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Strategic Portfolio Management::
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 blindspot 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 out those projects and initiatives that are linked to success and that 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 the way that many business managers do. Indeed, they would probably be fired. For example, imagine a Wall Street investment broker not knowing how big an important portfolio was, what it contained, how it was performing, the level of risk, the likely return and so on.

Not knowing these essentials about an important portfolio would be a clear abdication of responsibility – sufficient to cost them their job and their license. Yet, something similar is happening within organizations with respect to how portfolios and even 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.
  • Makes investment decisions in an impulsive way. 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 organization’s leaders and how they manage their strategic portfolios?

Strategic Portfolio Blindness

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

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

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

Leaders may care little about the majority of projects. They can only be expected to care about those projects, programs and initiatives that are clearly linked success.  That is, those projects and initiatives that are directly linked to the performance of the business, the success of the strategy and the realization of the vision. It is this subset of important projects and initiatives is worthy of the title ‘strategic portfolio’ and deserves to be managed the ‘Wall Street’ Way.

What is the ‘Wall Street Way’?

There are 4 reasons why 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 important.

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

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.

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 an obvious 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 performance of the portfolio 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, but the reality of strategy is evident in how the organization invests it’s 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.

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

Warning: Failing to manage the portfolio is failing 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. 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 key – 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 key 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. 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 lags behind 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 blindspot, but a mindset. The strategic portfolio should be front of mind for the leader. 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 portfolio and the success of the business are clearly linked. If they are not then the portfolio is not really a strategic portfolio. A leader should be able to talk for at least 5 minutes on their portfolio if asked. They should be able to clearly communicate how the performance of the portfolio underpins confidence in the execution of the strategy and realization of the vision.

The portfolio has to be strategic if it is going to 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, those initiatives that are strategic often find themselves competing for time, attention and, of course, resources.

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