The portfolio-of-initiatives framework offers a way to develop strategy in a more fluid, less predictable environment.
Classic approaches to business strategy assume a foreseeable future based on reasonable assumptions about developments in markets, technologies, or regulation. In an increasingly uncertain world, this approach falls short. The portfolio-of-initiatives framework, developed in the early 2000s by McKinsey director Lowell Bryan, draws on ideas such as the three horizons of growth and Hugh Courtney’s levels of uncertainty1 and offers a way to develop strategy in a more fluid, less predictable environment. In the article “Just-in-time strategy for a turbulent world,” Bryan compares such a portfolio to a convoy of ships in wartime: their numbers and diversity improve the likelihood of survival for any one of them.
The framework takes into consideration two aspects of initiatives: familiarity and time. Initiatives that allow a company to deploy a larger amount of distinctive knowledge than its competitors have give it the advantage of familiarity and the possibility of reaping superior rewards for a given level of risk. Such initiatives warrant the largest commitment of resources. Next come initiatives that require a company to acquire certain kinds of knowledge. In developing initiatives over time, a company must have enough of them not only to ensure large current returns but also to place bets that could help it grow in the medium and long terms.
