Companies need two portfolios running at once: an Exploit portfolio that squeezes returns from existing businesses, and an Explore portfolio that tests new ideas with small bets. The map helps you decide which projects to scale, pivot, or kill based on evidence, not intuition.
Chapters
Everything starts with an idea. Even the largest companies were once startups searching for a business model. When startups find their model, they scale and transform it into a mature company. They shift from an entrepreneurial mindset to a managerial mindset. We call these two fundamentally different worlds. Explore and Exploit. Companies must manage both at the same time a portfolio of existing businesses and a portfolio of new opportunities. The exploit portfolio helps you manage what you have by looking at the return on the one hand, and the death and disruption risk on the other. Here you scale emerging business models, renovate declining ones, or make successful ones more resilient. You bolster your exploit portfolio with the following portfolio Bring in outside business models through acquisitions, mergers, partnerships, or investments. Improve existing business models, shifting them from outdated to superior models. Remove business models that don't fit your strategy, through divestitures or by dismantling them altogether. Yet managing what you have is not enough in times of disruption, even the best business models expire like a yogurt in the fridge. Avoid obsolescence and proactively develop an Explore portfolio of both. Bold initiatives. Your search for growth engines requires two main Increase the expected return by designing better business models. Reduce the innovation risk through rigorous testing. Adapt ideas based on evidence from the field until a value proposition and business model emerge. You manage your explore portfolio with the following portfolio. Ideate and test your own business model and value proposition ideas or invest in outside ventures or do both. Once you start testing ideas with experiments, the evidence will suggest the path. Persevere and gather stronger evidence. Pivot and adapt the idea a little or a lot. Retire it entirely because the evidence indicates it won't work to scale a tested and de risked idea, transfer it to your exploit portfolio or spin it out if it doesn't fit your strategy. When in exploration, know that you can't pick the winner early on. Good and bad ideas are indistinguishable. The only way to truly identify the winners is by investing small amounts of money in a large number of projects. Retire ideas that can't produce evidence, and invest in those showing traction. Want a larger return? You'll need more projects in your innovation funnel. Use the portfolio map to visualize, analyze, and manage your portfolio of existing and new businesses. Design a resilient portfolio, protect your organization from disruption, and build an invincible company.
