Investment is about allocating different investment instruments into a portfolio in such a way that this portfolio is aligned with your personal profile. Banks and financial advisors could help you achieving this alignment by offering a certain modelportfolio. This is a sort of benchmark that corresponds to a certain (risk-return) profile. By a series of questions, you can find out about your investment profile and having done that you can select the appropriate model portfolio.
Another question the financial advisor will ask you is the purpose (or long term goal) of your investments. Your goal and your investment profile together serve as a personal investment strategy. The model(portfolio) serves as a benchmark; if your portfolio grows, the distributions of the different assets will change. You are then to take (operational) actions in order to re-establish the alignment of the portfolio with you profile.
If you translate this to business management, you will end up with a performance management approach.
First you need to find out your business goal, which we could say is growth (growth of the business portfolio). This can also be a departmental figure. Than you need of profile of your business. This profile could be compared with the investment profile. Although not exactly the same, the business profile is also about risk-and-return characteristics. One company is different than the other. Risk-and-return is part of this; imagine that a cyclical (trading) company is much more prone to (business) risk than a normal producer.
Companies need a strategy in order to achieve future growth. This strategy could be the same as the current business profile, but normally it is not; not seldom, strategy implies new business development and growth but not necessarily in the same direction that is indicated by the current profile.
Performance management is a next step. Performance management is about measuring where you stand in the process of achieving the strategy. Or put differently using the investment jargon; how does your strategic profile match with the profile of your current organization? Aligning these is you objective in achieving the business strategy.
2006 Hans Bool