Why Pyramids, Daruma & Eskimos matter
This post is the first of a series of three posts in which we will overview the basic definitions, yet sometimes not so well applied, of Portfolio, Program &
We focus here on the top layer:
Once the strategy has been defined for the overall company, the best way forward to implement it is by using a Portfolio/Program/Project structure. Indeed, where the strategy defines the goals & the means of attaining them, P/P/P management is the crucial link between the organizational strategy apex & the core operations center.
P/P/P activities are built like a pyramid: A portfolio is based on programs which, in turn are based on projects.
A portfolio represents the overall set of activities or investments of a company. The main idea here is that such activities might only be indirectly related or even unconnected.
In order to get the best of the portfolio decomposition to match the strategy you need to foster 5 key factors:
. Top management must demonstrate its involvement & remain active: One of the decision-makers must get ownership & act accordingly as the strategy’s flagship as poor delegation can kill straight away a feasible plan;
. Avoid turf wars: Set clear perimeters from the start if you don’t want the strategy enactment to be considered as a “viral attacks” by the different sub-company governance bodies;
. Make “matriochkan” goals: Refine more & more specifically people’s objectives as you go towards operations;
. Build in transparency: Chase hidden agendas; create a clear escalation process; and ensure that “business as usual” and “beyond responsibility” are properly defined at every level;
. Expedite everyone: Create a sense of urgency & ownership to make things happening.
Don’t forget the all so important context: Link internally portfolio management & integrate external conditions.
Internally, you will need to look for the current and planned:
. Organizational governance: for strategy business value, risk & performance;
. Structural activities: for communication & reporting;
. Program & project execution & operations: for budget, resources & performance.
Externally, you will have to check:
. Market conditions;
. PEST (Political, Economic, Social & Technological) conditions;
. Legal constraints;
. Governmental, or industry standards.
Portfolio management timeframe may look like eternity to most people. Indeed, what is a 10-year cycle to someonestaying in her job position on average less than 3 years? So, make an effort to “humanize” the timescale by slicing the portfolio activities in tranches.
And don’t overlook that a portfolio has 2 kinds of activities. Thus, you can split portfolio activities into 2 tangent cycles:
. Inception cycle: Selecting activities;
. Execution cycle: Reaping what was sawn.
A final word:
The secret of a successful portfolio management is to keep your hands on the strategy, governance, communication, performance & risks. And remember that a performing strategy starts with thinking about it, is followed by talking about it & ends by walking it. Like an acrobat, a good portfolio manager must keep all such skills in balance.