Portfolio Management for Vision Realization (SOE#7)

How often do our projects succeed at the tactical level, yet the organization fails to achieve its strategic objectives? Or, our projects fail, because they do not receive the needed support from the ones who initiated them? The operations succeed, but the patient dies! What do we do? Fire the poor project manager and look for another victim to hire as replacement (It Takes Two to Tango). This only sustains the problem and hurts the future of the organization. Portfolio Management as a discipline is meant to resolve this problem. Often we focus on the inefficiency of execution, when top management did not do their duty of making the right selections, building the right value realization channel, developing the needed capacity and capability, sanctioning the appropriate governance, and earning real visibility, while managing stakeholders and risks at the sub-enterprise level. It is easier to blame the other side of the fence rather than admit it is the responsibility of the owner of the fence -and both its sides - for true project success. The problem lays in the need for more awareness by the people upstairs on how to enable project success, and this means in part developing portfolio management capabilities and putting them in practice.

In this article, I will discuss how Strategic and Vision Realization Offices can utilize Portfolio Management and the six performance domains in order to save the patient - God willing.

Vision Realization, an equivalence for realizing strategic objectives, is being utilized by government organizations, specifically working towards realizing national long-term visions, such as KSA Vision 2030, Kuwait Vision 2035, Abu Dhabi Vision 2030, Dubai Vision 2021 to name a few. In KSA, the concept is governed through an array of Vision Realization Offices (VRO) in every government entity, coupled with carious Vision Realization Programs (VRP). VROs include multiple functions, with specific focus on strategic development and alignment, performance management, transformational change, alliance and collaboration, and organizational communications.

Portfolio Management. “The centralized management of one or more portfolios that enable executive management to meet organizational goals and objectives through efficient decision making on portfolios, projects, programs and operations.” PMI's Portfolio Management 4th Edition. This is one of the main disciplines required for any VRO, specifically for practically turning objectives into actual initiatives, programs and projects that are well defined with specific measurable KPIs that can ensure strategic alignment. "There is nothing so useless as doing efficiently that which should not be done at all" – Drucker.

Dilemma. When there is lack of clarity on a subject, different people come up with their own definitions and practices, shaping the "subject" into something new. When too many organizations do that, the "subject" means different things to different people, hence lack of convergence that offers sustainability, growth and maturity. I am fearful, we have been doing this for the portfolio management discipline, by assigning portfolio roles, or even career jobs as "Portfolio Manager" without any guideline, qualification or past experience. The poor lad does not know what he or she is supposed to know or do, and the organization expects what they do not know from those who do not know how to do it! Seems a bit common?

Back to Basics. Portfolio management is not a mere collection of projects and programs in a specific industry or zone; and it is not definitely a KPI collector function that aims at providing dashboards for top management. The above are some technical attributes, but the most important thing about portfolio lays in the 6 domains listed by PMI(R) in The Standard for Portfolio Management Rev. 4.0, across the four portfolio life cycle phases, which will often overlap, Initiation, Planning, Execution and Optimization.

1. Portfolio Strategic Management Domain: The first domain answers the most important question, why we need the portfolio. Strategic alignment means focus on strategy realization - in contrast with strategy formulation - where the organization selects how to optimize the utilization of their investments, partners and resources in the best manner that serves the organizational objectives. Through successfully executing all the initiatives, investments, programs, projects and operations under the specified portfolio, some of the strategic PKIs are realized. Portfolio strategic management is highly agile and adaptable to environmental changes, shifting tactics and selections accordingly, while remaining locked on organizational values and sustainability. This domain is heavily present during Initiation within the life cycle.

2. Portfolio Governance: Portfolios realize the strategy through the proper selection and management of components. This requires building the governance upside triangle, where the whole authority for decision making, spending the budget, approving changes, allocating resources and resolving conflicts, issues and escalated risks is cascaded from the steering or governing committee to several layers below. Each sub-portfolio, program, project and even operational unit will be delegated enough authority to manage their activities and operations in an autonomous manner, based on subsidized trust accompanied with accountability and proper reporting, especially in the Execution part of the life cycle. Of course governance manifests the authorization policy through defined processes across the whole portfolio life cycle to enable Transparency, Responsibility, Accountability, Fairness and Sustainability in and Integrated manner across the life cycle, under the portfolio and in compliance with organizational governance. With delegation comes great accountability to provide clarity and true visibility, hence the same process mandates what needs to be reported in timely manner, taking into consideration, "A mass of data is not the same as a report" – S. Moore.

3. Portfolio Capacity and Capability Management: The success of any portfolio, and its performing organization depends in great part on availability of 'allocable' resources in timely manner. In every organization, resources are either skillful and experienced, and these are always in high demand and are allocated easily in a highly profitable manner - which formulate the capability of the organization to execute projects and operations, eventually deliver results. The rest of the supply of resources are often either outdated or not available, which poses great challenges for realizing objectives. The demand on the other hand infers the required resources, skills, experiences and capabilities mandated by the market, which the portfolio does not own. in this perspective, the portfolio always strives to develop resources in order to increase allocated minimizing both unused capacity and unmet demand or lost opportunity. This requires portfolio leadership to attend to the ongoing task of building capacity, which requires multiple internal transformation programs and projects, such as developing career programs, policies, process enhancement, quality management, excellence, optimization and various supporting functions that are not directly related to delivery but rather to enabling better delivery. Focus of this domain is always in Initiation and Planning, but extends to the whole life cycle.

4. Portfolio Stakeholder Management: Stakeholder management as a discipline has several processes and tools for identifying, analyzing and engaging resources, which we know from project and program management. While these are quite useful in managing portfolios, stakeholder management serves different purposes, so let us focus on two important ones: Managing the relationship with sponsors, leaders, executives, owners of funds, and managers of resources is quite essential to keep the resourcing, both financial and human intact and flowing in properly to satisfy the needs of projects and operations, avoiding delays and issues. The second is a continuous attempt to build teams that are agile, autonomous and flexible enough to adjust and change roles quickly to adapt to strategic changes. Stakeholder management focuses on sponsors and leaders during Initiation and Planning, and team building during Execution, and back on sponsors and leaders during Optimization. Without good stakeholder management, we cannot get proper and needed communications and engagement.

5. Portfolio Value Management: The most important question in portfolio management is WHY. Value management is about the bottom-line realized benefits at an affordable cost for the organization, which can vary from growth, profitability, relevancy, customer loyalty, improved image, retained or increased market share to better social ecosystem, happier citizenship, improved country ratings and more. Decisively, value management is about "Achieve results, not phases" – J. Flander. Values are identified during Initiation, but they are visited during Optimization. This is where a portfolio can benchmark its efficiency against peers or competitors to reset its targets, either by doing more for the same investment capital or by reducing the investment for the same level of delivery. Ultimately, we have been hearing a lot about doing more for less, which is a status achieved when excellence is realized, and this can only occur in organizations that have already mastered the utilization of portfolio management in their DNA, rendering both: Management of projectized activities to increase value production capability and management of operations to produce sustainable value.

6. Portfolio Risk Management: Similar to stakeholder management, the tools for identifying risks, assessing risks and mitigating them are already widely spread and utilized. The main difference is that portfolio management ascribes to Enterprise Risk Management, affecting the permanent decision making and managing the sustainability and business continuity rather than incidental risks. Often, focusing on organization image, business continuity, funding availability and positive cashflow are continuously monitored and affect directly both the project selection criteria and project kill criteria in any portfolio. "Business is often about killing your favorite children to allow others to succeed" – J. Harvey Jones. This starts from understanding shareholders risk appetite, existing risk exposure and tolerance for more or less risky investments. This domain is heavily utilized in both Initiation and Optimization, where critical decisions are influenced by the efficiency and success of Execution.

Portfolio Management is not a secret, and it is not rocket science either. This is why I always ask myself the question, why it is not spread as should be to reap its benefits. Perhaps the cause is lack of awareness for the benefits of the project management discipline (ask my friend Antonio Nieto-Rodriguez) especially with leaders. Perhaps the reason is that very few sponsors know how to sponsor - since very little literature exists around the topic. Perhaps each party thinks the other got it write; "The single biggest problem in communication is the illusion that it has taken place" – George Bernard Shaw. One reason which I personally witnessed is assigning portfolio roles to mere project managers, without the required knowledge and most critically without understanding the role itself, just because someone is PMP(R) certified does not mean he or she knows how to manage a portfolio!

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