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Portfolio Analysis: Igniting a long-term spirit in a short-term world (XXXIV). Our epic´s ending.

Have a beautiful Friday. When everything has been said and done it is heartbreaking to come to an end with a saga that interprets the core of our intentions as a company, mostly when it has been miraculous to finish it.

We also do DBR when painting. This is a little watercolor practice that was made to test and prove a new set of watercolor paints gifted to me by the Pennsylvania Watercolor Society. We also are painting a master oeuvre based on this little one.

Today I will try to be brief, irrespective that we have so much to write. Our summary is bold and short. Our conclusions will be a bit expansive but directly to the point. Let´s begin.

Summary

Portfolio analysis is a unique way. Not the only one, but one technique created to deal and provide the remedies or solutions for the 4 medullary action portions of corporate strategy. Corporate strategy is problem-solving at the core of our business or economic endeavors, no matter what industry or economic sector.  

Corporate Strategy Snapshot in one slide.

If the fundamentals of portfolio analysis as a method were originated in the 1980s, Eleonora Escalante Strategy provided the notions, explanations, and examples on how to build them from scratch. This saga covered 5 existing frameworks: The Boston Consulting Group Growth-Share Matrix, the General Electric Portfolio Model, the Shell Directional Policy Matrix, The ADL Strategic Condition Matrix, and the Abell and Hammond 3×3 Investment Opportunity matrix. The saga discusses the pros and cons for each framework and has illustrated those issues that made these viable structures to be non-practical for a long time by practitioners in the business world. Consulting houses traditionally have examined portfolio analysis based on financial and economic returns, leaving the social and human critical factors behind. The most advanced advisors have offered the concept of CSR (Corporate Social Responsibility), but the way it has been delivered is still a side-dish when companies do not consider the whole mix of factors at the core of the corporate strategy domains.

Our saga “Portfolio Analysis: Igniting a long-term spirit in a short-term world” was originated to provoke strategic reflections at the corporate strategy level of those who make the corporate strategy on daily basis. We also added the “music factor” not intending to entertain, but with the profound aim to position our audience in the urgent context of waking up to see how the current advanced technologies are replacing the whole real instrumental performing industry. If we don´t stop this, the genuine interpretation of music made by musicians and interpreters will cease to exist forever. Machines have already taken the spots of humans in the creative world. When it comes to music, it is a fact that bands and orchestras as those that arose during the 1980s and the 1990s have already disappeared, and no circular replacement of equal caliber has emerged yet in the new generations. Finally,  the taste for our classical music (which keeps the composed oeuvres from our past ancient history) is also fading away.

Igniting a long-term spirit in a short-term world means to see beyond the timing of our present. It implies watching around for every single consequence of our actions, not just in the business production (all industries, including art), but also at the personal, family, social, and environmental levels. Eleonora Escalante Strategy has identified 5 groups of factors (internally designed for each SBU, and externally designed for each SBU Industry), which have to be included in all portfolio analysis matrixes additionally to the traditional economic and financial factors:

  1. Human Capital Development (Life long-learning) Factors
  2. Social and Community Factors
  3. Ecologic and Environment Protection/mitigation Factors
  4. Family Heritage Factors
  5. Integrity and Ethics Factors

Yet, our boutique strategy company recommends the Design-Based Research methodology to create tailor-made portfolio analysis matrixes, using the foundations of the 5 kits or frameworks that we studied during this epic.

The Good Samaritan Wisdom has been our guideline for this saga. Our globalized world, an invention of the application of the competitive advantage of nations theories and the emerging disruptive technologies, have conducted us to a point in time in which if we don´t begin to use the “Good Samaritan theory” to allow problem-solving, our civilization is at risk to perish with time.  When other people need our help the most, like the wounded man on the road to Jericho, is when our love for our fellows is truly tested. Jesus tells us to be like the Good Samaritan, helping others in times of need, and not be like the Priest or the Levite who ignored the misfortune of those who belonged to their own. That is what is all about when igniting a long-term spirit in a short-term world.

Conclusions

  1. There is no corporate strategy without portfolio analysis. Typically, nowadays portfolio analysis is always associated with financial frameworks, which are also associated with financial returns. The majority of decisions about portfolio analysis are built on sales growth percentages, ROIC, ROA or ROE, multiples, and valuation indicators. There is a whole bunch of missing factors that need to be added to our analysis.
  2. Diversification is linked to the “life-history theory” of fast and slow organisms strategies when it comes to the word survival. All of us, all the organisms living on this planet are born to survive facing adverse or favorable conditions. And all of us, naturally or not,  adopt bet-hedging strategies to shield against the failure of reproduction and failure of not succeeding. Diversification is the root of portfolio analysis planning.  One should not concentrate all efforts and resources in one area as one could lose everything during uncertain times.
  3. Design-based research (DBR) 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 a useful portfolio analysis matrix, tailor-made for your own company.
  4. DBR is an effort to tie the knot between theory and application (practitioner) for problem-solving. Iteratively, we recommend using it for portfolio analysis planning. The DBR is Pragmatic; Grounded; Interactive-iterative and flexible; Integrative, and Contextual. The steps of DBR are focus-understand-define-conceive-build-test-present.
  5. The DBR methodology was fully explained using the example of a watercolorist trying to make a living of at least US$68,600 income per year. The DBR mindset was explained with lots of details, because it has to be used when building our prototypes when performing the design for our portfolio analysis matrix.
  6. Growth patterns matter. In this context of technological disruption, growth patterns matter more than anything. There is a mismatch between the rhythm of productivity growth that tech is forcing us to bear, and our integral wellbeing as individuals and as members of a larger community. We have no other choice than to slow down our inventions at every level, and we foresee that a solution to this, is to elevate our standards when doing DBR, elevate our regulatory controls, elevate our tollgates of analysis by adding human-social-environmental-ethical factors inside the portfolio analysis matrixes. Everything with a long-term vision approach.
  7. We conducted a detailed explanation for each framework, in a comprehensive and exhaustive format. For a recap, visit each of our 15 episodes from the XIV to the XXIX.  The advantages and disadvantages were released with love there too.
  8. The core of our saga inference was written in the following episode. Please click and re-read again the chapter XXX.
  9. Lastly, we wish to end our list of conclusions with the phrase: “Nothing that we feel, or do during our lifetime is a lonely event. We all are interconnected, in soul, spirit and networks. Whatever we invent as a theory or as a selling opportunity or as a disruptive technology has a consequence. Better we begin to think about all the consequences of our actions. Better we ignite a long-term spirit in our short-term world.

Some words for the following year 2022. As far as we are concerned, we are satisfied with the results of our saga. Next year we will start a new one baptized with the name of “Bees at work” as of January 4th, 2022.  From today until then, we enter into vacations mode. I will post a couple of times more during the holidays, to acknowledge our season´s greetings for you, and to offer a prelude of “Bees at work”. We wish to congratulate all our readers for standing with us during this season. We did it!

A new saga “Bees at Work” is coming on January 4th, 2022.

Why did we choose 5 songs at our last publication?

Latin America has beautiful voices, rhythms, and interpreters. Our last five musical pieces from Diego Torres (Argentina), Fonseca (Colombia), Fonsi (Puerto Rico), Juan Luis Guerra and Carlos Vives (Colombia) are fully representing our continent. Of course, there are more Latin American music authors and famous singers from Europe, Africa, Asia, Australia, and North America that I did not have the time to share during the last three months. Don´t worry, we will continue sharing great quality music and watercolor paintings during the next year 2022.  No good musician, band, or orchestra will be left forgotten by us.

Our saga closing song belongs to Soda Stereo. We seal this year with Persiana Americana. It is up to you to guess why we selected Gustavo Cerati´s best song.

Thank you so much for staying with us during this year.

We are delightfully honored with your presence. Gracias, Obrigado, Danke, Merci Beaucoup.

Disclaimer: Illustrations in Watercolor are painted by Eleonora Escalante. Other types of illustrations or videos (which are not mine) are used for educational purposes ONLY. Nevertheless, the majority of the pictures, images, or videos shown on this blog are not mine. I do not own any of the lovely photos or images posted unless otherwise stated.

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