In Portfolio Management, the Best Defense is a Good Offense

People often ask me what I do in my role at UMT.  That’s a great question.  The answer is really quite simple:

  • I help organizations define what they want to accomplish through their project portfolio.
  • I help organizations align the projects they’re working on with what they hope to accomplish.

Needless to say, there’s a lot of work to be done on each of those bullet items – whether it be identifying operational constraints or eliminating waste and mitigating risk in the project delivery process.  In this role, I work with organizations at various levels of portfolio management maturity.  Some organizations are just focusing on getting an idea of what projects they’re working on and what constraints apply to those projects.  Other organizations are grappling with the pressing issue of trying to figure out how to prioritize those projects.  Still other organizations are grappling with the issue of whether or not the list of potential projects is even the right list to be considering.

When companies first begin to tackle portfolio management, they often start from the perspective of aligning their current planning processes.  Every year, projects are proposed by specific individuals within the organization.  These projects are added to a central repository of project work, and then rated on how well they align with specific strategic imperatives of the organization.

Sounds good right?  There’s nothing inherently wrong with this approach – but it invariably leads to questions such as “How does this project actually align with strategy?” or “How do we track benefits for this project?”  When each project is proposed as a stand alone entity – and treated as such, it becomes difficult to answer these questions.  This collection of projects doesn’t comprise a comprehensive strategic approach – but instead simply a collection of individual answers as to what is most important to the organization from the individual’s perspective.

It reminds me of the Mongol term for rice – buda.  It’s used to describe something as irreparably broken, that is now a collection of parts that cannot work together.  If a truck engine is buda, then it is like a handful of dry, white rice.  No matter how much you squeeze it, you’ll always have a collection of separate grains.  It doesn’t matter how many hours that truck will spend in the garage, those engine parts will never cohere to form a functioning engine again.  A project portfolio built from the bottom up is no different.

The issue is that the organization is playing defense and being reactive by fielding the project requests.  The trick to successful portfolio management is to go to the offense.  Instead of starting with the projects, and attempting to align them to the strategy – start with the architecture of the organization, and then forecast your projects to support that.

Start with the business plan for the next 18 months – or whatever time frame makes sense given the volatility of your industry.  Decompose that into business capabilities, services, and the assets that support those services.  This gives you a framework to understand what the organization needs to be doing at a tactical level.  As the organization changes, use this framework to identify the projects that we should be working on.

The white space around the strategic changes is filled with the BAU work that must be done.  This, too, can be proactive.  Each asset added to the enterprise environment requires constant updates, upgrades and maintenance.  Budget for that.  Understand that in the case of an IT application or a production facility, each year we will be making updates and modifications.  In a couple years, it will be retired and replaced.

There’s still room in this framework for the pop up individual requests.  After all, those capture the oversights – the gaps between the strategic plan and reality.  However, once the portfolio planning becomes more proactive, there will be a lot less of these unplanned requests – as chances are they were just manifesting as examples where individuals had perceived a gap between the current and the desired future organizational state.

When you start from this architectural framework, you end up with a proactive, forward looking portfolio of projects queued up for the foreseeable future.  You’re not playing defense and fielding individual requests.  You’re providing a benefits measurement and strategic context for each of those individual initiatives.

At the end, the success of a portfolio management lies not with a defensive mechanism of saying no to the low value projects, but with an offensive mechanism that relies on the quality of what I call the sensing mechanism – that piece of the puzzle that contains the processes that comprehensively defines the gaps between the current and desired future state.

In Portfolio Management, the Best Defense is a Good Offense