Project Practitioners > Portfolio Management: Is Modern Management Practice Compatible?

Portfolio Management: Is Modern Management Practice Compatible?

By Brian Irwin

I sat anxiously in the PMO Director's office waiting to present my proposal for an organizational portfolio management process implementation.  I had spent the previous several months drafting the process and holding reviews with several key company stakeholders.  My homework was done and I knew I would hit this one out of the park.  The presentation spanned the next thirty minutes.  What seemed like an eternity of silence had passed, but in reality was probably only 10 seconds, the PMO Director finally spoke his verdict.  "Am I the only one that has major heartburn with this process," he stated.  My heart sank as I wondered what I could have possibly forgotten to include.  He continued, "This process will never work here, as you are proposing to ask one Vice President to give up resources (both human and financial) to another Vice President to his department's detriment."

To date, I have implemented portfolio management processes across several organizations with varying degrees of success.  In theory the premise sounds very appealing to an organization – align all of the organization's project and other work with its strategy, allocate resources accordingly, and deliver on the strategy.  However, in practice it is usually quite different.  Introducing portfolio management processes into an organization, even those with very mature project management processes, is a monumental undertaking to say the least.  If you'll pardon the cliché, it is akin to steering the Titanic with a soup spoon.

The challenge that I have encountered in every implementation of portfolio management thus far is that a gap seems to exist between the promise of portfolio management and the practice of modern business management.  This was evident in the PMO Director's comments above.  Modern management practice rewards individual managers, especially executives, with their particular department's performance.  Portfolio management requires these same managers and executives to give up a portion of their slice of the pie for the good of the entire organization; yet, their performance is still being assessed based on departmental performance.  Can you identify anything wrong with this picture?

This seemingly small gap is a primary reason portfolio management initiatives fail in organizations.  The development of portfolio management processes in organizations is relatively simple and straightforward.  As with most things in management, the challenge lies in the human element.  For an organization to reap the benefits of what portfolio management has to offer human behavior, motivators, and agendas must be considered.

Very rarely is an organization structured into a single pool of resources.  The vast majority are still structured as numerous departments dispersed across the enterprise, ultimately rolling up into a single entity known as "the company".  A company's budget is typically distributed across departments based on numerous factors such as department size, profitability, and forecasted growth.  You are fortunate if you are in one of the few organizations that actually align operational and project work with company strategy and even more fortunate if an organization's annual budget is distributed according to that strategy.  So, what are we to do?

The answer is simple to state but incredibly difficult to implement.  The way organizations are designed must be revisited.  Simply implementing portfolio management processes, as defined by PMI is not enough.  Executive and managerial accountability and reward systems must be thought through in advance and built into the system.  In his book The Future of Management, Gary Hamel introduces us to the Emerging Business Opportunities (EBO) process developed at IBM.  Launched in 2000, the EBO process rapidly evolved into a comprehensive system for identifying, staffing, funding, and tracking new business initiatives across IBM (Hamel, & Breen, 2007).  In the program's first five years, IBM launched 25 new businesses.  While this example is not directly applicable portfolio management, it is a great example of promoting executive collaboration and partnership.

I am now well into another portfolio management process development and implementation.  And, as usual, the organization in question is eager to run while it is still learning to walk.  While eagerness and willingness are admirable traits, if all aspects of process implementation are not considered they can be incredibly haphazard.

Not all comments are posted. Posted comments are subject to editing for clarity and length.

Matrix management is the answer you seek. It aligns project and portfolio management approaches with a modern management framework that utilizes the same ideals. Everyone still relies on caveman management practices and are surprised when they keep getting the same poor results. See as they are experts in this space.

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