This is the first in a series of blogs summarising key themes from the Managing Portfolios guidebook. This one focuses on the Managing Portfolios Model and the three ‘rights’ of portfolio management.
At its core, portfolio management is about ensuring we optimize the strategic contribution from our available resources. This is achieved by the three ‘rights’ (illustrated in the Managing Portfolios Model below): doing the ‘right’ things, doing things ‘right’, and doing things at the ‘right’ time.
Digging a little deeper into these three ‘rights’:
Doing the ‘right’ things
As Mark Cyphert says, “We can do anything, we just can’t do everything.” We therefore need to ensure we invest in the set of projects and programmes that collectively offer the greatest strategic contribution, subject to their risk/achievability and affordability. In Manging Portfolios this is achieved via the six Portfolio Design practices: Scoping and structuring the portfolio; Determining the portfolio strategy; Understanding the current portfolio position; Project prioritization; Portfolio optimization; and Preparing the portfolio delivery plan.
Doing things ‘right’
So that portfolio performance matches ‘the promise’. This doesn’t mean that portfolio management takes responsibility for initiative delivery or micro-manages individual initiatives. Rather, portfolio management is concerned with ensuring the constraints, risks and dependencies that too often de-rail delivery, are identified and effectively managed at a collective level, and that benefits realization and strategic contribution are optimized in practice. Portfolio management is thus an enabler for both strategy execution and initiative delivery. In Manging Portfolios this is achieved via the six Portfolio Delivery practices: Management oversight; Portfolio benefits management; Portfolio financial management; Portfolio risk & opportunity management; Portfolio resource management; and Portfolio stakeholder management.
Doing things at the ‘right’ time
As the US Navy Seals mantra says, “slow is smooth and smooth is fast”. Indeed, evidence shows that where the active portfolio exceeds the availability of constrained resources, progress rapidly deteriorates – much as when traffic density on a motorway exceeds a certain level, the result is phantom traffic jams. Sequencing and scheduling initiatives to avoid overloading the organization’s capacity to deliver and to absorb business change, thus enables the portfolio to deliver more by doing less at any one time.
In the next Managing Portfolios Insight we will be examining the 5 principles that underpin effective portfolio management with a specific focus on Principle 1 – Executive Engagement.
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