Portfolio management is there to help with the selection and governance of projects and programmes with the aim of delivering the strategic plan. But what principles underpin good portfolio management? I mean, there has to be more to it than the buzzwords of strategic alignment and putting projects into categories, right?
There is, but that alignment and categorisation is important too. Here are 6 principles to bear in mind when developing the vision for your own Portfolio Office.
1. Align Strategy
Strategic alignment… Tick!
It needs to be said: aligning your portfolio of change work with corporate strategy is a definite.
If you know what the drivers are for your business you can ensure that your portfolio is aligned to deliver what you need to do in order to achieve that.
That’s a long-winded way of saying if you don’t have a strategy then you can’t move your business towards it. The strategic plan gives you the focus for the business. Portfolio management helps you choose the right projects and programmes to deliver that strategy.
It’s a basic principle for managing a portfolio: without an underpinning strategy you could be accepting to do any old project and have no idea of whether it’s going to support or hinder the business goals.
2. Align Governance
Organisational governance also needs to be aligned to projects and the work of the Portfolio Office. Part of being able to ensure that you are doing the right projects is to make sure that there is clarity and consistency with how the company governs what is happening.
It doesn’t have to be bureaucratic. It just has to be clear. If you mandate steering groups for projects, every project should have one. If you expect project managers to use Earned Value, then they should all be doing it. And there should be processes in place to check that it is happening and put corrective action in place where you see evidence that governance approaches aren’t being followed.
Ideally the governance at the top of the organisation should mirror the project governance lower down in how project managers control and manage their projects. Here are 7 factors of good project governance to inspire you for how your portfolio-level governance could work.
3. Close Projects Confidently
If a project is not going to deliver the benefits, the Portfolio Office should be confident enough to recommend that it be closed. And closed quickly, so that the company doesn’t throw any more money after it. A main principle of portfolio management should be that you take a hard look at the facts and act on the data.
Closing a project down prematurely is likely to be heavily debated when the time comes, especially if it is someone’s pet project. But as a Portfolio Office leader, you shouldn’t be shying away from the difficult conversations.
4. Lead Actively
Leadership is definitely a core principle of portfolio management. The whole portfolio structure exists to lead the business confidently forward, providing more than just management information for decision-making. It should communicate upwards, providing strategic recommendations and advice and leading change positively.
That means encouraging everyone in the Portfolio Office to lead, at whatever level. You should be creating a team that is proactive, change-driven and all those other good things you hear about on leadership training and development courses. But of course it goes beyond the tick list of desirable characteristics for leaders: you actually have to live it, and lead by example through your actions and decisions.
A final point on this: here is where professional ethics comes in. Portfolio Office staff should always be objective and ethical!
5. Embrace Risk
Your portfolio is going to have an element of risk. It just will. If your projects are too safe then your strategy isn’t adventurous enough! And yes, you may actually have to have that conversation with the top echelons of management if you analyse the mix of projects and realise you could be doing more, and more relevant work.
The attitude of the Portfolio Office should be that risk is there to be embraced. By taking calculated, well-managed risks, you can make greater leaps forward as a business. However, risk does need to be actively managed. If you do that, there’s no need to try to avoid it.
You may have to work on others in the business to adopt this same outlook. And you may have to reign in managers who want to take too many risks! Portfolio level data is perfect here for assessing the risk of the overall change programme at any one time, and identifying the risk appetite of the organisation.
6. Be Transparent
Finally, a key principle of portfolio management has to be transparency. Make sure that data is shared, that knowledge is transferred and embedded, and that honesty reigns supreme. The Portfolio Office should be that one version of the truth that management teams turn to for objectivity and data.
Transparency in all you do goes beyond being a principle for portfolio management and should be embedded in the culture of the organisation and become part of the way you do projects. This attitude at the top will filter down to the programme and project managers, helping them improve transparency at their levels and in their work too.
Portfolio management is an active role in the company and goes beyond creating spreadsheets and lists of projects and colour-coding them. If you adopt these 6 principles you are well on the way to providing fantastic decision-support information and turning your Portfolio Office into the hub of strategic advice and delivery.
Oh, and if you have to choose just one to work on this month, make it number 1! Strategic alignment is the top way to make sure your Portfolio Office adds real value to the organisation from the start.