Material for this synopsis of Winning Through Project Portfolio Management: The Practitioner’s Perspective 2015, has been reproduced with the permission of PMI. Copyright and all rights reserved.
In Lewis Carroll’s classic Through the Looking Glass, the Red Queen neatly describes the situation many organizations face. “Now, here, you see, it takes all the running you can do to keep in the same place,” the queen tells Alice. “If you want to get somewhere else, you must run at least twice as fast as that!” Organizations today operate in a highly complex and dynamic environment in which the pace of change is faster than ever before.
In this environment, project portfolio management—in which leaders take an organization-wide view to properly allocate resources and time among their portfolio projects, make effective course corrections, and maximize value delivery—is an increasingly critical component of success.
Many senior leaders recognize that excellent project-portfolio management—sometimes referred to simply as portfolio management—is a source of increasing competitive advantage. The ability to implement critical projects on time and on budget and, most important, to fully deliver the expected outcome—repeatedly and over time within a broader change portfolio—helps organizations execute their strategy more effectively. Yet senior leaders also acknowledge that there is significant room for improvement.
To gauge the impact of superior portfolio-management capabilities, The Boston Consulting Group partnered with the Project Management Institute (PMI) to study the issue from the viewpoint of portfolio managers. On the basis of that analysis, we have identified three key success factors that top-performing organizations share: strong processes; leadership, sponsorship, and support; and an enabling culture.
Strong Processes. Organizations need to put in place processes that structure discussions and make sure that project, program, and portfolio decisions are based on objective, quantifiable facts rather than pattern recognition and gut instincts. These decisions include the inevitable changes and adjustments during implementation, as well as the difficult decisions to discontinue projects when necessary.
Several tools, which collectively fall under the rubric of rigorous program management, can help organizations develop strong portfolio-management processes. For example, a roadmap can ensure that the right information gets elevated to leaders in order to ensure their support. An effective roadmap breaks a specific project into a series of critical milestones (typically 15 to 25) that tell the story of the project in terms of what needs to be achieved, the major steps along the way, and, most important, the major known risks that need to be managed and the most critical interdependencies that have to be delivered.
Leadership, Sponsorship, and Support. Leaders at top-performing organizations recognize that projects don’t succeed spontaneously. Rather, even the most challenging projects succeed because there are clear leadership, sponsorship, and support to make them happen, starting at the top of the organization. Senior leaders understand the value of such support, and they’re often the direct beneficiaries of superior portfolio-management capabilities. They access greater operational visibility and insight into emerging issues and, in turn, are able to take action when necessary in order to ensure that critical projects stay on track.
And when a critical project goes off track, rather than arbitrarily throwing resources at it, effective leaders are able to make a portfolio-based decision and course correction early. On the basis of the health of the overall portfolio, they can decide whether it’s time to discontinue the project and fill the gap with other projects, or whether they have the resources to restructure the project and move forward. Not all projects succeed, so the cornerstone of a successful program is knowing how to handle those off-track projects and make course corrections before real damage is done.
An Enabling Culture. The third critical success factor is a culture that explicitly supports portfolio management. High-performing organizations create a culture that does not attach the stigma of failure to projects that are terminated. Instead, terminated projects are viewed as an inevitable part of the portfolio management process, and the right culture celebrates them as a kind of victory, or disaster averted, rather than a cause for punishment.
Critically, high-performing cultures do not punish the people who raise concerns or make the difficult decision to terminate projects when necessary. In fact, these organizations encourage such behavior and very deliberately avoid “shooting the messenger.”
Capturing the benefits of superior portfolio management requires commitment from both practitioners and senior leaders. Organizations that recognize this opportunity and invest in improving their portfolio-management capabilities will likely be well positioned for the future. In today’s increasingly complex and dynamic business environment, optimizing the ability to view, allocate, and adjust resources and time across a portfolio of critical, strategic projects creates a clear path to competitive advantage.
For more information on one of the tools used in rigorous program management, see the Harvard Business Review article “The Hard Side of Change Management,” along with a recent HBR blog post on the topic, “A Way to Assess and Prioritize Your Change Efforts.”
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