June 13th, 2011
If you have any experience with investing, you know about rebalancing your portfolio. Every so often—at the end of every year, say—you need to reassess your investments. Some may have grown, such that you’re too heavily invested in a particular stock or sector in the economy. In other areas, you may find that you have less invested than you would like, given the prospects for another higher-potential sector.
Why do we need to do this? Because the world changes, and the asset mix may no longer meet our needs. I may feel that the economy is risky, and I’d rather be more invested in safer things like bonds than stocks.
In addition to the ebb and flow of securities prices, my needs may also change. I may need to take out money for my child’s education, or for other unexpected expenses. I may feel that I’d rather have more insurance.
The knowledge portfolio
It’s much the same way for organizational information and research assets. They are financial investments—not costs—and each one brings to the organization a return in the form of optimized decisions and business results. I find it helpful to think of all the research, information, and intelligence in an organization as its ‘knowledge portfolio’, with each research initiative, report, and staff position representing a specific asset in that portfolio.
There are knowledge investments, and there are returns on those investments (ROI). The investments are the costs of doing research, including both internal and external resources like consultants and databases. The returns are the value increments received for the organization and its business units—’better decisions’ that ultimately lead to better business results—for example: new customers; new sales from existing customers; reduced costs; and advantages relative to competitors.
The need to rebalance
As with other investments, when the world changes, our knowledge portfolio needs to change to adapt to the new environment. When resources are finite—as they always are—this means reducing lower-return activities, and increasing higher-return activities.
For example, in times of rapid industry change, we might find that shorter-horizon research is needed to capture those changes. For example, instead of a large annual survey, we might move to four smaller quarterly surveys.
We might also find that the questions we ask must change more rapidly in order for research to maximize its relevance. Qualitative research like interviews and focus groups might take on relatively more importance than large-scale quantitative surveys.
In short, the old ways of doing research might no longer be as effective as they once were.
TKA’s solution—a word from our sponsor
TKA Consulting helps you rebalance your portfolio of research assets. Our program has two fundamental elements, CONTENT restructuring and PROCESS restructuring. Content means determining what is important—industry drivers, significant trends, and likely future scenarios. Process means making sure the ‘dots are connected’—that research is conducted in a way that optimizes its efficiency, effectiveness, and value for decision-making.
The result is that you achieve a tighter integration between your changing business environment, the competitive strategies you need to address these changes, and the knowledge portfolio you require to support those strategies. We completely overhaul research programs to reflect the competitive realities our clients face today—and the challenges they will face tomorrow.
Knowledge portfolio rebalancing is typically cost-neutral. By shifting budgets away from lower-return activities, budgets can be reallocated to higher return activities—with no net gain in overall research budget.
There can even be a decrease. In our most recent implementation, we identified savings totaling three times our fees during the first year alone by eliminating redundancies and overlaps.
Thanks to Reuben Danzing for his comments.