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?
If you want to go from thinking like a director to thinking like VP, President or CEO then think ‘strategic portfolio’. Here are the reasons why:
Leaders with ‘a portfolio mindset’ have an edge when it comes to 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 project. You may be spending a lot of time on specific projects, attending regular project meetings and reviews for example. That however does not mean that you have achieved mastery in terms of your strategic portfolio. To master the portfolio you need to zoom out and to see the bigger picture – you need to adopt a ‘portfolio mindset’.
A portfolio mindset is very different from project mindset. It is as different as strategy and project management, or as different as being a project manager and being a business leader.
The table below contrasts portfolio and project management. Scroll on down to explore the differences, or use the table to jump to a specific difference that grabs tour attention.
If you are going make the switch from a project mindset to a portfolio mindset, let the above list guide you.
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 – it’s strategy as well as it’s 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 clearly linked to success.
Have you got a strategic portfolio? You may have a portfolio of projects and initiatives but just 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 that subset of projects and initiatives clearly linked to success. More specifically that are clearly linked to the performance of the business, the success of the strategy and the realisation of the vision.
Failing to manage a strategic portfolio means failing to manage money, strategy, risk and success.
With a portfolio mindset the focus is on the strategy of the business, as opposed to 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 on the strategy is the primary focus.
Strategic portfolio management – the label says it all. The emphasis being on the word strategic. That means it is important – that it is linked to strategy and to 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 key to ensuring that confidence regarding execution matches the ambition of the strategy. It is key to bridging the gap between strategy and execution.
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. 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 is able to put their ego in their back pocket.
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 wider context and the range of other projects and initiatives that are underway.
We are emerging from a boom period for projects to an era of budget cuts and consolidation. Organizations have had to get good at doing things they previously struggled with, including screening, prioritizing and sequencing projects and scrapping projects that no longer make sense.
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/question for leaders.
A portfolio mindset adopts an integrated approach to project planning and resourcing, with coordinated decisions and joined up thinking.
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 greatest 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.
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 key.
A portfolio mindset is important because running isolated or stand-alone projects typically results in suboptimal outcomes, for example:
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?
Because they are used to looking at projects in isolation, leaders typically have limited visibility or control over their 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, spend, 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 be something that gets 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 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.
Adopting a portfolio mindset naturally leads to more consistent processes, procedures and supports across projects. The result is greater visibility and control of the portfolio. That means better decisions and fewer surprise setbacks.
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.).
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.