Deserves is the word that causes the trouble. In most funding conversations it means the line that performed best last year, or the line whose owner argued hardest, or the line everyone would feel bad about neglecting. None of those is a reason to put the next dollar somewhere.
These are field notes from making that call in a few different businesses, and from watching it made badly in more. The criteria below are the ones I keep coming back to, and the order matters: a line has to clear the first before the others are worth asking. The verdict vocabulary behind them, fund, harvest, and exit, is set out in the guide to product portfolio strategy for manufacturers.
What deserves has to mean
A line deserves investment when money put into it buys a stronger position than the same money put anywhere else you could put it. That is the entire definition, and the comparison is the part people skip.
It also means the unit of the decision is a line in a segment. Most industrial lines sell into several segments at once and hold a different position in each, so one verdict for the whole line averages a strong position and a weak one into a number describing neither.
Funding decisions are almost always discussed one line at a time. A proposal arrives, it has a return calculation attached, the calculation clears the hurdle, and it gets approved. Nothing in that process asks what else the money could have done, which means a portfolio can be full of individually justified investments that add up to no position anywhere.
Get the comparison back by putting every candidate in one room at one time, ranked against each other rather than against a hurdle rate. A proposal that clears the hurdle and comes fourth out of four still does not get funded, and that is the difference between a portfolio and a queue.
The method I use for this is the Right-to-Win Matrix, which arranges product lines against the segments they serve and asks what advantage a customer in each cell could name. Investment decisions are made on the cells, not the lines, and the question at every cell is comparative: does a dollar here buy more than a dollar in the cell next to it.
I dig into governing bets versus cash machines in my podcast episode Alphabet Wasn’t About Diverse Businesses.
The four criteria, in order
Four tests, applied to a line in a segment rather than to a line as a whole. A cell has to pass all four, and the first one is a gate rather than a score.
What follows is the order I apply them in, with the reasoning for the sequence. The first is a gate because it is free to run and disqualifies the most candidates. The last is a gate because it is the one that determines whether anything actually happens.
- Name the advantage. Ask customers in that segment why they buy from you, and write down their words. If they cannot name an advantage, the cell fails here and nothing else is worth measuring.
- Check the room. Confirm the segment is growing, or that your share within it is small enough that growth is available without a price war.
- Test whether the money widens the advantage. Take the specific investment on the table and ask what it does to the reason customers gave you in step one.
- Confirm you can staff it. Name the engineers, the salespeople, and the capacity by person and by machine, not by budget line.
Notice that only one of the four is financial, and it is not a return calculation. That is deliberate. Return calculations are most reliable for the investments closest to what you already do, which means a process built around them will reliably fund incremental work and reliably starve anything that would change your position.
Run them in that order and most portfolios sort themselves quickly. The arguments concentrate on a handful of cells, which is where the attention belongs.
Criterion one: an advantage a customer can name
This is the gate because everything else is downstream of it. A cell where customers cannot say why they buy from you is a cell where you are competing on price and availability, and money spent there buys volume that the next supplier can take back with a quote.
The reason this works is that a named advantage is the only durable evidence that you occupy a position. Everything else in a funding case is your own view of the business: your cost estimate, your forecast, your assessment of the competition. A customer sentence is the one input that comes from outside the building.
The test is literal. Ask customers in that segment, in their words, why they chose you. Not why you think they chose you, and not what your marketing says. If the answer needs your explanation to make sense, it is not an advantage, and if the only answers you get are about price and lead time, you have learned something important about that cell.
Expect some discomfort in how the answers come back. Customers frequently name an advantage you were not investing in, and occasionally one you were planning to cut. That is worth more than confirmation, because it tells you where the money is currently going that no customer would notice if it stopped.
The most useful thing about this criterion is how quickly it disposes of the cells everyone already suspected. In most portfolios there are two or three cells where nobody can produce a customer sentence, and those cells have usually been receiving investment for years on the strength of being familiar.
Criterion two: room to grow
An advantage in a segment with no room produces a strong position and no growth. That is a fine thing to hold and a poor thing to fund, and the distinction is worth being precise about before money moves.
The distinction matters most for the cells everyone is proudest of. A dominant position in a mature segment is often the best thing a business owns, and it is also where additional money has the least to do. Protecting it properly, with quality, delivery, and price discipline, is not the same activity as funding it, and conflating the two is how growth money ends up defending the past.
Room comes in two forms. Either the segment itself is growing, or your share of it is small enough that you can take more without triggering the kind of price response that erases the gain. A cell where you already hold most of a flat segment has neither, and the honest verdict for it is usually to protect it rather than to invest in it.
Be careful with a fast-growing segment where you hold no advantage. Growth attracts entrants, and it can hide a deteriorating position for years, because your revenue rises while your share falls. Room without an advantage is an invitation to spend.
You do not need a market share study for this. In most niche industrial segments, a reliable share figure does not exist, and the estimate that gets substituted is produced by the person whose line is being scored. Your own sales trend in that segment plus what your salespeople hear about who else is quoting will get you close enough to answer the question.
An advantage in a segment with no room produces a strong position and no growth. Fine to hold. Poor to fund.
Criterion three: the money has to widen the advantage
This is the criterion that disqualifies the most proposals, because a great deal of what gets funded as growth is maintenance wearing better clothes. Capacity that keeps up with existing demand, variants that match a competitor’s catalog, and system upgrades that keep the lights on are all necessary and none of them widens anything.
The distinction is not about how large the investment is. A modest change that makes the thing customers already value more true of you widens the advantage. A large program that leaves that sentence exactly as it was does not, however impressive the capacity it adds or the technology it uses.
Take the customer sentence from criterion one and hold the proposal against it. If customers buy because your delivery is reliable when nobody else’s is, then investment that shortens lead time further widens the advantage and investment that adds product variety does not. If they buy because the product survives conditions that kill the alternatives, the reverse is true.
The useful discipline here is to make the proposal state the mechanism in one sentence: because we do this, customers will be able to say that. Proposals that cannot complete that sentence without a paragraph of context are usually maintenance, and the exercise of writing it exposes that faster than any review.
Funding is also not always a product. At Illinois Tool Works I grew a US equipment business from $42 million to $67 million without launching a single new product, by changing how it was sold: customers moved from buying a machine when the old one broke to having their whole fleet managed. The advantage customers could name was the relationship, and that is what the money went into widening.
Criterion four: you can actually staff it
Name the people. Not the headcount, the people, by name, and the machine hours by machine. A funding verdict that cannot survive that question is a budget allocation rather than an investment, and the work will quietly not happen.
Staffing is also the criterion most often satisfied on paper by people who are already fully committed. Naming an engineer who is currently assigned to three other things is not staffing, it is a queue. If the answer to who does this work is somebody who is already busy, the real answer is that something else has to stop, and that decision belongs in the same meeting rather than the following one.
Engineering capacity is where this criterion usually bites. In most industrial businesses money is not the binding constraint; engineering hours are, and they are allocated informally to whoever has the most urgent customer that month. If your funded cell needs four engineers and the engineering queue is already committed to a line you just marked for harvest, you have not funded anything yet.
Run this check before the verdict is announced rather than after. A funding decision that is reversed two months later because the people were never available costs more credibility than a slower decision would have, and it teaches the organization that the review does not mean much.
The same applies to the constraint on the floor. A funded line that needs bottleneck hours is competing with everything else that runs there, and if nobody reassigns those hours, the schedule will keep making what it made last month.
Why current profit is not on the list
Profit today tells you which cells earned, which is a record of past position rather than a prediction of future position. Cells earn well for reasons that are about to expire all the time: a competitor who exited, a customer who has not shopped in years, a price that has not been tested.
The reverse error is just as costly and less discussed. A cell can be earning poorly right now while holding a genuine advantage, because a price was set badly, a large customer is in a downturn, or last year absorbed a one-time cost. Scoring it on profit alone marks it for harvest, and harvesting a cell with a real advantage is how businesses give away positions they spent a decade building.
A profitable cell with no named advantage is a harvest cell. Keep serving it well, stop investing in it, and let its cash fund the cells that can win. That feels wrong to most operators, which is exactly why the criteria have to be written down before the meeting rather than argued inside it.
There is a further reason to keep profit off the list. Cell-level profit depends on your cost allocation, and most allocations spread overhead by volume or labor hours, which flatters complex low-volume cells. Building funding criteria on the least reliable number in the grid is a poor trade.
The mirror case is a cell earning little that passes all four criteria, usually because nobody has invested in it for years. Low attention and low potential look identical on a report, and the only way to tell them apart is a bounded investment with a date and a defined result.
Scoring the lines against the criteria
Do it as a single pass over the whole grid, not as a series of proposals arriving one at a time through the year. The comparison is the point, and a proposal considered alone has nothing to be compared against.
Give the pass itself a standard. Criterion one is passed by a customer sentence written down, with the customer named and the conversation dated, not by an assertion from the person whose line is being scored.
Mark every cell pass or fail on criterion one first and set the failures aside. For the survivors, record whether the segment has room, what the proposed money would do to the advantage, and who would do the work. Then rank what is left by how much the advantage widens per unit of the scarce resource, which is usually engineering hours rather than dollars.
Keep the scoring visible. Publishing the grid with the criteria applied changes what the argument is about: instead of whose line matters more, the discussion becomes whether a particular customer sentence is real or whether a segment has room. Those are checkable disagreements, and checkable disagreements end.
Do the pass in one sitting, with every candidate present. Spreading it over several meetings reintroduces exactly the problem the exercise exists to solve, because each proposal is once again judged on its own.
Expect the ranking to disagree with the current allocation, often sharply. If it agrees completely, either the portfolio has been managed well or the criteria were applied to justify what was already happening, and it is worth knowing which.
The growth cell and the cash cell
The hardest version of this decision is a growth cell that passes all four criteria sitting next to a cash cell that funds the business today. The answer is not to split the money evenly, which is the instinct, because even splitting protects neither.
Get the sequencing right as well. The floor is funded first, the growth cells take what is above it, and the residual goes back to the growth cells rather than being distributed to whoever asks late in the year. Most portfolios do this in reverse, funding the ambitious items first and letting maintenance absorb whatever is left, which is how a cash cell decays while everyone believes it is being looked after.
The cash cell needs enough to keep quality, delivery, and cost where they are, and nothing beyond that. Underfund it and it decays faster than any plan allows, taking the cash with it. Overfund it and you have spent growth money defending a position that no investment was going to widen.
Be honest about what that floor includes. Maintaining a cash cell usually means cost work, compliance, and enough responsiveness to keep the customers you have, and it rarely means new variants. A cash cell that keeps receiving new product development is being funded as a growth cell by people who have not said so.
Write down what maintaining the cash cell actually costs, as a number, and treat it as the floor rather than a negotiable share. Everything above that floor goes to the cells that passed the criteria. Done explicitly, this is a decision. Done by splitting the difference, it is an outcome nobody chose.
Even splitting between a growth cell and a cash cell protects neither. Fund the floor, then concentrate what is left.
How much should a funded cell get?
Enough to produce a result you can judge. Funding below that level buys a partial effort, an inconclusive outcome, and an argument next year about whether the idea was wrong or the money was short.
This is where an ordinary budget process does the most damage, because it asks each cell what it could use rather than what it needs to produce a result. A cell asked what it could use will always find a use for whatever is offered, and the answer tells you nothing about whether the amount is enough to change anything.
Work backwards from the evidence you want. What would have to be true in eighteen months for you to say the advantage widened, and what does it cost to get there? That number is the minimum, and if the portfolio cannot cover it for every cell that passed, fund fewer cells rather than shaving each one.
There is a staged version that keeps the concentration without betting everything at once. Fund to the first point where you would learn something real, make the next tranche conditional on what that shows, and say so when the money is granted. Each stage is fully funded for what it has to accomplish, which is the opposite of spreading, and what remains conditional is whether there is another stage.
Concentration is uncomfortable because it means telling cells that passed the criteria that they are not getting money this year. That conversation is easier when the ranking is visible and the reason is arithmetic rather than preference.
When to stop funding a cell you funded
Set the stopping condition when you set the funding, in writing, with a date. Investments almost never get cancelled because nobody ever defined what failure would look like, and a project with no failure condition runs until something else kills it.
Set the checkpoints on a human timescale even when the payoff is not. Something should be observable at six months and at a year: a customer agreeing to trial, a process holding a defined capability, a quote won that you would previously have lost. Those let you hold a direction for the years it needs without spending them blind.
The condition should be about the advantage, not about the spending. A funded cell where customers describe your advantage more strongly than they did a year ago is working, whatever the revenue has done. A cell where the customer sentence has not changed after two years of investment is not working, whatever the revenue has done.
Write the condition so that meeting it is as clear as missing it. A funded cell that achieves what you named deserves a decision about what comes next just as much as one that fails, and portfolios lose as much money to successful projects that were never concluded as to unsuccessful ones that were never stopped.
Put the condition in the same document as the funding, seen by the same people. A stopping rule kept only by the person who wrote it is not a rule, and it will lose to whoever is most committed to the project when the moment comes.
When the condition is met, stop and reallocate to the next cell in the ranking. The whole apparatus only pays if money actually moves when the evidence says it should.
Questions that come up every time
What if no cell passes all four? Then the honest answer is that you have no investable position right now, and the money is better spent fixing the business than funding a line. That is an uncomfortable finding and a useful one, and it usually points at pricing or cost rather than at products.
Does a new product line get judged this way? Not on criterion one, since it has no customers yet. It gets a defined ramp period with a result that counts as success, and it faces the full criteria when that period expires. Without the date, new lines are protected forever by the argument that it is too early to tell.
How does this square with cutting SKUs? They are the same decision at two altitudes. This one decides which cells get resources; the SKU work decides the shape of each line inside them, and the method for that is in how to cut a product line without losing revenue.
A funded cell where customers describe your advantage more strongly than last year is working, whatever the revenue has done.
Can a cell pass every criterion and still not get funded? Yes, and saying so plainly is what makes the process credible. If three cells pass and you can only fund one properly, the other two are told they came second and third, with the ranking visible and the condition under which that changes.
What to do Monday morning: pick your largest product line, call three customers in one segment, and ask them why they buy from you rather than from anyone else. If you cannot get a clean answer, that cell is not a funding candidate this year.
About the Stagnation Assassin
Todd Hagopian is a Fortune 500 transformation executive who has generated $3B in shareholder value across Berkshire Hathaway, Illinois Tool Works, Whirlpool, and JBT Marel, where he serves as Global VP of Product Strategy and Marketing. Known as The Stagnation Assassin, he is the author of two published books: The Unfair Advantage: Weaponizing the Hypomanic Toolbox and Stagnation Assassin: The Anti-Consultant Manifesto. His blog is published in 15+ languages and read by operators worldwide. Bring him to your stage via his speaking page or connect with him on LinkedIn.
The four criteria work best applied live, to a real grid, with the people who will have to give something up in the room. Bring the session to your leadership offsite or association program through the speaking page.