The path to implementing organisational strategy is very often seen as straightforward: you define what the strategic objectives are, then draw a path to that outcome by setting up an implementation plan and wait for the plan to deliver. We (assume that we) have all the information we need upfront, we define a set of activities and management procedures, and then all we have to do to reach our objective is follow the plan. Job done!
In this line of thinking, anything that doesn’t go to plan is caused by a problem with reality, not a problem with the plan! But plans are implemented in the real world, a world full of uncertainty, conflicting priorities, conflicts of interest, personal agendas, organisational politics, emerging needs, crises, constraints of resources and skills, etc.
Implementing organisational strategy is much more difficult to achieve in practice than on paper. Reality is much more complex than we plan for even in the best-composed plans, managed with the best managers and the best of intentions.
Which is where portfolio management comes in.
Portfolio Management is an important performance enabler for both strategy formulation and for the effective execution of its implementation. It facilitates the selection of the optimal mix of organisational investments (e.g. projects and other), the allocation of adequate resources to those investments, and the collection of the relevant information required to support effective decision-making.
Read more about Portfolio Management and the PfM² Methodology here.
The implementation of Portfolio Management helps organisations to:
● Align organisational investments with strategic objectives.
● Build discipline into the evaluation and selection process for new initiatives.
● Prioritise investments on the basis of common criteria rather than subjective perceptions of value.
● Optimise resource allocation based on strategic priorities.
● Align senior management priorities with middle management activities.
● Manage the overall portfolio realisation risk.
● Gather reliable, standardised information that can be used to report portfolio performance and the realisation of benefits to senior management.
The successful implementation of Portfolio Management within an organisation also requires appropriate sponsorship to be in place to promote a shift towards a productive Portfolio Orientation of the Organisation. Two additional factors that need to be taken into consideration are the organisation’s management maturity and culture, which, if misaligned, can pose significant challenges to Portfolio Management implementation.
Portfolios are implemented in environments full of uncertainty, conflicting priorities, conflicts of interest, personal agendas, organisational politics, emerging needs and crises, resources constraints, limmeted skills, etc.
Experience has also shown the following to be Critical Success Factors (CSFs) in the effective implementation of Portfolio Management within an organisation:
- Viewing all work performed as organisational investments.
- Maintaining Senior Management sponsorship and stakeholder engagement.
- Defining an agreed and accepted methodology.
- Achieving the correct balance between processes, people, and tools.
- Avoiding a “big-bang” rollout in favour of a more agile approach (phased release)
- Dealing with organisational politics and aiming for “transforming while performing”.
- Ensuring organisation-wide visibility.
- Establishing a single version of the truth.
- Increasing awareness of project/service management competence and maturity.
- Introducing Portfolio Management practices and benefits in everyday work practices.
Achieving portfolio orientation is an orgsanisational change project.
But keep in mind that, above all, a well-thought-out Business Implementation Plan (#PM2) to manage the necessary organisational change needs to be in place as the challenges of implementing portfolio management within an organisation are mostly related to the organisational changes required rather than the definition of portfolio procedures or the acquisition of a portfolio management information system (PfMIS).
See also:
- The PfM² Portfolio Management Guidelines (LinkedIn Post)
- An Overview of the PfM² Portfolio Management Methodology (LinkedIn Article)
- The Portfolio Orientated Mindset (LinkedIn Article)
- Original Article (LinkedIn Article)
