the brand exclusively on surfers by offering a board shipping service and renting dynamic warehouse space. A portfolio anatomy would help visualize the relationships between projects like transitioning suppliers, integrating warehouses, launching new services and IT system updates needed to implement the changes. Breaking dependencies and adopting shorter iteration cycles could help explore opportunities and adapt the portfolio to improve flexibility.

1. Product Management
© 2013 Johan Oskarsson

2. Choosing the right path to
achieve a company vision can
be very tricky, even if all
Portfolio
Anatomy
parts are known and the
vision is stable. It’s even
trickier when the vision is
moving and the roadmap
needs to change. Usually the
tactical moves are
interdependent and a change
will have multiple
consequences.

3. Creating a vision for your company, “Drawings help people to work out intricate
business unit or product line involves relationships between parts.”
laying out the bits of the puzzle in order,
then choosing the right way forward. This
is usually called a Roadmap. Roadmaps Christopher Alexander
are great for figuring out your next steps [patternlanguage.com]
and milestones. What’s harder to figure Not only does the upper management become more distant from
out is how all of your projects interact and the different parts of the organization, the communication chasm
between these parts becomes greater. Intercommunication
how to coordinate many different projects diminishes.
into tactical launches.
When the market is changing fast and competition emerges over
In creating an effective roadmap you must be able to anticipate night, organizations need to close communication chasms not
shifts in the market, adapt when more knowledge is acquired, and widen them. Everything has to become more interactive and
understand and assess any risky assumptions contributing to the integrated, including planning. Many product solutions today are
process. An effective roadmap includes all major projects and bundled and require that more people understand all internal
activities that you need to accomplish in order to reach a relationships in order to create new solutions. It is no longer
milestone or strategic vision. possible to assume that picking a system wide solution apart and
managing each part alone makes anything any easier.
When changing your business model you usually need to start
various projects in different areas of your organization. IS-IT, R&D, It’s a common occurrence that a planning process faces deadlock,
after market, suppliers, etc. These areas are sometimes not very where one part is waiting for another to finish. This results from
well coordinated with each other, or have little insight into each being unable to see and plan in interdependence, and can result
others work. The different projects take different times to in huge waste and lost opportunities. Endless meetings and
complete. Not only do you have to create new solutions but you discussions are unable to solve this dilemma. Resources are often
have to maintain or withdraw others from the market. It is a reallocated between different projects in the hope of a fast solution
combination of everything. to the problem. Adding more people late is a known bad, but a
common action. What else can you do?
One way to handle such a situation is to separate projects and
activities and coordinate them from C-level management. I More holistic tools are necessary to manage complex systems.
strongly believe that this is the wrong way. Tools that visualize relationships help identify interdependence,
giving you the complete picture and triggering creativity.

4. Manage complexity “Leaders who try to impose order in a
complex context will fail, but those who set
Planning and executing a strategy the stage, step back a bit, allow patterns to
successfully is truly complex. Many emerge, and determine which one are
desirable will succeed.”
interrelationships are sometimes
unknowable in advance. Yet we tend to Dave Snowden, A leader’s
make long term plans and large tactical framework for decision
making [lean-kanban.eu]
moves in the hope of staying competitive,
all the while unable to see the We are good at predicting the future, too good actually, so that we
interdependent parts that need to fit tend to forget that everything cannot be predicted.
together. The way to handle complexity is to probe, sense and respond,
When we have vision in sight we make a strategy to reach that compare to sense, analyze and respond again. In other words we
vision. We start to execute the strategy when we start spending should explore the near future (probe), acquire data from that
money on projects and activities. The biggest fallacy is that we exploration (sense) and then respond to that information. This
think we can control the future with long-term plans. contrasts with first gathering data, analyzing it and then
responding. It is quite a different approach. The probe, sense and
“The law of requisite complexity” states that an organization must respond approach is exactly what, I believe, we have always
be adequately complex as the environment it finds it self in. wanted but been unable to use because of very long development
Meaning, for strategy and portfolio planning, that it must be able to cycles. Instead of making in depth market research and analysis
handle all the changes and variations that it might encounter. on which to base long term plans for meeting market demands,
We have a tendency to group things together in order to we should make fast and cheap prototypes, test them in a safe to
understand them. This is something we have been taught to do in fail environment, get rapid feedback and then adapt according to
order to handle variation and complexity. It is called attenuation, the findings.
reduce complexity in order to understand the big picture. But in
managing complexity an attenuator needs to be balanced with an By breaking elements of a portfolio into smaller pieces we can
amplifier in order to match the complexity of the surrounding create the appropriate complexity needed to match both our
environment. This means breaking groupings up into smaller parts external market’s and our internal organization’s complexity. It
which need to be managed to handle a fast changing market. A does not need to be broken into smaller parts than necessary to
complex environment requires us to change our way of trying to handle changes in the market, but still it is nice to be able to react
control the future. fast. Nor is it recommended to break things down more than you
can handle internally.

5. Visual Thinking “We can learn to solve complex
When at a waypoint figuring out the next problem with simple pictures!”
heading for a new product, portfolio or
company milestone, we have trouble
understanding how all the bits and pieces will
fit together. We tend to use tools for our verbal Dan Roam, “The back of a
napkin” & “Blah, blah, blah”
mind, forgetting about the visual mind which [danroam.com]
can help a great deal to make sense of problems.
We can use pictures that encompass all Collective reference point. A picture can turn an implicit
relationships to complete a doubled sided assumption into explicit information. This is very useful to enhance
communication and visualize unknown risks.
mental approach.
Albert Einstein didn’t say a word before he was two and half years Shared language. A visual Portfolio Anatomy uses a shared visual
old. His nanny called him stupid. As it turns out Albert Einstein language. It need not include words but is still a means for
didn’t think in words. Is he stupid? No, I assume it is safe to say, communication that provides a shared picture for how bits and
he was not. Some people are able to think more in words, some pieces fit together.
are able to think more in pictures (like me and Albert). To be able
to make good strategic moves we need both. Visual Thinking is Joint understanding. By visualizing the entangled way forward,
about utilizing the right side of our brain. Here are some key you can achieve a shared understanding between people from
features of Visual Thinking. different parts of an organization. It is priceless as a tool for
alignment.
Capturing the big picture. By sketching out all elements of a
portfolio you will see just the right amount of information. Enough Idea trigger. Many times we are stuck with tunnel vision, unable to
to grasp the idea, yet not too many details to distract. see new possibilities. In order to find new alternatives we can
enable the creative process by understanding the whole.
Seeing relationships. Understanding the the way forward
requires understanding the relations between elements. This is Play. A Portfolio Anatomy provides you with the opportunity to play.
easier to express visually than in words. For example, when there By simply adding, breaking, changing or removing elements you
is interdependence between two projects, a drawing can show can be in the ‘sandbox’ until you have explored all the different
why one of these projects should be split in two in order to bring a possibilities. Don’t forget to have fun!
complete solution to the market faster.

6. Design Attitude “Sometimes when you innovate, you make
mistakes. It is best to admit them quickly,
Everywhere we hear that the world is changing and get on with improving your other
faster and faster, and with increasing innovations.”
uncertainty. Traditional incremental growth is
challenged by disruptions that happen
Steve Jobs
overnight. There is not always time to figure out
what to design. We need to use Design
Thinking, instead of thinking what to design.
When talking about prototypes we usually tend to talk about them Meet the real world. To solve a real problem for someone, we
as they are close to the final product. Just a few modifications and have to understand, not only what they are doing right now, but
we are there. The original thought is the same, the prototype is what their unmet needs are. It is not certain that he or she knows
just for verifying the concept. This is very narrow minded and what they need. To discover their real needs we have to visit the
misses the discovery of new possibilities. By opening up to what real world, meet and observe people in their daily life.
we can learn from prototypes, we could change the whole initial
idea to something much better than what we first intended. This is System level. To create a solution for a problem usually involves
Design Thinking. Design something just to see if we trigger any people from different parts of an organization. To be able to
new thoughts. The result of the design does not have to be a communicate with people from different parts we need a
product intended to sell. The goal is new insight and learning. This framework that enables system level communication and models
process can replace traditional design. A new and scary concept that can illustrate system wide interdependencies.
for many, many people.
Cheap, rapid prototyping. One of the best ways to reduce risk is
So prototype instead of specify. Writing a specification with to verify assumptions. By using simple, fast, cheap prototypes you
foresight is hard, almost impossible. Yet it is what we have done can unveil risky assumptions. The lessons of a prototype can also
for far too long. This may be why it is hard to convince managers make you change directions. Using prototypes like this helps you
that making a prototype is the best way to figure out what should stay one step ahead.
be done. If you spend too much time trying to figure out things in
advance you are less likely to be flexible enough to adopt a better By adjusting to a design thinking mode you can make sure that
idea when it comes along. Design Thinking is a lot of things but you have a clear understanding of the real problem you intend to
three basics that I think (along with those who inspired me) are solve, aligning the way forward system wide and exploring the
core to this process are; to face the real world frequently, see the next step using cheap, rapid prototyping.
whole, and rapid prototyping.

7. Portfolio Anatomy
A portfolio anatomy is a visual aid for Deadlocks usually result in workarounds and temporarily solutions
which off course increase cost and delay time to market.
showing the relationships between the
projects and activities in your portfolio. When dependencies are broken and your flexibility increased, you
can move into exploration mode, working iteratively with a rolling
There are many types of anatomies which can help you visualize wave of exploration, adaptation and mass release. When all your
intricate relationships between parts. The concept has been used projects were interdependent, there was little time for exploration,
on many types of problem but mainly for visualizing different parts making your launch very risky. Imagine instead a rolling wave with
of a project. A Portfolio Anatomy can be used at the corporate an iteration period of 3 months. By using the Explore, Adapt and
level, with the entire portfolio, or with individual product line Produce sequence you can in the current iteration: explore what
portfolios. It visualizes all parts as viewed from 30 000 ft. A might be produced in six months time, adapt what you are
Portfolio Anatomy will help you understand the big picture, producing in 3 months, according to exploration findings found in
including when and how to break dependencies between the last iteration, while producing the result of previous iterations
elements. now.
A Portfolio Anatomy will help you align your tactical moves and
make communication easier. It is not so much a replacement for
other tools than a compliment. Many common portfolio tools use Explore Explore Explore
the verbal, logical part of our brain, like financial models, business
proposals, etc. An Anatomy engages our visual side. It
complements your tool set for solving the complex problem of Adapt Adapt Adapt
coordinating many different projects.
Produce Produce Produce
By breaking projects up into smaller projects and identifying
interdependencies between them, they become easier to
coordinate. When breaking a project down, you often end up with
one part which is the platform/infrastructure/foundation and
The anatomy technique is not at all difficult and no specific tools
another part which is the value proposition. Normally these parts
are necessary, though there are special tools just for this exercise.
are aggregated in order to make the financial investment cut. The The easiest way to describe it is probably with a case study; Meet
advantage with breaking the project apart is that the
Green Room Surfing.
interdependent part can be executed earlier and then be available
for the other parts of the project. This helps to avoid deadlocks.

8. The Greenroom Surfing story
Greenroom Surfing is California based
surfing brand. They have been selling surf
equipment and clothing since 1990. They are
not profitable and soon face downsizing if
sales don’t improve. There is a real crisis in
this fictive company.
The surfing equipment and clothing business is fiercely
competitive and all brands are competing for approximately the
same customers. That is anyone who surfs, wants to surf, wants
to be regarded as a surfer and those who just like their T-shirts.
The company has seen a negative trend over the last 5 years and Current Business Model
is now facing downsizing. The board of directors still has one last Ben calls it the “Flip Side” service. This service is something new
hope. One of the employees, Ben, has an idea. for the industry and will help help boost Greenrooms brand as a
pure surfer brand. Surfers will also get exposed to Greenroom
Bens’ idea is a new business model where the company should Surfing retail stores and possibly buy things they need while
shift from selling to just about anyone, to focusing exclusively on traveling. Some might even buy a new custom shaped board.
people who really surf. While surfers are not known to be rich,
since they travel frequently and tend to prioritize waves over work, A possible cost reduction has also been identified. Instead of
they will pay a premium for functionality, quality and durability. owning their warehouses, there is a new business utilizing a
dynamic warehouse model where warehouse space can be rented
Another idea Ben has relates to the problems surfers have as a service. This way Greenroom only has to rent the space they
bringing surfboards when travelling. It can be ridiculously need.
expensive, the boards can get broken and every other traveler you
meet seams to hate you (it’s true!). Bens’ idea is that instead of By changing the strategy to this new business model, Greenroom
bringing them on the airplane, you ship them using a service Surfing can move away from competition with mass produced
provided by the Green People Club. You bring the boards to your products with super low margins. Instead they will focus on only
closest Greenroom Surfing retail store where you live, they will on functional quality products where their margins are higher.
ship them to your travel destination and you pick it up at either a They will also lower the cost by use of the new dynamic
Greenroom retail store or partnered company when you arrive at warehouse service.
your destination.

9. Projects Prio
The board have decided to go with the new business model and
also add an environmental factor. They will reduce non- Phase-out of old suppliers & phase-in of 1
new
environmentally friendly material usage as much as possible.
Kill own warehouse system & integrate to 1
Greenroom Surfing is now launching a vision statement, lead by external 3:rd part warehouse
Ben who came up with the new strategy.
Flip Side Service 1
“We believe that surfers not only want good functional Update Product Design System 1
products but also highest quality, produced with minimum Update B2B Order system 1
effect on the environment.” Update PLM system 1
Update CMS system 1
Greenroom.com 2.0 update and new 1
layout
Update return order system 1
Green People Club 1
IT projects needed to launch the new business model
New Business Model
The new strategy leads to many new projects. During the program
planning new ideas are popping up, from asset saving projects to
new products. However Greenroom don’t have enough time or
money to do all of the projects identified. The reality is they need
some short-term revenue to avoid bankruptcy. Ben and his team is
asked to cut the time plan, and costs, in half. The biggest problem
is that it seems all projects need to be done before the new
strategy is effective.
Greenroom Surfing IT architecture

10. The management team is asked to prioritize projects, since they Looking at this Portfolio Anatomy some projects can be started
cannot all be started and run at the same time. The simultaneously and some can be postponed for later. But it is
management team has not been able to prioritize since all status quo for the business model.
projects are needed. All are musts.
Ben and some creative people spend the evening trying to
During the first planning phase Ann, one if the project leaders, figure out another way. What they discover is that almost all of
has found a tool to visualize dependencies between projects the projects can be broken up into smaller projects. Ben also
and to plan possible combinations. Below is her first prototype creates an alternative launch strategy.
of a Portfolio Anatomy. She demonstrates it in the hope of
finding a way to coordinate projects and move toward the new
strategy, at least far enough so they can launch something that
can change their current fate.
First round portfolio anatomy

11. Bens’ alternative launch strategy is a more iterative and, after a In the second iteration they plan to phase in the new
couple of hours bending and twisting, looks less risky but is still environmentally friendly products as well as launch the real
profitable. Ben split the launch up in iterations. surfer compliant products. They will finish the transition to
dynamic warehousing and make an update on the current
In the first iteration Ben plans to phase out the low margin website with the new products.
products. He also phases in the new suppliers of organic
environmentally friendly material and the integration with the In the last iteration they plan to phase out non-environmentally
3rd party external warehouse system. This way they lower friendly products, phase out old suppliers, start the Green
costs significantly and turn the immediate cash-flow problem People Club and start the Flip Side service. New new business
from critical to manageable. strategy is finalized with a new layout on the website.
Second round portfolio anatomy

12. Ok, what’s next? Guiding steps
In theory this is easy. Not so easy in reality 1. Understand your Business Model strategy
but you have to start somewhere. If you 2. Identify all that must happen to realize this strategy
don’t know where you are going a Business
3. Visualize these elements in the portfolio of projects, assets and
Model might be the first step. When the activities
end of the road is clear then it is time to
4. Align the strategy with the whole organization
find the way.
The Greenroom case only illustrates the simplest way of using a 5. Decide in which order projects and activities should come
Portfolio Anatomy. As you start using it you will discover other
benefits. You can easily add other activities such as knowledge 6. Use internal competence to creatively explore new ways
acquisition, organizational changes etc, as important elements. forward that might help speed things up
Working with a Portfolio Anatomy is not a one time event, its is an 7. Review and adapt on regular basis, minimum 3-6 months
ongoing planning activity and is part of the Agile Product
Management Framework ©. This planning activity is a great
complement to Business Generation Modeling, Portfolio
Alignment, and Project Decision-making. By visualizing the
portfolio elements it tends to effect the decision-making process.
This is a good thing!

14. Johan Oskarsson
@johanoskarsson
Inspirational sources
www.captaintrouble.com
Management 3.0 – Jurgen Appelo
The Product Manager’s desk reference – Steven Haines
Business Model Generation – Alexander Osterwalder
A leader’s framework for decision making - Dave Snowden
The back of a napkin & “Blah, blah, blah” - Dan Roam
Steve Jobs - Walter Isaacson
Thanks to David Jackson for editing and theoretical dialogues.