Is Your Strategic Portfolio Getting the Attention it Needs?
The Trends & Topics that Pre-occupied Leaders in 2022
Managing projects – obviously that is essential, but it is not enough! Moreover, it is not necessary the job of a senior leader. Leaders are constantly thinking of their strategic portfolios – they have a ‘portfolio mindset'. But what about you?
Have You A ‘Portfolio Mindset'?
If you want to go from thinking like a director to thinking like VP, President, or CEO, think ‘strategic portfolio’. Here are the reasons why:
Leaders with a portfolio mindset’ have an edge regarding strategy, with greater visibility & control over execution. It enables them to bridge the gap between strategy and execution, as well as to manage risks, maximize resources and ensure focus & alignment.
A portfolio mindset doesn’t just mean thinking about a project. You may be spending a lot of time on specific projects, attending regular project meetings and reviews. However, that does not mean that you have achieved mastery in your strategic portfolio. To master the portfolio, you need to zoom out and see the bigger picture – you need to adopt a ‘portfolio mindset’.
What's a Portfolio Mindset?
A portfolio mindset is very different from a project mindset. It is as diverse as strategy and project management or as different as being a project manager and a business leader.
The table below contrasts portfolio and project management. Scroll down to explore the differences, or use the table to jump to a specific difference that grabs your attention.
If you switch from a project mindset to a portfolio mindset, let the above list guide you.
Business Success V's Project Success
Rather than a narrow view of project success, focus on the broader goal of business success.
While managing projects is often focused on the how (what needs to be done, when it needs to be done, the outputs required and so on), strategic portfolio management focuses on the Why – the strategic rationale for projects and initiatives. In particular, what the business is trying to achieve – its strategy and vision for success.
Leaders who bridge the gap between strategy and execution actively manage their strategic portfolio. That is those projects and initiatives that are linked to success.
Have you got a strategic portfolio? You may have a portfolio of projects and initiatives, but how strategic is it? To what extent is it connected to the success of your strategy or the advancement of your position?
A strategic portfolio is a subset of projects and initiatives linked to success, more specifically, that are related to the performance of the business, the success of the strategy and the realization of the vision.
Failing to manage a strategic portfolio means failing to manage money, strategy, risk and success.
Business Strategy V's Project Plan
With a portfolio mindset, the focus is on the business's strategy instead of just the project plan.
Ensuring that a project(s) delivers on time and to budget is still the project leader's primary concern, but for the senior leader, that is not enough. Delivering the strategy is the primary focus..
Strategic portfolio management – the label says it all. The emphasis is on the word strategic, which means it is essential and linked to strategy and success.
For a long time, there was a widely held but mistaken view that leaders did strategy while execution was done by somebody else. But leadership is both strategy and execution. The leader staying involved is critical to ensuring that confidence regarding execution matches the strategy's ambition, and it is key to bridging the gap between strategy and execution.
Business First Vs Project First
Those running projects tend to put the project first. Regardless of whether it is an IT project, a HR project or anything else, the focus should be on business needs and priorities, and the. The perspective is business first.
Individual projects can lose sight of the needs of the business (what we call Project Myopia) with the emergence of silos and boundary disputes.
‘Hands off' my project is a natural response from any project manager who is invested lots of time and energy in getting a project off the ground.
A key factor distinguishing the leader from the project manager is the ability to put the business rather than the project first. This requires the project manager or sponsor can put their ego in their back pocket.
Coordinated Vs Stand-Alone Decisions
The goal of managing the portfolio is to deliver on the strategy/vision. This cannot be achieved through any single project but by the integrated efforts of many coordinated projects and initiatives.
Yet, decisions are often made on a project-by-project basis, with little consideration of the broader context and the range of other projects and initiatives underway.
Project decisions may be made in silos with each department function or team having its own projects and initiatives to protect. The resulting myopia puts the interest of the department of function ahead of those of the business its needs and priorities.
In 2022-23 organizations emerged from a boom period for projects to an era of budget cuts and consolidation. Suddenly, they have had to get good at doing things they previously struggled with, including screening, prioritizing, sequencing, and scrapping projects that no longer make sense.
With a portfolio mindset, project resourcing decisions are not just budgetary or financial decisions but strategic business decisions that must reflect the commitments and priorities of the organization. This is a multi-million dollar issue/question for leaders.
A portfolio mindset adopts an integrated approach to project planning and resourcing, with coordinated decisions and joined up thinking.
Consolidation Vs Proliferation
When decisions are made on a project-by-project basis, this can result in everybody doing their own thing and a proliferation of projects and priorities. As a result, resources are dissipated – being thinly spread rather than being focused where they can have the most significant impact.
By contrast, a portfolio mindset tends to lead to a consolidation of projects, with particular attention given to the prioritization, sequencing and timing of projects and initiatives.
A strategic portfolio mindset is a prioritization mindset. It is about ensuring that resources are allocated to those projects and initiatives that are most closely linked to success.
A portfolio mindset helps to ensure greater clarity and alignment regarding business needs and priorities. This is essential as a proliferation of projects (also called project whack-a-mole) is typically symptomatic of the need for greater strategic clarity and alignment.
Synergy Vs Silos
Stand-alone projects often happen in silos. When a portfolio mindset exists, linkages and synergies between projects are leveraged. The aim is to ensure that the whole is greater than the sum of the parts. Effective collaboration is vital.
A portfolio mindset is essential because running isolated or stand-alone projects typically results in suboptimal outcomes, for example:
- Competition rather than collaboration between projects, resulting in hoarding (rather than sharing) information and resources
- Duplication, gaps and overlaps between projects
- Failure to capture learning from one project and share with another, to build the organization’s overall competence/capacity
- A siloed approach where there are challenges with the levels of cross-functional collaboration required for the success of complex strategic initiatives.
- A failure to pool resources (tools, skills, etc.) that can be shared across projects.
- Failure to recognize patterns across projects – therefore problems are tackled on a project-by-project basis, although they may have systemic causes.
Visibility Vs Blind spot
Some initiatives may be performing, while others are not. But what is your business unit's overall performance or health or organization's project portfolio?
Because they are used to looking at projects in isolation, leaders typically have limited visibility or control over their overall portfolios. They may not have accurate and up-to-date information on the performance or health of their portfolio or individual projects (e.g. status, spending, risk and so on).
The strategic portfolio should be a mindset rather than a blind spot. It should be front-of-mind for the leader. It should get them excited or frustrated (but does not leave them cold). 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 about their portfolio if asked. They should be able to communicate how the portfolio's performance underpins confidence in the execution of the strategy and realization of the vision.
Adopting a portfolio mindset naturally leads to more consistent processes, procedures and support across projects. The result is greater visibility and control of the portfolio, which means better decisions and fewer surprise setbacks.
Organizational Competence Vs Project Skills
For project mangers the focus is on the talent/skills required for a particular project.
Leaders that are portfolio aware, seek to nurture and develop their organization's capacity to successfully deliver projects and initiatives (skills, tools, frameworks, etc.).
Strategic Decisions Vs Budget Decision
With a portfolio mindset, project resourcing decisions are not just budgetary or financial decisions, but strategic decisions that must reflect the commitments and priorities of the organization. This is a multi-million dollar issue for leaders.
Naturally, at a project level the focus is on securing the maximum budget and delivering under budget. But, at a portfolio level the focus is on the total investment in projects & initiatives and the payback it will generate.
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