Portfolio Management – A Simple Process?

Portfolio management – a simple process?

Perhaps you’re shaking your head at that but what if we said that intrinsically those portfolio management processes are simple – it’s just when people get involved that it becomes complicated.

In this session we were joined by Lucy Loh, a consultant focused on organisation diagnosis, design and development, business architecture, strategy development, and organisational change using systems approaches. She’s also co-author on a book on a systemic approach to business strategy – Patterns of Strategy (we like this one!) 

In this session, we looked at the 13 different ways that the portfolio management process gets derailed – what the PMO crew thought about that and how to deal with them

 

The Session

The Deck

The deck used in the session can be downloaded

What We Learnt

Good portfolio management needs:

  • Clarity on the required performance improvement – we need to be more precise about performance improvement – for too long it’s been too vague.
  • Standard information for existing and candidate investments (benefit-cost-risk) – business cases need to be clear, and comparable between each other
  • Objective process to (de) select investments and allocate resource – how do we choose which projects – and deselect projects when they’re no longer delivering performance improvement or value.
  • Monitoring of actual vs expected performance improvement – are you getting the improvements expected
  • Rapid review and reprioritisation in response to change in strategic situation – is there a way to pause and intervene when things change

So the diagram to the right is the portfolio management process.

The defining what you want – should be the simple part of the process. Of the investments we’ve selected  – will they deliver the performance we want? If yes – resources can be allocated and work commences. Every so often you’ll check in to see if the investments are still giving us the performance we want – which might lead to a redefinition or change to what was originally required. Simple!

The tricky part is when we put the people on top and across of all of that.

The Thirteen Tricky Things

1. Senior executives dishing out the money when the right opportunity arises

2. A bunfight amongst people – pet projects and who shouts the loudest gets the money and resources

3. Buzzword business cases – if you pad out the business case with buzzwords it’ll get the attention – magpies with shiny things!

4. Overstating benefits and understate the costs and risks

5. An existing project that has been struggling – give it a revamp, new project manager and a change in scope – but it doesn’t work.

6. A business case doesn’t get updated to match the changing world – the originally stated benefits will not be delivered anymore.

7. Projects kick off with fanfare – but not done the true baseline, without tinkering – we only then have a ‘feeling’ that a project might be successful.

8. People are not going to be there in the future when the project will be delivered – no skin in the game – long term projects.

9. A rock-solid business case that should go ahead – but you’ve just missed the budget cycle so the project can’t be started. The financial / budget cycle, normally annually, should be more frequent.

10. A do-do – not killing the failing project. You have to be so confident in your information to do this – your portfolio management process is definitely working if you can do this

11. You keep adding stuff into the business case to hit as many strategic categories as possible.

12. When push comes to shove – we tend to focus on the things that hurt us now and not think about investments for the future. A balance is needed.

13. Not revisiting the initial part of the process where defining what is needed is looked at again and seeing if they are still relevant.

 

People are derailing the portfolio management process and for some of these you might totally recognise them.

What the PMO Flashmobbers Shared

There was a lot of sharing going on in the session – some you’ll see in the video itself. In the chat there were a few streams of thought.

Best buzz word business case for me – ‘digitial transformation’.

Overstating benefits and understate the costs and risks – have been some of my worst projects….once sold to the CEO, cannot kill it anymore.

Killing a project is easy, if you ignore the sunk costs.

Opportunity cost / options to accelerate other ‘winners’ saves cash on a lingering death of a project.

And a crisis (like the pandemic) helps organisations focus on killing zombie projects.

One of the activities that get left behind is the validation of benefit assumptions so projects keep going without an acid test of just how realistic/realisable the benefits actually are.

Often the assumptions are so “assumed” that no one wants to kick them to see if they’re valid!

Lean Startup type activities place more priority on proving there’s value/benefit to be had before you go chasing after it.

The boldness to step away from traditional measurement is a big risk for many which also tends to lock in the old behaviours. If you also take a ‘capital value process’ approach in conjunction with incremental funding based on a business case with increasing certainty and increasing knowledge/understanding – then you have a mechanism to both accelerate a project that demonstrates an improving business case as well as kill those with diminishing ones.

 

Poll of the Week

We asked the question, which of these are you the strongest at:

  • Dealing with Politics
  • Negotiation
  • Managing Conflict
  • None of the Above

The question was asked because we think the three skill areas really do underpin the ability to deal with people on projects and of course the thirteen tricky areas we covered in the session.

The highest polled was Conflict Management

Asking an open question can pull the legs out of conflict and turn folks towards searching for a solution

Sometimes you need conflict in order to get a decision made – otherwise if not handled then it can cause stagnation

I’ve had a couple of interviews this week and that has been their main focus – conflict/influencing/politics

 

There were loads of book recommendations during this session – and throughout all our meetups really. We’ve started to collect them, one day we might even sort them 🙂

PMO Loves Books

About Lindsay Scott

Lindsay is the founder of PMO Flashmob and a Director at PMO Learning - the sister company to PMO Flashmob and the best training company for PMO people in the world! She's also the creator of London's first dedicated PMO Conference; Director of Arras People and PMO enthusiast. Loves dogs and gin.

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