How can you make better portfolio decisions?

Each organization may vary in terms of criteria and the weighting of these criteria, but every organization should keep two points in mind: 1a - A clear understanding of the organization's strategy and the alignment of OKRs and KPIs. This is an input for defining the correct weights, a clear understanding of all areas on a global scale, and the proper design of the 5-year plan. 2a - Involvement of Key Stakeholders/Sr. Managers in defining the criteria and balancing the weights based on a mutually agreed common sense across all areas, with a focus on the organization's strategy.

Don't let a scoring system cloud your judgement. In the end, portfolio management is as much art as it is science. Start with an objective scoring system to help you begin to separate the signal from the noise. After that, its got be a judgement call using an entrepreneurs mindset and weighing more than just the "hard facts" of investment and return. Sometimes a key stakeholder needs their project to be one in the mix; sometimes a gut call to take a chance on the one that looks like a risk; and yes ... sometimes something that looks like a waste just has to be done.

To get the greatest value from your portfolio, you first need to understand what value means to your company. Defining your criteria and value drivers via a value framework gives you a robust model to inform decision making, and ensures portfolios are delivering the results you’re aiming for. It gives you the ability to define, communicate, and evolve the elements of your value framework so that all stakeholders understand the rationale behind each decision, and everyone can align investment decisions with business strategy.

Define the scoring criteria, which should reflect strategic alignment, expected benefits, risks, and constraints. Assign a weight to each criterion based on its importance. Develop a way of assessing a low, medium, or high score for each criterion in the model. Calculate the final score for each project based on the scoring model. Rank the projects based on their scores and select the ones that align with the strategic goals of the business and maximize the value of the portfolio. Continually evaluate the performance of the projects in the portfolio and adjust the scoring model as needed.

?? You should also consider the dynamic aspects of scoring models in portfolio management. ?? Customization of Scoring Criteria Tailoring the scoring model to reflect specific project or investment characteristics ensures a more accurate evaluation. ?? Weighting Factors Assigning different weights to criteria based on strategic importance or risk can significantly alter the portfolio's risk-return profile. ?? Iterative Refinement Regular updates to the model in response to changing market conditions or strategic shifts are crucial for maintaining its relevance and accuracy. ?? A scoring model is not just a static tool but a dynamic framework that requires ongoing attention and adjustment for effective portfolio management.

Effective communication is required to get the valuable insights of stakeholders in your project portfolio management. The decision you make will cut across your organization and different stakeholders, it is important to solicit their feedback as it might be of great help in providing you deeper insights.

Create a senior cross-functional management forum (evaluation and recommendation) and an executive forum (decision-making). This ensures management are involved, have a voice and have ‘skin in the game’ to see through delivery of the prioritised initiatives - and responsibility to be aware of the company-wide view of initiatives so can be encouraged to adopt the broader organisation vs siloed functional view when it comes to committing staffing, physical resources etc. Also provides opportunity for emerging leaders to have a seat at a cross-functional table - so good for talent development.

Being agile and engaging a cross functional management forum for decision to the review and adjustment process will enable better informed and aligned decision making

Continuously optimising your portfolio is essential as plans change, new priorities emerge, and the uncertainty of the future takes hold. Having the agility and flexibility to amend your portfolio allows you to save costs, manage risk, and reduce resource wastage, and ensures you can keep making the right decisions at the right time.

An important thing is to understand in which context, sector, industry your portfolio is inserted. There is no one-size-fits-all model. For example: using the SAFe framework to manage industrial engineering projects in industry will be a disaster. We need to understand the context and then use the correct tools.

As mentioned above, a weighted scoring system is great for evaluating your portfolio. I would only add that you should ensure the process is collaborative with your stakeholders, from defining the criteria to evaluating projects. This way, there will be more buy-in and it will reduce tension when projects do not make the cut. A data-driven scoring system is excellent for steering you in the right direction. However, it is worth having a panel to review in a time-boxed session to fine-tune and make any necessary adjustments. Finally, create a cadence for when the portfolio is reviewed. Annual planning is too far apart, and monthly is probably too soon. Every quarter or half-year could work