Portfolio Analysis: Igniting a long-term spirit in a short-term world (IV). Research Design in Portfolio Analysis.
Today we will endure an introduction of theory resistance with an overview of research design in portfolio analysis.
As I mentioned to you in our most recent saga, “The Hare and the Tortoise: The race is not to speedy”, the diversification path for growth has been studied in several waves of time. During the 25 years that followed World War II, the modal form of large corporate enterprise in the USA underwent diversification (1). The 80s decade offered us several researchers and authors, who were focusing their work on trying to measure evidence from the past (1949-1974) concerning the type of diversification that was successful in terms of profitability. The key variable measured was economic profits (money after paying taxes). This was the exact moment in which strategy began to be linked to profitability at its essence.
Why does diversification occur at this specific moment of time? We wrote about this in our last episode. But primarily, it is so simple. Before the advent of Smartphones, companies (at the corporate level) began to think about diversification when their growth plateaued at its highest, and opportunities for growth in the original business were depleted. This is still true, but something has changed. Nowadays the reason for diversification can´t be conceived as when an athlete reaches the peak of the summit, and then he or she is forced to retire. In our present times, the reason for diversification has nothing to do with reaching the plateau of success in a mature industry or trying to innovate for making this world a better place but in trying to insert whatever humans do in a Smartphone. In reality, the business of those who sold a telephone line, once this evolved from fixed communication to the combo of mobile plus the NAIQIs, this business that we see in our black box smartphone daily has changed us. Since the year 2008 (when the iPhone disrupted our life), our mindset has changed. And the change is not for good, but for whatever we are doing. Instead of asking ourselves questions about how can we expand our businesses and services with a real innovative perspective, by using design-based research processes of thinking; we all began to reduce our focus of thoughts into: what can we do to set up our endeavors inside a Smartphone that functions with the disruptive technologies grouped under the NAIQIs? (NAIQIs: Nanotechnology, Artificial Intelligence, Quantum Supremacy, and the Internet).
The strong seduction of the NAIQI mammoth forces is forcing our civilization to do everything using a mobile, a tablet, or a computer. And this is sacrilegious against our mind power.
In our search to at least keep competitive levels of market share and profits, we have begun a “forced” road to digitalization or going digital, and people finds themselves in a gallop that is not being researched from the point of view of our integral well-being of everything in awe for our human development but only in terms of profits.
We have lost our meticulous and rigorous taste for what means to be integrally excellent, and particularly those who are younger than us, seem to be happy and content with mediocrity at its maximum.
The COVID19 Pandemic came to show us how hard is to do everything using a mobile or a tablet. It is atrociously mediocre to be educated using a device, it is dull for the teachers and the pupils or students. The same happens with art. In our search for making our life as movies with animated drawings, by means of drawing-painting software platforms like Photoshop, Affinity Photo, Corel Painter, and others (2); since the 80s, we forgot the meaning of what is the value of “hand-made visual art products”. I have already written about this theme in past sagas, but the reason why I wish to remark this idea today, again, is simply to put you into the illogic context that triggered us to choose the incorrect way of thinking and designing our products and services as we are doing it right now.
Alors, if we define and design our business wrong. Then we are also designing and defining our portfolio analysis wrong. Diversification of our products and services (concentric or related) and/or unrelated is taught using screening criteria based on market attractiveness and market feasibility only, and that is extremely limited (3).
It was in the decade of the 80s, in which our businesses were not integrally well researched, and the term “profits and shareholder value” were privileged above every single other criterion. The fundamental reason why we set up a business is to become better human beings and help others to be integral humans with a soul, a spirit, and knowledge. That should have been the prerogative in all our endeavors, not only profits. We lost our way a long time ago, and this is nothing to do with ideological political extremes. This is about understanding the corporate strategy that has been researched, designed, and implemented, not only in the West but also in the East. China is an example of a super capitalist structural backbone economy that works under a brand of “communist state regime”. Believe me, the World Bank taught the Chinese how to be capitalists in their owned state enterprises, and right now China is the top merchant in the world (4). So here we are rising from our ignorance and beginning to open our eyes to how our frameworks work in business and corporate strategy (including portfolio analysis frameworks). If these frameworks are not correctly composed, they affect everything in a global economic system. And all these models should have been researched properly 40 years ago. How? By applying the Design-Based Research ideas into portfolio analysis.
Walking the talk. The reason why I chose the Design-Based Research Process for Portfolio Analysis is that this model “walks the talk!”. It has been designed to design our endeavors in several disciplines, and it has been polished during the last 25 years.
Design-based research is an educational research methodology and integrates design and scientific methods to allow researchers (in this case, if used by corporate strategy researchers) to generate useful products and effective theory for solving individual and collective problems not only in education but in our human development and economies.
Today I will introduce the DBR design-research process framework illustration, and next week we will continue by understanding it properly. As of next week, also, we will commence digging profoundly into our examples in relation to art and education as I promised to you at the beginning of this saga.
This is it for today, wishing you a superb and enchanting weekend, enjoy the music that we have chosen for you.
Sources of Bibliography used today:
(1) Rumelt, R. “Diversification Strategy, and Profitability”. Strategic Management Journal, Volume 2. 1982. Pp 359-369
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