If Your Portfolio Isn’t Executing Strategy What Is It Doing?

by October 3, 2017

One of the most significant areas in which a modern project management office (PMO) will need to make changes in the future is with its project and portfolio management approach. While the list of things that will ultimately need to be done is long, fortunately the place to start is with a few simple shifts in your current thinking:

  1. Move away from the mental model of demand management
  2. Regard all proposals as major investments of the enterprise’s valuable resources (e., it isn’t just about projects anymore)
  3. Begin to practice radical transparency
  4. Use “contribution to strategy” as your mandate and implicit authority

Part of the change that is occurring with the advent of digital business is that, increasingly, an organization’s portfolio of internal investment options is no longer regarded as just demand being placed on IT. It isn’t that demand for IT isn’t important (it’s still one of the most critical execution issues), but at the front end of the portfolio process, contribution to strategy matters more.

Moving up the maturity curve from demand management to practicing true portfolio management isn’t an overnight activity. The first change we recommend is segmenting demand. Strategic investments do NOT belong in the same intake process as low-level service requests. Digital business requires having an intake process, supported by the right tool, that doesn’t treat a multi-million dollar investment proposal with the same level of gravitas as a 40-hour change request. To put it bluntly, the difference between a Level 2 maturity PMO (process driven, tactically focused) and a modern PMO (strategically focused) is the ability to get out of the weeds.

The second change we recommend for moving beyond demand management is to move the portfolio management function into a separate department and retitle it something like investment portfolio office (IPO). Your goal is make sure whatever name you chose reflects the fact that the organization is separate from any day-to-day operational IT concerns.

The beauty of this change is that it doesn’t need to involve anything more than a new org chart. Your staff can do double duty in multiple boxes on the org chart, and you can work on drawing a dotted line between the portfolio office and the CIO if the current IT PMO reports somewhere else in the organization. The goal with this move is to make the case that the portfolio office at least has the inherent right/permission to talk to business leaders directly about their investment proposals without being perceived as having their IT “hat” on.

Once the construct of a portfolio office is in place, the next thing to do is begin to change the language used to refer to the work in the portfolio. We strongly suggest using the term investments. Adopting this terminology will allow for discussions that include products, services, programs and projects all in the same portfolio (an approach product-based companies have been using for years).

The third change is to begin practicing radical transparency, and this is another place where having the right tool to support your organization will be critical. Microsoft Excel® simply wasn’t designed to allow an entire organization to understand what contextual information is known about a particular investment at any point in time during its lifecycle. Level 2 organizations often get off track with their portfolio because the annual budget process for capital is done based on nothing more than a list of proposals that includes title, a sponsor and a request for funding.

To avoid confusion, we recommend that a modern PMO/portfolio office take these budgeted investment ideas and place them onto a roadmap for each business area. With modern tools preparing a roadmap is easy and will provide a future basis for discussion. Radical transparency as a practice requires always finding a way to take data and translate it into information that others can understand. A list of investment requests is simply a list; a roadmap of what an organization would like to accomplish and when is something that has contextual meaning to even a casual observer.

The final change is to begin to use strategy as the source of implicit authority for the portfolio function. What does this mean in practical terms for the modern PMO? It means that you have the right to ask (politely) very pointed questions of some fairly senior managers. For example, “please, Ms. VP of marketing, can you tell me how this particular proposal will increase customer engagement? I know it will because you wouldn’t have proposed it if it weren’t important, but to execute it correctly, we’ve got to know what about this project makes a unique contribution to strategy.”

This conversation can take between 30 minutes and an hour, and you will obviously do it only for the most important (read expensive or risky) proposals. In this short a discussion, you won’t get all the answers you might want, but you should get enough information to begin to understand what each proposal that claims to contribute to the corporate strategy is bringing to the table (its unique contribution). Later on in the portfolio lifecycle—when it becomes clear that not all the proposals supporting, for example, customer engagement are created equal—you will be able to explain, using the evidence you’ve collected in your portfolio tool, exactly why what proposal G seems to offer is not as fully fleshed out as what proposal K offers.

Life in an old-style Level 2 IT PMO was focused on recording and prioritizing demand. Life in a modern PMO is about executing strategy for the greater good of the enterprise through transparent data, and a clear but flexible sequencing of the right investments. So ask yourself, if your portfolio isn’t executing strategy—what is it doing?