It’s important for the management to identify and evaluate investments in a way that solves problems with priority, and achieve strategic goals continually.
Put the framework in place to map the strategic objectives into key performance indicators, and then, determine what investments will accelerate the changes you want to see in your key performance indicators, and how to make continuous improvement.
Investment transparency: Venture investment is a complex business activity. The investment management needs to ensure that they are investing in the right business initiatives to improve business growth. Setup idea forums to engage the business and build business liaisons proactively to help shape the problem or opportunity. Analyze total cost, total value, and total impact. The logical investment scenario helps an organization assess whether the business improvement is the right investment to be done in the first place, and ensure the expected return on investment.
From an investment perspective, there is a concept of the “golden thread” that can link the business strategy to investment goals or business benefit. It’s about spending the money right, and getting the right results. You should not spend to meet a quota, nor should you avoid spending to stay within a quota. You should spend to make a return.
Investment portfolio: The potential portfolio investment needs to streamline the strategic objective alignment and accelerate future growth of the business. Make sure the # and financial investment of the initiatives are aligned with at least one strategic objective over the total portfolio, provide visibility of the projects that are supporting the company's strategic objectives and assess opportunities to realign resources and investments as appropriate. Besides financial results, it’s also important to evaluate the overall business value of a portfolio from investment perspectives, such as quality, performance, customer satisfaction, and the varying matters that stakeholders consider important to them.
To survive and thrive for the long-term perspective, investment management should involve more planning, more compromise on budget expenditures, and changing outlooks on profit margins as a result. They must invest in and leverage appropriate technologies and solutions to generate valuable insights to help businesses open up new channels of revenue and monetization within the enterprise, the industry, and their ecosystem. In order to maximize ROI, businesses have to build a balanced portfolio, to consume resources efficiently; calculate financial & performance indicators wisely.
Return on investment: Return on Investment tells the business management how well organizational investment repays the company. Each portfolio has goals and metrics unique to that portfolio. Businesses need to make investments and improve return on investment by articulating what the pros and cons of each investment option are for today and the proposed tomorrow. S.M.A.R.T (Specific, Measurable, Attainable, Relevant, and Timely) goals play an important role in assessing the effectiveness of problem-solving as well as quality of problem-solving, effectiveness & efficiency, substantiate return on investment, and get increasingly more attention with organizations that have poor visibility and control over their project portfolio. Enhance the overall economic value of the portfolio in order to get the optimal return on investment.
Even if you have a well-defined set of measurements, it doesn't guarantee you could measure them right. Too-optimistic cost projections perhaps seed doubts about an initiative in others’ minds. It is insufficient to simply communicate an initiative’s promised benefits, because these benefits must be delivered, bringing together people who would not typically have the opportunity to communicate in the day-to-day operations. S.M.A.R.T goals work better as a post evaluation tool. Goals are the key, but what makes them effective is how they are implemented.
Building a solid portfolio management to enable strategy execution is difficult, the value-based investment management needs to be driven by concepts like collaborative value or collective advantage, evaluating individual and aggregate investments. It’s important for the management to identify and evaluate investments in a way that solves problems with priority, and achieve strategic goals continually.
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