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5 Steps to Introduce Portfolio Management to Executives

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Introducing portfolio management to senior management typically generates resistance. After all, putting a methodology in place to prioritize and manage projects requires humans to change how they work, and that’s never easy. Plus, factors such as industry, state of the market, internal culture, and personalities vary so much among organizations that coming up with one magic approach for introducing portfolio management is bound to fall flat.

Timing is a tricky matter when selling any idea and interest in portfolio management seems to be very cyclical in nature.

Although it’s no silver bullet, the practice of project portfolio management (PPM) can help organizations today to more efficiently respond to market shifts and new innovations. Project Portfolio Management is the disciplined approach to overseeing the overall collection of projects and programs by in which the organization has invested. The goal of PPM being to make sure that resources are invested in initiatives that support the strategic objectives of the organization as they evolve. Institutions that employ PPM as a practice stand out because they apply methods to the sometimes-haphazard decision-making that goes on in determining what projects warrant investment.

However, over the past 20 years MI-GSO | PCUBED has found five steps that can help sell the idea of portfolio management to your executives, by improving the initial perceptions of what portfolio management is and thus increasing the likelihood of its subsequent adoption.

1. Link Portfolio Management to Solving Current Pains

The first thing to do is get the attention of people who can make portfolio management a reality in the business. Since senior managers barely have time for their scheduled meetings, you need to immediately resonate with some of their current problems. So, a good start would be linking the introduction of portfolio management to one of the current pains they’re going through.

The most common example is the annual planning cycle most organizations go through, albeit many have also moved to more frequent and agile planning cycles. As such senior executives need the ability to react and then quickly adapt to the introduction of new and major initiatives or budget reduction activities. These pains are quite typical and are not restricted to a specific annual calendar. Research the organization’s problems ahead of the meeting and hone in on the message you want to deliver. This step is vital, as it can transform hesitance into intrigue.

As consultants, we often find ourselves preaching portfolio management without really actively listening to the client’s troubles. The client may have a different idea about what portfolio management even is. So every time we use the term, they’re hearing something other than what we mean, and they reject the idea.

So, how do you solve this dilemma? Frequently, the client has a very specific problem that can well be addressed by portfolio management.

Currently, we hear a lot of clients talk about resource management. They’ve said things like, “We need to better manage our resources or budgets”, “We need to realize efficiencies” or, “We don’t know who is actually working for us. We may know their names, but we don’t know what projects they’re supporting.”

The sensible way to act in such circumstance is not to promote portfolio management, but to initially solve the immediate problem. For example, create the transparency the client wants in order to provide that overview of resource allocation. Once that’s done, and the client’s trust is gained, we can tackle the underlying, more fundamental problems. This is where portfolio management will come into play.

After all, many resource management problems are caused by people working on too many of the wrong projects. Often, these are projects that don’t contribute to strategic objectives. Or, they’re so complex and risky, they only have a minimal chance of being concluded successfully. In either case, it burns precious resources along the way. Instead of trying to sell a buzzword, it’s more important to craft a specific solution for the client.

Resource Utilization Forecast in Project Online
Resource Utilization Forecast in PPM Application

2. Share a Vision for the Future State

Once the current problem is established, the next step is to paint the picture where the challenge will be solved. Usually, this picture includes an efficient and controlled way to deal with the planning or re-planning efforts.

Some of the tangible benefits include:

  • Process Consistency Across the Organization
    A standardized approach for the activity, which would lower support cost and duration or effort required by the activity in the same time.
  • Transparency into Portfolio of Projects
    Transparency into the pipeline of projects vs. both organization goals and resource needs.
  • Agile Response to Change
    Increased competitiveness by being able to prioritize the current project portfolio and align it to changes in the market conditions or organization strategy in a rapid and efficient manner.
  • Efficient Allocation of Resources
    Distribution of monetary resources and personnel to the project work that is most important for the organization, when doing annual planning or at points when budgets are cut.
  • Objective Way of Prioritizing Projects
    Being able to rank and compare project requests and on-going project work by assessing their financial, strategic, and risk dimensions.
  • Adequate Controls
    Standard governance rules for how projects get ranked, approved, and funded and their execution monitored.

The expected benefits should be presented in connection with the problem faced by the organization, as opposed to theoretical statements.

3. Allow the Message to Come from an Insider

From a logistical perspective, the team introducing portfolio management to a senior leader must inspire trust and expertise. Therefore, the best dynamic for this team is to bring in both someone from within the organization, who is trusted by the executive team, and additionally someone who is experienced in portfolio management. This latter person could be either internal or external.

These two individuals need to work well together. Expertise without trust is usually perceived as just another sales meeting, and trust without expertise is always perceived as incompetence.

4. Ensure Longevity

Once participants are sold on the idea of portfolio management, you need to actively ensure it’ll “stick” in an organization. That requires a long-term strategic plan to follow when allocating capital and resources. The strategic plan usually includes the major goals of the organization over a number of years (typically, three to five). And it’s endorsed by all the key people who are ultimately responsible for executing it.

A problem common to large organizations is a “silo” mentality that grows up in different business units or functional areas. Each silo has its own perspective on what the crucial strategic objectives are. Therefore, a strategic plan can measure how a specific project portfolio achieves one or more of their long-term objectives. Additionally, it serves as an objective way of quantifying performance and progress for the organization and the senior executives.

5. Pursue Top-Level Commitment

Portfolio management’s main feature is to align project investments to the organization’s strategy and continually reassess projects against changing conditions. This is why it’s appropriate to call it a top-down management approach. Decisions are made on the entire project portfolio as a whole, rather than on an individual project basis.

As such, for portfolio management to succeed, a vital element is support from the top of the organization – senior managers. You need to bring those senior managers on board and get them committed to succeed in the portfolio management implementation.

These Steps In Practice

The process we have just outlined really works. A group of internal clients were pitching a particular executive on the idea of portfolio management. They presented a great overview, focusing on all the common benefits that could be delivered with the efficient allocation of resources.

The executive challenged everything, declaring that enough resources were available to fund every as long as each had a good case. So, he couldn’t see the point in going through such an exercise. After meeting with his staff, his big problem was a lack of transparency into what was going on. He was sorting a lot of the daily operations as project work. Once the discussion zeroed in on transparency, it clicked for him, and he opened up to portfolio management and its benefits.

In summary, the road to integrating portfolio management will be long and difficult. You’ll need to ensure that the organization follows through with your plans if they truly are the right fit. However, when everything is said and done, the realized benefits will be the satisfying marker of a job well done.


For more information about this article and MI-GSO | PCUBED



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