Value-Based Management Helps Dow AgroScience Create Sales and Earnings Growth
By Don Creswell, Co-Founder SmartOrg Inc.
In May’s eBroadcast, Frost & Sullivan (F&S) featured SmartOrg customer Ken Edwardsson of Dow AgroSciences who described how his company significantly increased growth and profitability using value-based portfolio management process and tools.
“Dow AgroSciences (DAS) is a great example of a company that has met profitable growth challenges in a touch economic environment” said Frost & Sullivan senior analyst Leo O’Connor as he introduced Edwardsson.
Edwardsson described how his $3.8 billion global company committed to a robust 7% annual growth rate. To meet this challenging goal, the company recognized that project/portfolio management required a better way to manage their project portfolio. He recognized they needed to consider both a strategic view — “choosing the right path by deciding where to spend” — and a tactical focus — “managing how you spend it.”
To accomplish this, the company moved from a home-grown, laborious process that relied on effort-intensive, spreadsheet-based tools to value-based processes enabled by Portfolio Navigator™.
Value-based processes support what Edwardsson terms “long loop” learning and decision-making:
- Tracking the value impact of risk to “manage it down” over time
- Tracking value improvement over time
- Tracking value over time versus “the promise” (forecast)
- Evaluating project productivity (“bang for the buck”) against other investments in the portfolio
Long loop learning has delivered significant benefits to DAS:
- Direct (apple – apple) comparisons between all portfolio investments
- Portfolio and project transparency in real time without added rework
- Marginal R&D investments are easily identified
- Organizational focus is unified on improving investment returns
- Portfolio Navigator™ has become the primary source for project information
- Ensures standardized use of all decision and risk management tools
So, what does all this mean in dollars? As the chart shows, value-based portfolio management helped DAS exceed their ambitious goals compound annual sales and EBIT growth goals.
View the full eBroadcast.
We invite you to find out how your company can benefit from value-based, long loop learning. Contact us at info@smartorg.com or visit www.smartorg.com.
Portfolio Navigator™ transparent business models focus attention on key value drivers and the uncertainties that must be managed to optimize project and portfolio value. The system provides teams and management with the information they need to make better, cheaper, faster decisions.
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