Portfolio Rationalization Is an Operating System Problem

We already established in ‘The Portfolio Nobody Designed’ that filling a garage happens almost without noticing. Cleaning the garage is different.

It doesn’t begin by throwing things away. It begins by pulling everything out. Years of accumulated decisions suddenly occupy the same space, demanding your attention all at once. Every box asks the same question: Should I still be here?

Product portfolios behave the same way.

Organizations often describe portfolio rationalization as expensive, disruptive, or politically difficult. It rarely feels that way at first. I’ve seen this happen firsthand. What starts as a conversation about one product quickly becomes a conversation about the organization that grew around it. Sales points to customers who still rely on it. Support identifies active cases. Engineering uncovers dependencies that haven’t been revisited in years. Finance highlights recurring revenue. Legal raises contractual obligations. Product remembers the roadmap commitments that were built around it. What started as a straightforward product decision gradually becomes an organizational one.

It’s easy to assume that all of this complexity was created during the rationalization effort. It wasn’t. The work had been accumulating for years. Every addition distributed a small amount of future work across time. Every decision that was easy to make became another decision that would eventually need to be reconsidered. Rationalization is simply the moment those deferred decisions arrive together.

Accumulation distributes costs across time. Rationalization concentrates them into a single decision.

It’s tempting to conclude that organizations simply need to become better at portfolio rationalization. And many probably do. In my experience, though, the organizations I’ve worked with rarely struggled because they lacked capable people. They struggled because their operating model rewarded accumulation far more consistently than it rewarded simplification. That’s treating the symptom rather than the cause. If rationalization consistently becomes painful, the more interesting question isn’t why cleaning the garage is difficult. It’s why the garage keeps reaching that point in the first place.

More importantly, once the garage is finally clean, how long will it stay that way?

Healthy portfolios aren’t created through periodic cleanup efforts. They’re created by operating systems that prevent unchecked accumulation. Funding models determine how easily products continue. Governance determines when they’re reviewed. Planning cadences determine whether continuation is questioned. Ownership determines who is responsible for retirement. Incentives determine whether teams are rewarded for simplification or only for addition.

Organizations don’t struggle with rationalization because they’re bad at making difficult decisions. They struggle because years of individually reasonable decisions eventually have to be reconsidered together. The answer isn’t to become exceptionally good at cleaning the garage every few years. It’s to build operating systems that never allow the garage to become unmanageable in the first place—or again after the cleanup.