Recovery or no recovery, if you don’t choose the right projects and bring them to fruition, your organization will suffer. Here are some strategic project portfolio management strategies that will help you improve productivity at your organization and outperform your competition in the process.
In an age of scarce customers and scarcer resources, performance is everything. Organizations must have the right strategy, supported by the right projects, brought to fruition through the right processes. Take one wrong step and you’ll be choking on your competitors’ dust. Yes, it’s a lot of pressure. And if you’re counting on a steadily-creeping-upward economy to let you off the hook, think again: The same performance issues that plague you in the recession will plague you just as mercilessly in the recovery.
If yours is like many companies, your current struggles may very well boil down to a dearth of effective strategies for project and portfolio management. And by simply closing this gap, you can become more productive right now—when you need it most.
Project and portfolio management can be a challenge for many organizations. That’s why it’s important to remember that at its core it’s all about capturing ideas, aligning them with the strategic goals of the organization, and putting them into action.
Yes, technology and theory in both arenas are constantly evolving, so things can get tricky. But in my new book, Strategic Project Portfolio Management: Enabling a Productive Organization (Wiley, 2009, ISBN: 978-0-470-48195-0, $45.00) I help close the gap between the theory of project and portfolio management and the technologies that actually help organizations hardwire these practices.
Here’s the real problem: If this gap isn’t closed and you don’t create an effective strategic project portfolio process, you’ll miss vital opportunities. That, of course, is a death knell in an unforgiving economy.
In most organizations, there is no shortage of ideas. And ideas, when implemented effectively, lead to opportunities. But except in the few cases where a handful of employees are sufficiently entrepreneurial to drive their own ideas through to implementation, those ideas go to waste.
The truth is, organizations are effective at focusing employees on their daily tasks, roles, and responsibilities. However, they are far less effective at capturing the other output of that process: ideas and observations that result from it. It is important to remember that these ideas can be more valuable than an employee’s routine work.
Putting in an effective process for capturing ideas provides an opportunity for organizations to leverage a resource they already have, already pay for, but fail to capture the full benefit of—namely, employee creativity.
A robust portfolio selection process is a valuable component of that solution. Making critical changes to portfolio selection ensures that all projects target results consistent with the organization’s strategic direction. Here are ten steps for creating a successful strategic project portfolio management process:
Know what you have. Before you start your process, understand the resources and skills that exist across your organization. Even if there are high-profile examples of project failures within your organization, it is likely that there are some best practices within particular groups and divisions that should be retained or even expanded and showcased.
Identifying your successes drives the process of improving portfolio management processes because it prevents you from having to implement wholesale change with no existing processes to leverage. Another great strategy is performing an effective portfolio management skills audit. Knowing what you have can make improvements to the portfolio management process more targeted and impactful, while at the same time helping to demonstrate the key areas of need for portfolio management improvement to your stakeholders. Taking the time to understand your existing competencies and processes across groups and divisions is always a valuable first step in a portfolio management process.
Build momentum. The more you can do to demonstrate that portfolio management is an exciting and powerful process—not just for executives, but for all stakeholders across the organization—the more effective the system will be.
Momentum can be built in different ways. But the most effective strategy is to demonstrate early successes and then establish broader roll-out of those strategies. This approach helps you avoid attempting too much at once. It also lessens the burden on the initial team championing the portfolio process. Remember, as groups adopt the process, the initial team should become advocates for it and provide demonstrable evidence of successes.
Define business goals. Without business goals, project prioritization is arbitrary and potentially misdirected. That’s why defining appropriate business goals is the critical first step. Without goals, you run the risk of creating projects where the stakeholders’ ability to influence is more important than the proposal itself. Such a process is unlikely to be one that inspires others to get involved and support it. Defining these goals at a high level is crucial. Bottom line: Without clear and broadly shared and supported business goals, it becomes impossible to create a portfolio that will have the required strategic impact.
Capture ideas. The more ideas you capture, the stronger your portfolio will become. Increased choices improve your options for finding opportunity and managing risk across the portfolio. Remember, proposals should be captured broadly from across the entire organization. If all ideas come from the same source—be it a particular division, role, or geographic area—then the creativity across that set of ideas is likely to be lower.
Creative ideas are also essential when it comes to beating the competition. For example, Netflix has grown dramatically through its creative business model of shipping movies through the mail, based on an online movie queue set up by customers. The model also changes the pricing structure for movie rentals, as customers pay a monthly fee rather than for each individual rental. In addition to its mail service, Netflix now also uses an online distribution model. This continual innovation has enabled the company to continue to acquire customers from entrenched competitors.
Be transparent. Opaque processes are seldom magnets for ideas and voluntary engagement and cooperation. Therefore, transparency has many benefits. A transparent process is more likely to be improved because the set of people who can observe and refine it is larger. And as a result, it is more likely to enjoy greater support and buy-in.
Transparency can also help magnify the benefit of the insight that the portfolio system creates. That’s because while the cost of creating information is generally fixed, the benefit multiplies as the number of people it is shared with increases. Transparency can also help organizations overcome the duplication of effort that is often driven by lack of awareness.
Prioritize. Make the prioritization process robust and clear. If everyone is aware of which projects are happening, then it is less likely that two projects are inadvertently doing the same thing. Making the process clear and accessible also makes it easier for participants to suggest improvement and understand how the system works so that there are higher quality proposals, and there is a greater degree of understanding of the overall goals of the process.
Remember, the prioritization must be linked to the strategic goals of the business and must ensure that projec
ts are selected as a set, not the best set of projects in isolation. Considering projects as a set will create a more efficient portfolio from a risk management and cost management standpoint.
Use efficient decision making. While collecting up-to-date and accurate data is a challenge, building an effective reporting system is relatively easy. In short, reports should answer specific questions and be tied to specific processes. It is important to consider the following key report types:
• Single-page project report. Each project summary should be contained on a single page or screen, with top-level details and the contact information for the project manager and project owner provided should questions arise. The data should also be time-shaped.
• Budgetary information. This provides aggregate roll-up on budgetary status across projects with the ability to drill down into individual projects.
• Project dashboard. One-line summaries of the projects currently in execution, filterable by important grouping such as division or project sponsor.
• Resource allocation view. This is a view of current resource availability and utilization for the coming 12 months.
• Strategic alignment. This provides a view of the strategic goals of the business and how the current projects contribute to them.
• Flexible pivot table capabilities. Using a drag-and-drop pivot table-style analysis on the inventory of projects or proposals can help executives and others find the information that they need to answer particular questions and also lead to creative analysis to produce new report types to further support decision making.
Establish communication frameworks. Providing effective tools for communication can dramatically improve project performance. This is because communication is the critical ingredient to project success. An easy-to-use set of communication and collaboration tools is critical. Tools can and should include the latest e-mail technologies, customizable portals, wikis, instant messaging, and so on.
There is no such thing as too much communication. When communication lines are open and used often, information is less likely to be poorly communicated, duplication of effort is avoided, and alignment can produce efficiencies. Bottom line: Speedy and effective communication can accelerate an entire project.
Conduct postmortems. The interesting trait about project management is not that projects go over budget, but that the problem is constantly repeated. Project portfolio processes should be made more efficient over time. Use postmortems to uncover opportunities for improvement.
Postmortems are also critical for ensuring that budget and time estimates are reliable. If there is no post-project feedback, then there is little incentive for estimates to be as accurate as they can be, since there is no process in place making sure that they are. If there is a tendency toward overestimation in some areas and underestimation in others, a series of postmortems can identify these biases. The great thing is that once these biases are uncovered, correcting them is relatively easy.
Improve continually. Portfolio management is an organic system. Each component impacts the others. Change should be constant to ensure that the portfolio is reacting to business needs and changes in organizational conditions.
Project portfolio management is a relatively new field. Willingness to embrace new ideas and thinking is key to realizing the best results. A culture of pragmatic opportunism and a willingness to experiment are also key. Moderate tolerance for risk is necessary so that changes can be introduced and tested with particular groups or divisions and then implemented more broadly if they succeed, or reversed if they fail. Taking this level of risk with process change is desirable, relative to the risk of maintaining a static process—which will almost inevitably decline in usefulness over time if no action is taken.
In today’s tough economy, projects are running on shorter timeframes and smaller budgets. Projects must be executed seamlessly and efficiently, or organizations will be unable to outperform their competitors. Ultimately, a strategic project portfolio management system with proper training, adoption, and facilitation offers many opportunities for organizations to become more productive by focusing on the right objectives and executing them well.
About the Author:
Simon Moore is the product planner for Microsoft’s Enterprise Project Management solution and has engaged with project and portfolio executives from Brazil to Japan to define the most effective strategies for completing projects on time, on budget, and within scope. He has worked on new product development for Anheuser-Busch, financial portfolio analysis at Putnam Investments, and regulation and compliance at the Bank of England. He has also served as a strategic consultant to firms in the technology, retail, and financial industries. He has written for the UK’s Guardian newspaper and is a member of the Project Management Institute. He has a B.A. (Hons) from Oxford University and an MBA from the Kellogg School of Management. He also studied at Chulalongkorn University in Asia and holds the Chartered Financial Analyst designation. Simon was born in the UK and currently lives in Seattle, WA, USA.
About the Book:
Strategic Project Portfolio Management: Enabling a Productive Organization (Wiley, 2009, ISBN: 978-0-470-48195-0, $45.00) is available at bookstores nationwide and from all major online booksellers.
For more information, visit www.strategicppm.com.
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