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Managing Your Project Portfolio the Wall Street Way

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The prosperity of your organization is tied to the performance of its portfolio of strategic projects and initiatives. That makes portfolio management critical to success.  

A portfolio of strategic projects and initiatives deserves the same level of care and attention that would be given to any important investment portfolio. In short, it needs to be managed the Wall Street way.

Your Organization’s Prosperity

The continued prosperity of your organization is closely tied up with the health of its portfolio of critical projects and initiatives. The performance of this portfolio will determine the success of your organization’s most ambitious strategies including digital transformation, organizational change, accelerated innovation and growth.

For a business unit to have 50 or more ‘live’ projects is not unusual.  If the average budget was $1.5 million that would represent a total investment of $75 million.  For large organizations the number of projects and initiatives could be many times that. As such a major investment in your organization’s future this portfolio of projects and initiatives demands the skills of a Wall Street investment manager. It must generate a payback many times the total project investment.

The projects and initiatives in your portfolio reveal the decisions made by your organization:

  • Where it has chosen to invest its manpower, money and other resources. 
  • The trade-offs it has made by investing in some projects and not in others.
  • Your organization’s level of ambition, its appetite for risk and expectation of reward, including where it expects to derive the greatest payback or return.

Hopefully all the above are carefully calculated decisions aligned with the strategy of the organization and the results that it must achieve. Rather than a project free-for-all, individual projects are woven together into a broader tapestry of deliberate design and forethought.

As a first step in answering the million-dollar question, we zoomed in to explore the performance of those most critical projects.  Now we are going to zoom out to take a big picture view of the portfolio’s overall performance.  That means asking questions such as what percentage of projects are performing and struggling and what the overall portfolio reveals.

Beyond Stand-alone Projects

Some initiatives may be performing, while others are not. But what is the overall performance or health of your business unit or organization’s project portfolio? This is important because any single project is unlikely to have an overwhelming impact on the organization’s destiny. However, the performance of a bundle of important projects or initiatives could be decisive.

Think of a portfolio of projects as if it were a football team – if each player simply does their own thing (independent of the other members of the team) it is going to be difficult to win. It takes a team to win, individual players can’t achieve that alone. So, a team manager will optimize the performance of each player, while also attending to the overall performance of the team. The same applies to a portfolio of projects – you optimize individual projects and initiatives, while attending to the overall performance of the project bundle or portfolio.

The ‘portfolio mindset’ can be applied at a number of levels.  It can be applied for an organization’s overall project portfolio, as well as for parts of it (e.g. the IT project portfolio). Importantly, it can also be applied for mega projects or programs, for example where a digital transformation initiative is seen as a bundle or portfolio of projects, sub-projects, initiatives and work streams. The task is therefore two-fold – optimizing the performance of each of these ‘granular elements’ while also managing the totality of the program.

Zoom-out to Analyze the Overall Portfolio

For an organization to be confident of realizing its strategic ambitions, a portfolio of projects and initiatives must be more than the sum of its parts. With this in mind, we are also going to look at the health of the portfolio, as well as its performance.

As a portfolio is more than a collection of individual initiatives, we are going to explore the composition or make-up of the portfolio.  This includes whether the portfolio is aligned, integrated and balanced.

To think like a Wall Street investor we will explore the performance, health and synergy of the portfolio under 6 headings as follows:

The 6 factors above characterize a winning portfolio – one that is likely to best advance the organization’s strategy and its prosperity too.

Use the 6 factors to explore the health and performance of your portfolio and how likely it is to deliver on your strategy. As you review each of these factors, identify any areas where there may be gaps in respect of portfolio management.

Let’s explore each of these 6 areas in turn.

How Healthy are the Portfolio’s Vital Statistics?

In assessing the portfolios performance and health let’s start by gathering some vital statistics, including:

  • How many projects are ‘live’ and in the pipeline? 
  • What is the overall investment in projects? What is the expected payback?
  • What percentage of projects are performing and are struggling? 
  • What percentage of projects are at the first mile and last mile?
  • How is the list of projects segmented in terms of importance, spend, functional area and so on?

These ‘vital statistics’ will help in providing a contextualized view of the health of the portfolio.  Moreover, the act of gathering this information will, of itself, improve the level of visibility and oversight of the project portfolio, as the following examples suggest:

‘We use the word ‘project’ for everything – from a piece of work that one person is doing to a cross functional initiative with a big budget and dedicated resources’ said one frustrated executive.  ‘However, once we arrived at an internal definition of what a ‘project’ actually is, we calculated a total of real 230 projects that are presently underway across the division’.

‘To be ‘valid’ or ‘real’ a project must have a documented business case, but of the 150 or so projects underway, it would appear than less than 10% actually have one on paper.  This calls into question how the success (or otherwise) of these projects will be measured.’

‘Only 10% of projects had more than one department or function as the sponsor.  This raised concerns about a siloed approach to critical projects whose success would require effective cross-functional collaboration.’

How Aligned is Your Portfolio?

Is there internal consistency within the portfolio? This means ensuring that projects and initiatives are not ‘at odds with’, but compliment and reinforce each other.  They are aligned with strategy and consistent with the overall vision, the needs of the business and the realities of its market.  Moreover, that the allocation of people and other resources to projects matches words with deeds in terms of the organization’s stated strategic priorities.

Failure to adopt a portfolio mindset, neglects interdependencies as well as synergies across projects. Projects that span departments and functions amplify this challenge. HR has its projects and IT its projects too.  This is situation is replicated across Finance, Marketing, Operations and all the other functions too. 

How Balanced is Your Portfolio?

Is there an appropriate mix or spread of projects or initiatives within the portfolio:

  • Spanning different time horizons – short, medium and long term1.  In addition to delivering short term gains in efficiency and performance to meet this year’s target, longer term projects must ‘pay it forward’ investing in those areas that will sustain performance into the longer term and enable the business to cope with future disruption and change.
  • Addressing core, adjacent and new areas of the business (capabilities, products, technologies, markets, etc.)2. Another way of describing this would be business as usual (i.e. concerned with the everyday running of the business) or business unusual (a departure from the everyday running of the business concerned with new processes, products, markets and technologies)?

Similar to a financial investment portfolio of stocks and shares, some projects or initiatives may promise a high reward but entail high levels of risk.  Other projects or initiatives may be low risk but deliver only low returns.  The balance between the two determines whether a portfolio would be described as ‘conservative’, ‘moderate’ or ‘aggressive’.3

Ideally a portfolio would be a hybrid or mix of both conservative, moderate and aggressive initiatives in order to deliver on the strategy as well as the longer-term vision.  Use the table overleaf to find out which of these labels best describes your portfolio.

The mix of projects in a portfolio reflects not just the level of ambition of the organization’s vision or strategy, but also its appetite for innovation, risk or disruption

Explore the balance within your portfolio in 3 steps:

Step 1: Give each project a number based on its position on the grid (above).  For example:

  • A project likely to deliver in the short term and focused on the core business (e.g. optimizing existing processes) would be a ‘1’
  • A longer-term initiative focused on new technologies is a ’9’. 

Step 2: Add all the numbers across the portfolio and divide by the number of projects to find the average. 

Step 3: Use the table to find out what it reveals about your portfolio:

AverageWhat it Suggests
1-3Your portfolio appears conservative
4-6Your portfolio appears balanced
7-9Your portfolio appears aggressive

As a rough ‘rule of thumb’ a number close to ‘5’ can be seen to indicate a balanced portfolio.

How Integrated is Your Portfolio?

Looking at individual projects (even critical ones) in isolation risks missing the bigger picture.  You need to zoom out to see patterns across a bundle or portfolio of projects and initiatives, also to leverage synergies or manage interdependencies between individual projects. Running lots of standalone projects in isolation of each other results in missed opportunities.

Is your portfolio a collection of individual initiatives, or is it more? While projects and initiatives may cover a wide gambit in terms of different departments, functions, goals and timelines some integration is important.  For example:

  • Are projects woven into the overall strategic agenda?
  • Is care taken to leverage any synergies and interdependencies between projects?
  • How effective is collaboration between project teams?
  • Is organizational learning deliberately harvested across the portfolio? 
  • Do projects span departments and functions – uniting them in the realization of shared objectives and requiring effective cross-functional collaboration?
  • Are projects united through a common vision and shared framework or set of principles underpinning their success?

Does Your Portfolio Stretch Your Organization? 

Ideally, the portfolio should also stretch and challenge the organization, testing the limits of its ambition and the vision of its future. It must balance the predictability of business usual, with the need to embrace and shape the future through change and innovation (business unusual). 

Complex and innovative projects will inevitably challenge, stretch and even strain the organization:

  • Exciting the visionary, while threatening the more traditional
  • Generating tension between the old and the new
  • Creating perceived winners and losers
  • Putting the optimists up against the cynics
  • Aggravating rifts and tensions, as well as issues of personalities and politics
  • Challenging long held beliefs and organizational dogma (or groupthink)
  • Challenging old ways of working and chaffing against the traditional hierarchy
  • Creating confusion and ambiguity where there was once order and certainty.

How do you know if your portfolio stretches your organization? 

Well, look for projects or initiatives on the grid that fall anywhere between 5 and 9.  In particular, lookout for 9s on the grid.     

In the 9th box you will find what Harvard MBA Graduates call ‘Blue Ocean’ strategies, ‘Inflection Points’ and even ‘Moonshots’.

If this grid was an early map of the world, then the 9th box is where the text ‘here there be dragons’ might be added.  Projects here are business unusual, rather than business as usual.  They entail high levels of risk and uncertainty and are laden with hypothesis and assumptions. However, it is here that the most ambitious strategies are likely to emerge.  It is here that the potential for hockey stick or 10x levels of growth exists.

Recognizing that the organization can only see so far into the future, some projects in the 9th box are exploratory or speculative.  For example, a longer-term initiative focused on a new technology, product or channel. Such ‘strategic experiments’ are vehicles for learning and innovation. They embrace uncertainty, testing assumptions and hypotheses about the future.

Following some exploratory market research in emerging markets, a traditional ‘bricks and mortar’ bank with eyes on the future, prototypes and experiments with a mobile payments app in a number of large college campuses to learn about the opportunity and the challenges it will present. This ‘living market research’ reduced ‘box 9’ risk and uncertainty. It provides the external validation necessary to build the business case for a more wide-ranging strategic initiative centered on the emerging mobile payments opportunity.

Is the Portfolio Prioritized & Sequenced?

With many projects and initiatives competing for scarce time and attention it is important that projects are prioritized and sequenced with resources being allocated for maximum impact and the necessary trade-offs being made. 

By prioritizing and sequencing those projects that matter most, the organization:

  • Ensures that projects must compete for resources & attention
  • Focuses attention and aligns resources in line with the strategy or vision 
  • Prevents a proliferation of projects and dissipation of effort and resources
  • Connects projects and initiatives to business impact and success
  • Ensures that the timing is right in terms of the window of opportunity and the readiness of the organization.

Not all projects can or should go ahead and certainly not at the same time.  The organization must invest its resources in those projects and initiatives that can most impact the success of the business and its strategy. 

Nothing signals a lack of clarity or alignment regarding strategy, like a proliferation of projects.  Yet, decisions to fund one project over another can be mired by politics and other forms of bias.

Adopting a Portfolio Mindset

A portfolio mindset is important because running isolated or standalone projects typically results in suboptimal outcomes, for example:

  • Competition rather than synergy between projects, resulting in hoarding (rather than sharing) information and resources, as well as duplication and overlap between projects.
  • Failure to capture learning from one project and share with another, to build the organization’s overall competence/capacity
  • Individual projects can lose sight of the needs of the business (what we call Project Myopia), with the emergence of silos and boundary disputes
  • Failure to recognize patterns across projects – therefore problems are tackled on a project-by-project basis although they may have systemic causes.
  • A proliferation of projects. Resources, are dissipated and thinly spread, rather than being focused where they can have the greatest impact.
  • A failure to pool resources (tools, skills, etc.) that can be shared across projects.
  • Lack of standardized or consistent processes and procedures, or a support structure for projects. There is no standard way to plan, prioritize or review projects. It is an organizational free for all, with the approach determined on a project-by-project basis and depending on the sponsor or project manager.

Program Granularity

Granularity is a long-established and common-sense principle in respect of strategy. It means that organizational strategy needs to be granular – broken down into its component parts and attending to the opportunities and challenges presented by different business units, products, markets and so on. Therefore, a corporate strategy is the rolled up summary of all the individual strategies of the different parts of the business. On over-arching strategy is simply too vague, to be meaningful and actionable strategy needs to get stuck into the detail.

This ‘granularity principle’ applies in respect of major projects too. They need to be broken down into their component parts. A major program or mega project is a bundle of smaller projects, specific initiatives and individual workstreams. The task is two-fold optimizing the performance of each of these ‘granular elements’ while also managing the totality of the program or portfolio (in line with the 6 factors above). 

  1. Mehrdad Baghai, Stephen Coley, and David White, The Alchemy of Growth, New York: Perseus Publishing, 1999. []
  2. ‘Strategic transformation requires the seeds of growth and innovation to be planted while maintaining the core business, enabling rapid scaling when those seeds start to bear fruit’ Colin Price & Sharon Toye, Accelerating Performance: How Organizations Can Mobilize, Execute, and Transform with Agility, Wiley; 2017. []
  3. See how Investment Portfolios are described here: https://www.investopedia.com/articles/basics/11/5-popular-portfolio-types.asp []

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