A number of my Twitter friends asked me to blog some observations I Tweeted this week from the field, on signs that your enterprise is truly portfolio-managing its investments in change.
Some context. The fundamental principle of portfolio management is that you first choose the goals of your portfolio, then select the most efficient combination of investments to deliver them. For an enterprise’s investments in change, these goals are expressed as (a) a diverse set of value types (typically around ten) with corresponding measures and milestones, and (b) the overall shape – or architecture – of enterprise that the investments must collectively deliver.
Here are extended versions of the three ‘from the field’ Tweets, on signs that your enterprise is truly portfolio-managing investments in change (by no means an exhaustive list):
- Deciding first on the goals of your portfolio, as defined above, then selecting the projects to deliver them
- Evaluating and selecting projects based on their contribution to the portfolio, rather than just on their standalone merits. This means turning down attractive proposals that don’t fit the portfolio.
- Exploring what each project would mean for the overall shape of the enterprise. This can mean investing in projects that have a low or negative individual return but are key to the enterprise’s future. It also means turning away or redesigning attractive projects that would undermine the future shape of the enterprise.
In another related ‘from the field’ Tweet I noted that it’s interesting to observe what happens when a CEO removes total cost as a selection constraint on the portfolio. It’s very common for enterprises to treat the total cost of a portfolio as a primary constraint in selection and prioritisation, but when it removed, other constraints come to the fore. These include, for example, the overall value that the portfolio is expected to deliver, and the enterprise’s capacity to make and exploit all the changes that the portfolio represents.
Whether or not total cost is a constraint on your portfolio selection, exploring and applying non-cost constraints can result in a more productive and efficient portfolio and a higher project success rate. So, if only as a strategy scenario, it can be valuable to discover what would happen if your enterprise removed cost as a portfolio constraint.