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Clarifying Roles & Responsibilities
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Are You Managing Your Strategic Portfolio the ‘Wall Street Way’?

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

In these times of economic uncertainty, the strategic portfolio is a dangerous blind spot that could cost organizations dearly.

Why Does the Strategic Portfolio Matter?

Bundle all those projects and initiatives, programs and priorities together, and that is your portfolio. Separate those projects and initiatives linked to success, which is your ‘strategic portfolio'.

Given the millions tied up in strategic project portfolios, you would expect them to be managed with the same care and attention an investment broker would apply to a million-dollar investment portfolio. You would expect them to be managed the ‘Wall Street Way.'

However, most investment brokers would be fired if they managed their portfolios as many business managers do. Indeed, they would be fired. For example, imagine a Wall Street investment broker not knowing how big a significant portfolio was, what it contained, how it was performing, the level of risk, the likely return and so on.

Not knowing these essentials about a critical portfolio would be an apparent abdication of responsibility – sufficient to cost them their job and license. Yet, something similar is happening within organisations concerning how strategic portfolios are being run.

Here is the type of investment broker you don’t want:

  • Does not know what is in the portfolio – what it contains, how much investment and risk is involved, etc.
  • Impulsively makes investment decisions. Makes stand-alone investment decisions without considering the rest of the portfolio.
  • Is not clear on the strategy or the goal and cannot put a number on it
  • Does not track progress – cannot tell how many of the investments are working and how many are not.
  • Only pays attention to some of the investments in the portfolio, neglecting the others
  • Is not concerned about the performance and health of the portfolio. Does not seek to balance the portfolio.

This is not the “Wall Street' way! Do any of the above apply to your organisation's leaders and how they manage their strategic portfolios?

Strategic Portfolio Blindness

The concept of important projects and initiatives as a strategic portfolio is a significant leadership blind spot – one that has the potential to cost organizations dearly.

Some of this portfolio blind spot results from a failure to segment the portfolio distinguishing from the broad mass of projects and those projects that matter.

Project Management (PM) suffers from an image problem within many organizations. The danger is that Portfolio Management can be seen as an extension of PM, and this is where the word strategic in strategic portfolio management is essential. It is not just about projects – it is about strategy, particularly bringing the strategy to life, and this is why it is worthy of leadership attention.

Leaders may care little about most projects, and they can only be expected to care about those projects, programs and initiatives linked to success. That is, those projects and initiatives directly related to the business's performance, the strategy's success and the vision's realization. This subset of essential projects and initiatives is worthy of the' strategic portfolio' title and deserves to be managed the ‘Wall Street' Way.

What is the ‘Wall Street Way'?

There are 4 reasons leaders should attend to their strategic portfolio of projects and initiatives like a high-end Wall Street investment manager. They are money, strategy, risk and success.

As the labels' money', risk' and so on suggest managing the portfolio is fundamentally essential.

If you want to go from thinking like a director to thinking like VP, President, or CEO, then start thinking strategically about your portfolio. Start managing your strategic portfolio like a Wall Street Investment Broker.

Failing to manage a strategic portfolio means failing to manage money, strategy, risk and success. Let's explore each of these in turn.

Managing the Portfolio = Managing Money

A business unit with 50 or more ‘live' projects is not unusual. Suppose the average budget was $1.5 million; that would represent a total investment of $75 million. The number of projects and initiatives for large organisations could be many times that. As such a significant investment in your organisation'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.

Projects and initiatives represent a major financial outlay – tying up millions of dollars and thousands of ‘man-hours'. At a time of resource scarcity and economic uncertainty, the portfolio is a prominent place to look for cost savings and efficiencies.

Warning: Failing to manage the portfolio is failing to manage one of the biggest areas of spending.

Managing the Portfolio = Managing Strategy

The portfolio's performance will determine the success of your organization's most ambitious strategies, from digital transformation to organizational change, innovation and growth.

Words mean little when it comes to strategy. Yes, the strategic plan or set of slides is a guide. Still, the reality of strategy is evident in how the organization invests its resources and, in particular, the projects and initiatives that are funded. Thus, the portfolio reflects the living strategy better than the plan.

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

  • 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.

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 should be woven together into a broader tapestry of deliberate design and forethought.

Warning: Failing to manage the portfolio fails to bridge the gap between strategy and execution.

Managing the Portfolio = Managing Risk

It is not just a portfolio of investments but of risks too. The success of any project or initiative cannot be taken for granted. Yet, most managers only have limited visibility of their portfolios – they are often let in the dark.

There may be some nasty surprises hidden within your portfolio, and that could be a real problem if they remain hidden. The earlier you identify projects or initiatives that are in trouble, the sooner you can intervene to prevent problems from getting out of control. Being proactive here is vital – don't wait to be told! 

Some projects and initiatives may have a high risk of failure. But which ones? How is risk being managed/mitigated?

The portfolio is critical to understanding and managing business risk. A portfolio must balance short-term with longer-term, high risk with low risk and sure things with more speculative gambles.

Warning: Failing to manage the portfolio leaves you vulnerable to surprise setbacks.

Managing the Portfolio = Managing Success

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

How confidently will your portfolio deliver the levels of performance, growth and innovation that are required for success? That is the million-dollar question.

The portfolio underpins performance in the short term, as well as the longer-term vision of success. It is the means of value and wealth creation for the organization.

Projects and initiatives are the bridge between strategy and execution. However, while countless hours are spent crafting the strategy, little time is spent managing the portfolio. Inevitably, the confidence in execution needs to catch up to the ambition of the strategy.

Warning: Failure to manage the strategic portfolio could jeopardize your success.

The Strategic Portfolio

The strategic portfolio shouldn't be a blind spot but a mindset. The strategic portfolio should be front of mind for the leader, and it should be something that gets them excited. The leader should have visibility and control of the portfolio at all times. All this assumes that the success of the portfolio and the success of the business are linked. If they are not then, the portfolio is not strategic. A leader should be able to talk for at least 5 minutes on their portfolio if asked. They should be able to communicate how the portfolio's performance underpins confidence in the execution of the strategy and the realization of the vision.

The portfolio has to be strategic if it will merit leadership attention. Yet, the strategic portfolio must be seen in the context of the wider project portfolio. That is because every project and initiative draws on organizational resources. A proliferation of projects means that resources are often spread like peanut butter across a long list of projects and initiatives. As a result, strategic initiatives often find themselves competing for time, attention and, of course, resources.

Cover art: Image by Reto Keller from Pixabay

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