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Sustainable Portfolio Management – Foundational Overview

This post highlights the importance of portfolio management for sustainable change delivery.  This blog post is part of a series that provides a foundation for understanding sustainable change delivery.

It is not the strongest of species that survives, nor the most intelligent.  It is the one that is the most adaptable to change.

Leon C. Megginson, 1963

A few years ago in Ottawa (Canada’s national capital), the term portfolio management was regarded as one of the three dirty words in consulting, the other two being enterprise architecture and big data. No one seemed to be able to agree about what portfolio management meant. Portfolio management is now recognised as a critical method required by organisations to manage their change initiatives in a sustainable manner; still, it is a term that is often misunderstood.  Failure to adopt portfolio management and the subsequent entropy resulting from this failure is one of the reasons why, when GPM Global conducts a PSM3 sustainable change delivery organisational assessment, we focus on the organization’s portfolio management competency.  Portfolio management is a recognized facilitator of the organization’s sustainable management systems.

The following is a fun clip with John Cleese, wherein Cleese explains the Dunning–Kruger effect.  This is a cognitive bias where

relatively unskilled individuals suffer from illusory superiority, mistakenly assessing their ability to be much higher than it really is. Dunning and Kruger attributed this bias to a metacognitive inability of the unskilled to recognize their own ineptitude and evaluate their own ability accurately.

In other words, if you are not an expert in portfolio management, you don’t know what benefits you may be missing out on.

Sustainable Portfolio Management

The title image, shown below in Exhibit 1, was created by Ian Mellings (adapted from Pittiglio Rabin Todd & McGrath in Kaplan, p. 57, 2009) several years ago.

Portfolio Management Pipeline
Exhibit 1: Typical portfolio pipeline.

For me, this image represents many of the complexities and challenges of portfolio management.  It would be nice if portfolio pipelines were like the following in Exhibit 2, also created by Ian Mellings… but this is seldom the case.

Sustainable Portfolio Management Pipeline
Exhibit 2: Best in class portfolio pipeline

Despite the confusion in the management community outlined before it is interesting that, unlike projects and programmes, portfolio management definitions within the change-delivery arena are consistent:

Sustainable Portfolio Management - Portfolio Management Definitions
Exhibit 1: Definitions of portfolio management.

From the sustainable change delivery perspective, sustainable portfolio management is a facilitator and coordinator for obtaining the desired benefits to support strategic objectives, as demonstrated below.  The long-term strategic portfolio benefits, as well as the asset lifecycle benefits of portfolio management, are keys to building a successful foundation for sustainable change.

Sustainable Portfolio Management - Run the business, change the business
Exhibit 2: ‘Run the business, change the business’ (OGC, Figure 3.1, 2012).

The image below highlights how portfolio management provides a construct for answering the following key questions:

Portfolio Management Questions
Exhibit 3: Five key questions that successful project portfolio management addresses (The Enterprise Portfolio Management Council, Figure 1.1 p. 3, 2009).

To answer the previous questions the following represent the key criteria for a successful portfolio:

Portfolio Management Objectives
Exhibit 4: The right project portfolio (The Enterprise Portfolio Management Council, Figure 3.1 p. 37, 2009).

By focusing on the proper areas with the right organizational strategic planning processes, portfolio management empowers successful and cost effective sustainable change delivery.

Portfolio Management Strategic Planning
Exhibit 5, Strategic planning and portfolio management (OGC, Figure 3.2, p. 20, 2012).

Portfolio management makes for a brilliant integration point for the delivery of sustainable change disciplines, as presented in Exhibit 6.

Sustainable Portfolio Management Touchpoints
Exhibit 6: Portfolio Management Touchpoints

An interesting aspect of portfolio management is that this function represents the “Secret Decoder Ring” between the executive and operations. This fun phrase was coined by Vaughn Brennan several years ago.

Sustainable Portfolio Management - Secret Decoder Ring
Exhibit 7: Portfolio management as the secret decoder ring.

The portfolio management function identifies and obtains the right information for executives to make decisions and ensure that the business is aware of those decisions. More important is the fact that the information is shared in the manner that best allows each stakeholder to act upon it.

“Portfolio management concerns the twin issues of how to do the ‘right’ projects and programmes in the context of the organization’s strategic objectives, and how to do them ‘correctly’ in terms of achieving delivery and benefits at a collective level” (Cabinet Office, Kindle Locations 668-670, 2011).

Negotiating with executives is required to determine what information they want based on confidentiality, integrity, availability, cost, and currency. Negotiating with operations is also necessary to provide this information. Further, getting the right information to the executives to allow informed decisions, then advising operations of those decisions, is paramount to portfolio management.

  • “More of the ‘right’ programmes and projects being undertaken in terms of:
    • Greater financial benefits and measurable contribution to strategic objectives.
    • Removal of redundant and duplicate programmes and projects.
  • More effective implementation of programmes and projects via management of the project development pipeline, dependencies and constraints (including resources, skills, infrastructure, change appetite etc.) and redirecting resources when programmes and projects do not deliver or are no longer making a sufficient strategic contribution.
  • More efficient resource utilization.
  • Greater benefits realization via active approaches to exploitation of the capacity and capability created across the organization, and capturing and disseminating lessons learned” (OGC, p. 13, 2012).

From a return-on-investment perspective, portfolio management is one of the best organizational investments. The following diagram shows how identifying, prioritizing, and subsequently removing or delaying initiatives (i.e., pet projects) that are not aligned with strategic goals and objectives can save time, money, and resources, all of which are often limited:

Sustainable Portfolio Management - Change Alignment with Strategy
Exhibit 7: ‘Example of alignment of change initiatives with strategic objectives’ (OGC, Figure 4.2, 2012)

This is obviously a sustainable approach from a resourcing, costing, and prioritization perspective. By employing portfolio-management tools and techniques, dashboards and reports (such as the following in exhibit 8) help executives make informed decisions regarding what change initiatives to focus on and when:

Portfolio Management Dashboard
Exhibit 8: Example of a portfolio ‘bubble’ matrix of change initiatives based on benefits and risk (OGC, Figure 6.5, p. 59, 2012)

 

Conclusion

This blog post provided a thorough summary of the importance of portfolio management from a sustainable change delivery perspective. For more information, I have found the AXELOS Management of Portfolio (MoP) Guidance, or the MoP pocket guide which is a quick guide, or some of the references outlined below.  GPM Global also highlights the importance of portfolio management in its training solutions.

Series Objectives

This series is all about raising awareness of sustainable change delivery and the integral elements, disciplines and competencies associated with it.  In the graphic below, each of these elements is identified in terms of its role in empowering for sustainability.  These elements form the basis of the GPM® Global’s P5™ Standard for Sustainability in Project Management, the GPM® Global Training Programs, and the GPM® Global Portfolio, Program, & Project Sustainability Model (PSM3™) for organizational assessment.

Sustainable Change Delivery
Exhibit 9: Organizational Sustainable Change Delivery Elements & Disciplines / Competencies

REFERENCES

Bible, M. J., Bivins, S. S. (2011). Mastering project portfolio management: A systems approach to achieving strategic objectives. J. Ross Pub.  http://www.amazon.com/Mastering-Project-Portfolio-Management-Objectives/dp/1604270667/ref=sr_1_1?ie=UTF8&qid=1450766429&sr=8-1&keywords=Mastering+project+portfolio+management%3A+A+systems+approach+to+achieving+strategic+objectives

Brennan, Vaughn & Proudfoot, John (2013). Integrated Planning Beyond the Budget Year, 2013 Seventeenth Annual PPX Symposium

Cabinet Office (2011). Managing Successful Programmes 2011 Edition. The Stationery Office (TSO).  http://www.amazon.com/Managing-Successful-Programmes-Stationery-Office/dp/0113313276/ref=sr_1_1?ie=UTF8&qid=1450766522&sr=8-1&keywords=Managing+Successful+Programmes+2011+Edition

Carboni, J., Gonzalez, M., & Hodgkinson, J. (2013) The GPM reference guide to sustainability in Project Management. Fort Wayne: GPM Global. http://www.greenprojectmanagement.org/the-gpm-reference-guide-to-sustainability-in-project-management

Carboni, Joel (2014). The GPM P5™ Standard for Sustainability In Project Management. 1st ed. Fort Wayne: GPM Global.

Durbin, Pat & Doerscher, Terry (2010).  Taming Change with Portfolio Management – Unify your Organization, Sharpen you Strategy, and Create Measurable Value.  Greenleaf Book Group Press. http://www.amazon.com/Taming-Change-Portfolio-Management-Organization/dp/1608320383/ref=sr_1_fkmr0_1?ie=UTF8&qid=1450766652&sr=8-1-fkmr0&keywords=Taming+Change+with+Portfolio+Management+-+Unify+your+Organization%2C+Sharpen+you+Strategy%2C+and+Create+Measurable+Value

Heising, W. (2012). The integration of ideation and project portfolio management – A key factor for sustainable success. International Journal of Project Management, 30(5), 582. doi:10.1016/j.ijproman.2012.01.014.  https://www.researchgate.net/publication/257094635_The_Integration_of_Ideation_and_Project_Portfolio_Management_-_A_Key_Factor_for_Sustainable_Success

Jenner, S. (2012). Transforming government and public services: Realising benefits through project portfolio management. Ashgate.  http://www.amazon.com/Transforming-Government-Public-Services-Stephen/dp/1409401634/ref=tmm_hrd_swatch_0?_encoding=UTF8&qid=1450766827&sr=8-1

Kaplan, J. 2009. Strategic IT Portfolio Management: Governing Enterprise Transformation. Waltham, MA, USA: Pittiglio, Rabin, Todd & McGrath, Inc. (PRTM).

Featured Image Link:

https://books.google.ca/books?id=umTOaHzOkfEC&pg=PA57&lpg=PA57&dq=%22Pittiglio+Rabin+Todd+%26+McGrath%22+%26+portfolio+management&source=bl&ots=4SlBrr9phd&sig=vETv6ArNK1PeZHqKyXp8Md7miYE&hl=en&sa=X&redir_esc=y#v=onepage&q=%22Pittiglio%20Rabin%20Todd%20%26%20McGrath%22%20%26%20portfolio%20management&f=false

Book Link:

http://www.amazon.com/Strategic-Portfolio-Management-Enterprise-Transformation/dp/0976609312/ref=sr_1_1?ie=UTF8&qid=1450766992&sr=8-1&keywords=Strategic+IT+Portfolio+Management%3A+Governing+Enterprise+Transformation

Maizlish, Bryan & Handler, Robert (2005).  IT (Information Technology) Portfolio Management Step-by-Step: Unlocking the Business Value of Technology. John Wiley & Sons, Inc..  http://www.amazon.com/Information-Technology-Portfolio-Management-Step-/dp/B0108DZ4OK/ref=sr_1_3?ie=UTF8&qid=1450767075&sr=8-3&keywords=IT+%28Information+Technology%29+Portfolio+Management+Step-by-Step%3A+Unlocking+the+Business+Value+of+Technology

Moore, Simon (2010). Strategic Project Portfolio Management – Enabling a Productive Organization.  John Wiley & Sons, Inc.. http://www.amazon.com/Strategic-Project-Portfolio-Management-Organization/dp/0470481951/ref=sr_1_1?ie=UTF8&qid=1450767141&sr=8-1&keywords=Strategic+Project+Portfolio+Management+-+Enabling+a+Productive+Organization

OGC – The Office of Government Commerce (2012). Management of Portfolios. The Stationary Office.  http://www.amazon.com/Management-Portfolios-Book-Best-Practice/dp/0113312946/ref=sr_1_1?ie=UTF8&qid=1450767204&sr=8-1&keywords=Management+of+Portfolios

Perry, M. P. (2011). Business driven project portfolio management: Conquering the top 10 risks that threaten success. J. Ross Pub.  http://www.amazon.com/Business-Driven-Project-Portfolio-Management/dp/1604270535/ref=sr_1_1?ie=UTF8&qid=1450767291&sr=8-1&keywords=Business+driven+project+portfolio+management%3A+Conquering+the+top+10+risks+that+threaten+success

Project Management Institute (2013).  The Standard for Portfolio Management–Third Edition. Project Management Institute.  http://www.amazon.com/Standard-Portfolio-Management-Project-Institute/dp/1935589695/ref=sr_1_1?ie=UTF8&qid=1450767335&sr=8-1&keywords=The+Standard+for+Portfolio+Management

Rad, Parviz & Levin, Ginger (2006). Project Portfolio Management – Tools & Techniques.  IIL Publishing.

http://www.amazon.com/Project-Portfolio-Management-Tools-Techniques/dp/0970827687/ref=sr_1_1?ie=UTF8&qid=1450767393&sr=8-1&keywords=Project+Portfolio+Management+-+Tools+%26+Techniques

https://books.google.ca/books?id=PUavbSMdP7QC&pg=PA142&lpg=PA142&dq=project+portfolio+management+tools+and+techniques+pdf&source=bl&ots=yzZGArssbu&sig=lk-2eeMKmjJTYpk8VybDb8U4quY&hl=en&sa=X&ved=0ahUKEwiB86q_wfXJAhWEXR4KHRYICJAQ6AEIWTAH#v=onepage&q=project%20portfolio%20management%20tools%20and%20techniques%20pdf&f=false

Rajegopal, Shan & McGuin, Philip & Waller, James (2007).  Project Portfolio Management – Leading the Corporate Vision. Palgrave Macmillan.  http://www.amazon.com/Project-Portfolio-Management-Leading-Corporate/dp/0230507166/ref=sr_1_1?ie=UTF8&qid=1450767483&sr=8-1&keywords=Project+Portfolio+Management+-+Leading+the+Corporate+Vision

Teller, J., Unger, B. N., Kock, A., & Gemünden, H. G. (2012). Formalization of project portfolio management: The moderating role of project portfolio complexity. International Journal of Project Management, 30(5), 596–607. doi:10.1016/j.ijproman.2012.01.020.  https://www.researchgate.net/publication/229811774_Formalization_of_Project_Portfolio_Management_The_Moderating_Role_of_Project_Portfolio_Complexity

The Enterprise Portfolio Management Council (2009). Project Portfolio Management – A View from the Management Trenches. John Wiley & Sons, Inc..  http://www.amazon.com/Project-Portfolio-Management-View-Trenches/dp/0470505362/ref=sr_1_1?ie=UTF8&qid=1450767611&sr=8-1&keywords=Project+Portfolio+Management+-+A+View+from+the+Management+Trenches

 

Peter Milsom

Peter Milsom is an entrepreneurial advocate for sensible, sustainable change delivery practice. Peter has come to realize that sustainability is the perfect catalyst for Project / Programme / Portfolio / Risk / Value / Business Case and Benefits Management improvement. As an entrepreneurial methodologist Peter's unique value proposition is the vast array of tools and techniques that he brings to every engagement using the most cost effective and efficient methods based on the situation and tailored to meet your needs. This is based on his unique combination of experience and extensive training / certifications in change delivery, value / risk / benefits management business case, and business architecture.

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