We want to share our perspectives with you.  Click here to read our thinking on benefits realisation, a key consideration in any successful project.

This week's focus is on portfolio management and how to ensure that your vision is translated into reality - with a few key questions that have to be asked first.

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Bringing Portfolio Management to Life

As a concept, it is relatively straightforward: portfolio management can help organisations select, mix and balance the right projects and investments, keep track of how these are delivering, and ‘nudge the tiller’ at the right times to keep the portfolio balanced and delivering the right outcomes.

In our experience, however, there are several key areas in which organisations typically stumble when implementing portfolio management. We set out a few suggestions for what these are, how they appear, and what can be done about it.

1. Introspection then Extroversion

A portfolio management capability invariably asks some fundamental – and hence difficult – questions about an organisation:

  • What is it that we want to do?
  • What is it that we actually do?
  • How much of that do we want to do?
  • What is it that we don’t want to do?
  • Why are we doing that rather than this?
  • Where exactly do we want to get to?
  • How do we know that we are succeeding?
  • How can we best articulate all this? Do we need to put that in numbers!? How do we agree those?

The good news is that not all of these questions have to be answered before an effective portfolio management solution can be put in place. A huge focus of the implementation is the (sometimes) cathartic process of drawing out the answers – or at least finding out what you don’t know now, but need to answer later.

Whilst it is a common fallacy of portfolio management to believe that organisations have to have a clearly developed strategy, at minimum they need to have an idea about what it is that they want to do – even if this is at a tactical or business unit rather than genuinely strategic or enterprise level. Regardless, the more of these questions you can answer, the clearer the functional requirements for the portfolio management solution, the greater sensitivity it can have, and hence the more specific an impact it can have in selecting and supporting delivery of your tailored outcomes.

Even organisations that have clearly-articulated strategies often find it difficult to analyse the relative importance of particular strategic objectives, or clearly understand the dependencies between them.

So what can be done?

First of all, don’t worry that you don’t know all the answers. Done well, introducing portfolio management into an organisation can bring out and work with what you do know, at the level of specificity and certainty with which you feel comfortable.

Nonetheless, there is no short-cut to answering some of these questions. Reaching useful conclusions will require quality thinking time from Senior Management, and sensitive facilitation of this process. Start with what you know (what is it that we want to do?), adopt a structured approach to answering the other questions and, dare we say it, enjoy this philosophical, and usually brand-new experience.

2. Be as well as Do

Portfolio management is 80% about changing minds, approaches and behaviours and 20% about robust process and insightful data. The approach cannot work without a large number of people contributing in a structured and transparent way, with a clear view and acceptance of the overarching objective.

This ‘softer’ side of portfolio management is frequently overlooked, but if you can be clear about what portfolio management means, help people understand why it’s important and ultimately what it can do for them, the more difficult ‘technical’ elements of process design, prioritisation and balancing approaches will, with focus and collective organisational support, look after themselves.

So what can be done? 

Fortunately, portfolio management is a ‘good news’ story for most people in an organisation. It is also very hard to disagree with. More clarity; knowing we’re doing something for the right reasons; ability to see the wood and the trees? Yes please.

Two cautionary points though. Firstly, like any change, there are people who will lose out. Who stands at the fulcrum of the organisation’s information flows? Who do people turn to when they want to know what’s going on? Whose diary is filled with information-poor petitioners? That person’s formerly uniquely privileged view of the world will shortly be shared with everyone: a tough change that may well be resisted. To further complicate things, how can anyone resist the ‘CEO’s pet’ that is portfolio management? Plan for some unpredictable behaviour.

3. Bad is Good

The first glimpse of an organisation’s actual portfolio of activity can result in some big ugly questions: why on earth are we doing that, when no-one’s doing this?

Identifying these lurking beasts is a result: putting a stop to them a win. Openness during this process is key: don’t shy away from recognising, questioning and challenging these investments. This is counter-intuitive for a number of organisations, where staff are encouraged to take on and deliver initiatives, come what may. Having these challenged and, potentially, stopped, can take some adaptation – but this should be encouraged.

So what can be done?

The business case for effective portfolio management rests largely on reducing ineffective spending, and increasing strategically-aligned investment. Without ruthlessly identifying and questioning non-aligned spending, the business case cannot be achieved. In our experience, re-phrasing the problem to the portfolio management team, encouraging and rewarding the questioning of investments, is essential. Measure the operating and capital expenditure improvements, and continue to challenge the organisation to justify why it requires financial and human resource to deliver initiatives.