Strategic Project Portfolio Management E-Book

Simon Moore

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Microsoft Executive Circle
• Sprache: Englisch

Seitenzahl: 253

Veröffentlichungsjahr: 2009

Beschreibung

Lead change through strategic alignment of project and process performance Practical and filled with expert advice, Strategic Project Portfolio Management: Enabling a Productive Organization presents a clear framework for your organization to complete impactful strategic projects. Providing executive-level guidance to build a powerful and efficient process from initial adoption to portfolio alignment, this essential resource contains case studies from small to global multinational organizations, arming you with the insights to ensure your strategic projects are given the resources they need to deliver business impact. This important guide * Shows executives how to align their projects and processes with their business strategy for compelling competitive advantage * Provides cases from best in class organizations, showing how they were able to achieve results by using processes outlined in the book * Reveals how technology is the key to developing new collaborative platforms and innovative work management environments that have not been possible until now * Defines a framework for assessing project portfolio management competence within your organization and driving momentum for compelling improvements * Explores how to go beyond project portfolio management to a holistic work management system Strategic Project Portfolio Management: Enabling a Productive Organization offers the practical recommendations, guidance, and real world insights you need to immediately begin driving better project management strategy.

Leseprobe

Table of Contents

Title Page

Copyright Page

Foreword

Preface

THE REASON FOR THIS BOOK

How the Book Is Organized

THE VALUE TO THE READER

Acknowledgements

Introduction

CHAPTER 1 - Obtaining the Best Ideas

THE COST OF WASTED IDEAS

PROJECTS AND INNOVATION

WHY A LONG LIST OF PROPOSALS IS NECESSARY

THE RISK OF INFORMAL PROCESSES

LOWERING THE BAR FOR IDEA SUBMISSION

USING SIMPLE IDEA CAPTURE

THE VALUE OF RANGE-BASED ESTIMATION

GENERATING EXCITEMENT

MAKING PROCESSES TRANSPARENT

MAKING PROCESSES SIMPLE

USING SUPERIOR ESTIMATION

GOING BEYOND THE EMPLOYEE

MANAGING PROJECTS ACROSS THE SUPPLY CHAIN

WHERE ARE YOUR IDEAS COMING FROM?

KEY QUESTIONS

SUGGESTED READINGS

CHAPTER 2 - Selecting lmpactful Projects

ALIGNING PROJECTS AND STRATEGY

CREATING PORTFOLIO ALIGNMENT

GOING BEYOND STRATEGIC ALIGNMENT

APPLYING PORTFOLIO THEORY TO PORTFOLIO SELECTION

THE VALUE OF PRIVATE INFORMATION COLLECTION

THE RISK OF COMMITMENT ESCALATION

THE DANGER OF SLOW DECISION MAKING

AVOIDING COGNITIVE DISSONANCE

STRIVING FOR NIMBLE DECISION MAKING

KEY QUESTIONS

SUGGESTED READINGS

CHAPTER 3 - The Importance of Planning

KNOWING WHAT YOU ALREADY HAVE

DETERMINING HOW MANY RESOURCES YOU HAVE

THE VALUE OF PLANNING

THE TRIPLE CONSTRAINT: TIME, SCOPE, COST

THE IMPORTANCE OF BOTTOM-UP PLANNING

AVOIDING PROJECT DELAYS

KEY QUESTIONS

SUGGESTED READINGS

CHAPTER 4 - Improving Cost Performance

THE BENEFITS OF PORTFOLIO MANAGEMENT

UNDERSTANDING MARGINAL RETURNS

ALLOCATING RESOURCES PREDICTABLY

IMPROVING FINANCIAL FORECASTING

USING EARNED VALUE

USING INNOVATIVE IDEAS TO MAKE BETTER USE OF RESOURCES

ACCESSING SUPERIOR RISK ANALYSIS

KEY QUESTIONS

SUGGESTED READINGS

CHAPTER 5 - Ten Things to Do

KNOW WHAT YOU HAVE

BUILD MOMENTUM

DEFINE BUSINESS GOALS

CAPTURE IDEAS

BE TRANSPARENT

PRIORITIZE

USE EFFICIENT DECISION MAKING

ESTABLISH COMMUNICATION FRAMEWORKS

CONDUCT POSTMORTEMS

IMPROVE CONTINUALLY

KEY QUESTIONS

CHAPTER 6 - Best Practices

KEYS TO PORTFOLIO SUCCESS: WHAT ARE YOU MONITORING?

BUILDING LEGITIMACY THROUGH EFFECTIVE MONITORING

CAPTURING WHAT YOU NEED

CREATING AN EFFECTIVE DASHBOARD

SHARING INFORMATION

SETTING REVIEW MEETINGS

THE TRANSPARENT ORGANIZATION

FROM MONITORING TO ACTION

UNDERSTANDING ORGANIZATIONAL COMPETENCIES

MAXIMIZING INTEGRATION, MINIMIZING TRAINING

EMPLOYING BEST PRACTICES BY ORGANIZATIONAL TYPE

KEY QUESTIONS

SUGGESTED READINGS

CHAPTER 7 - Ten Things to Avoid

MOVING TOO FAST

ALLOWING HEAVY PROCESSES

RELYING ON THE BIG BANG

NOT TYING REPORTS TO ACTION

NOT KILLING PROJECTS

FAILING TO CALIBRATE ESTIMATES

MISSING SCOPE CHANGES

COMPARTMENTALIZING INFORMATION

PROVIDING INADEQUATE RESOURCES

PLANNING INSUFFICIENTLY

KEY QUESTIONS

CHAPTER 8 - Communications

THE IMPORTANCE OF EFFICIENT COMMUNICATION

PRESENCE: REACHING PEOPLE FASTER

STORING INFORMATION

COLLABORATING BEYOND DOCUMENTS

CREATING INSTITUTIONAL MEMORY

CUSTOMIZING THE WORKSPACE

USING SOCIAL NETWORKING

AUTOMATING PROCESSES

MOBILITY: COMMUNICATING REGARDLESS OF LOCATION

WEB CONFERENCING: BRINGING VIRTUAL TEAMS TOGETHER INSTANTLY

KEY QUESTIONS

CHAPTER 9 - Identifying Organizational Bottlenecks

THE PROBLEM WITH BOTTLENECKS

POSTMORTEMS

TRACKING BENEFITS

KEY QUESTIONS

SUGGESTED READINGS

CHAPTER 10 - People, the Key Element

THE NEED FOR ORGANIZATIONAL BUY-IN

THINKING BEYOND THE TECHNOLOGY

ENGAGING BEYOND YOUR IT DEPARTMENT

BUILDING YOUR OWN SUCCESS

REPETITION, REPETITION, REPETITION

USING DIFFERENT CHANNELS FOR INFORMATION SHARING

DRIVING AWARENESS UNCONVENTIONALLY

WHAT’S IN IT FOR ME?

THE NEED FOR A PHASED APPROACH

KNOWING YOUR AUDIENCE

LOOKING BEYOND EXECUTIVES

DRIVING MORE CUSTOMER ENGAGEMENT

USING TOP-DOWN VERSUS BOTTOM-UP IMPLEMENTATION

KEY QUESTIONS

SUGGESTED READINGS

CHAPTER 11 - Toward Adaptive Project Management

INTRODUCTION

THE GANTT CHART

CRITICAL PATH METHOD

PHASED MANAGEMENT MODELS

EVENT CHAIN METHOD

PRINCE2

PROJECT MANAGEMENT BODY OF KNOWLEDGE

AGILE PROJECT MANAGEMENT

PROJECTS WITHOUT PLANNING-THE WIKIPEDIA APPROACH

A CONTINUUM, RATHER THAN A CHOICE

KEY QUESTIONS

SUGGESTED READINGS

CHAPTER 12 - The Future of Strategic Portfolio Management

THE CHALLENGE OF PREDICTING CHANGE-THE FAX

PREDICTED CHANGES TO STRATEGIC PORTFOLIO MANAGEMENT

More Fluid Organizations

KEY QUESTIONS

SUGGESTED READING

Conclusion

Index

This book is printed on acid-free paper.

Copyright © 2010 by Simon Moore. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Moore, Simon, 1978-Strategic project portfolio management : enabling a productive organization / Simon Moore. p. cm. - (Microsoft executive leadership series ; 16)

Includes index.

Summary: “Lead change through strategic alignment of project and process performance Practical and filled with expert advice, Strategic Project Portfolio Management: Enabling a Productive Organization presents a clear framework for your organization to complete impactful strategic projects. Providing executive-level guidance to build a powerful and efficient process from initial adoption to portfolio alignment, this essential resource contains case studies from small to global multinational organizations, arming you with the insights to ensure your strategic projects are given the resources they need to deliver business impact. This important guide Shows executives how to align their projects and processes with their business strategy for compelling competitive advantage Provides cases from best in class organizations, showing how they were able to achieve results by using processes outlined in the book Reveals how technology is the key to developing new collaborative platforms and innovative work management environments that have not been possible until now Defines a framework for assessing project portfolio management competence within your organization and driving momentum for compelling improvements Explores how to go beyond project portfolio management to a holistic work management system Strategic Project Portfolio Management: Enabling a Productive Organization offers the practical recommendations, guidance, and real world insights you need to immediately begin driving better project management strategy”—

Provided by publisher.

eISBN : 978-0-470-56412-7

1. Portfolio management. 2. Strategic planning. I. Title.

HG4529.5.M66 2010

658.4’012-dc22 2009025056

Microsoft Executive Leadership Series: Series Foreword

Today’s world requires lifelong learning. The Microsoft Executive Leadership Series provides leaders with access to new ideas and perspectives, intended to inspire and to challenge—ideas that will help keep thoughts fresh and minds nimble. These ideas range from effective strategy to deploying an agile infrastructure. Information technology increasingly drives the evolution of business models, social norms, market expansion, even the very shape and nature of our institutions. Organizations that succeed in the future will differentiate themselves effectively on how well they use technology to navigate change, respond to challenges, and leverage new opportunities.

I talk nearly every day to executives and policy makers grappling with issues like globalization, workforce evolution, and the impact of technology on people and processes. The idea for this series came from those conversations—we see the series as a way to distill what we’ve learned as a company into actionable intelligence. The authors bring independent perspectives, expertise, and experience. We hope their insights will spark dialogues within organizations, among managers, and with policy makers about the critical relationship between people and technology in the workplace of tomorrow.

I hope you enjoy this title in the Microsoft Executive Leadership Series and find it useful as you plan for the expected and unexpected developments ahead. It’s our privilege and our commitment to be part of that conversation.

DANIEL W. RASMUS General Editor, Microsoft Executive Leadership Series

Preface

THE REASON FOR THIS BOOK

This book exists to fill a gap in the current literature on project and portfolio management (PPM). Much has been written around theory of PPM, and there are a number of more technical books on the nuts and bolts of PPM technology. This book ties the theory and technology together, primarily for an executive audience, with the goal of enabling a productive organization. Executives don’t need to understand all the granular detail of the technology, but there is a need to understand the latest thinking in PPM and how far both the discipline and the technology has moved beyond the simple Gantt chart. This book looks at the latest developments in a dynamic field that is critical to organizational success.

The book also takes a real-world look at the challenges of PPM, using case studies throughout the chapters, and examines not just how PPM should be done, but maps out ways to get there using a measured and pragmatic approach.

How the Book Is Organized

The first four chapters highlight the benefits of project portfolio management. The first two chapters focus primarily on the high-level strategic perspective in terms of creation of business goals and alignment of projects to them. Chapters three and Four emphasis benefits from disciplined planning and cost focus.

Chapters five, six, and seven together serve as a guide for best practice implementation.

Chapters eight, nine, and ten expand on the prior chapters to explore the need for effective communications structures, people-centric processes, together with appropriate use of workflow, and process overall.

Chapter eleven takes a more theoretical look at project management, surveying the key perspectives.

Chapter twelve looks at future trends across project and portfolio management, combining a business and technology perspective.

Case studies and call-outs on topics of interest are positioned in the appropriate chapters.

THE VALUE TO THE READER

The Executive

Executives in relatively large organizations are the primary audience for this book. They will quickly be brought up to speed on the latest thinking and benefits on project and portfolio management, from strategic goal setting and alignment to the latest thinking on postmortem processes. The book shares insights from multiple disciplines, including psychology, to explore the most effective way to think about a project portfolio in an organization. They will understand how technology can be used to support these efforts and magnify the benefits of a well-functioning organization.

Case studies provide examples from different industries and geographies to highlight the real-world implementation and best practices around the concepts discussed.

Key questions at the end of each chapter provide a mechanism for the executive to tie the content in the chapter back to their organization, and references are provided for some of the more technical concepts discussed.

The IT Professional

The IT Professional will learn more about the business context of project portfolio technology and best practices for successful implementation from the numerous case studies. The range of the case studies provides a way of thinking about how systems can be refined and tailored to the needs of different groups and teams.

The final chapter discusses future changes in the project portfolio management discipline, while the later chapters examine the link between project portfolio management and other systems and tools.

The Project or Portfolio Manager

The book offers insight into the broader strategic context of project and portfolio management and ways to grow support and enthusiasm for both the process and technology within the organization. Case studies enable learning from other organizations, and the book contains a number of tips and tricks that the project or portfolio manager will find useful in their day-to-day role to align their work with the key goals of the business they support.

Acknowledgments

This book is dedicated to Jamie Morris for her tremendous support during my writing of this book. I started on this book before we were engaged, and by the time it goes to print, we should be married.

Many thanks to Henry Moore, who provided all the illustrations. Thanks especially to Joy Moore, Richard Moore, and Charles Moore for all their support.

Thanks to Julian Tydeman for writing Chapter 11.

Thanks, particularly, to those who spent time reviewing the manuscript, making numerous valuable suggestions: Lori Birtley, Magnus Holmlid, Rudi van den Berg, Denis Gaynor, Craig Kilford, James Butler, and the ever-resourceful Marc Gawley.

Thanks to everyone else who helped make this book possible through their enthusiasm, perspectives, and support: Tim Burgard, Stacey Rivera, Jan Shanahan, Sam Hickman, Juliana Aldous, Tom Tenazawa, Kris Tibbetts, Sam Guckenheimer, Hilary Long, Tad Haas, Christoph Fiessinger, Scott Gordon, Lisa Snyder, Rex Foxford, Jamie Eddis, Jill Campbell, Will Holmes, Anna Hatt, Gary Cooper, Sandeep Mangla, Lloyd Stanley, Richard Toledo, Geoff Russell, Doug McCutcheon, Stuart Brown, Peter Grady, Pontus Pettersson, Doug Slater, Brian Nowak, Seth Patton, Ludovic Haduc, Keshav Puttaswamy, Alice Wignall, James Hatt, Anthonie Wain, Oliver Mears, Hirotake Abe, Tatsuro Sako, Stuart Brown, Ben Chamberlain, and James Brooks.

Introduction

Organizations that outperform do so because of a combination of strong execution and great strategy. Lack of either results in failure. Effective portfolio management helps achieve outperformance, making your strategy real through organizational change. Significant advances in technology have made portfolio management an area where technology can enable a truly productive organization.

Project management is a challenging discipline, but relatively well understood. Realizing the full benefits of portfolio management is harder, partly because the technology has evolved in recent years so the opportunities for advancing portfolio management are not well understood, but also because implementing a portfolio management process can become complex. To minimize this complexity, it is necessary to approach portfolio management in a well-phased, results-oriented, and inclusive manner.

Portfolio management software is part of a larger business process, as is most enterprise software, and to be broadly successful, portfolio management must reflect that broader process. No one expects software alone to create organizational change, but the challenge of introducing portfolio management within an organization is often underestimated and oversimplified. Knowing where technology can assist, and what organizational processes are required, is critical to portfolio management success. This is particularly true in the context of the rapid innovation related to portfolio management. Long term, technology and organizational process must match. Yet there are situations where technology can serve as the catalyst for organizational process improvement.

A key area for improvement is proposal submission. Project ideas, often called project proposals, within organizations are frequently ad hoc and lack formality. Lack of a well-thought-out process will reduce the number of proposals, or inputs, into the portfolio selection process. As with most processes, reducing the number of inputs can reduce the quality of the outputs. Having a limited list of ideas hampers any project portfolio. In the extreme, if the number of ideas you have matches the number of projects you can complete, then the portfolio selection process is obsolete. Without a list of ideas larger than you can do, you cannot make trade-offs between ideas. You would just implement all ideas, and the quality of the portfolio will suffer.

There is no shortage of innovative talent within the organization. The challenge is to harness this talent effectively. It is efficient to harness this asset, which organizations already have but are not fully using. Harnessing innovative ideas is challenging, but, if done well, it can be a rewarding part of everyone’s job.

A robust portfolio selection process is a valuable component of this process. In order to achieve this, projects must be aligned with the strategic goals of the business. Ad hoc selection processes will not yield the best outcome and will not manage resources effectively. Making critical changes to portfolio selection ensures that all projects target results consistent with the organization’s strategic direction.

The power of technology can support the project and portfolio management process. Communication is key and has multiple benefits, including avoiding duplication of effort, better knowledge sharing, and faster decision making and information dissemination. Workflow can underpin project processes and reduce overhead. Workflow can also help spread and entrench best practices within an organization. Technology can drive transparency across the portfolio process. The importance of a transparent organization goes beyond portfolio management. Transparency can drive broad acceptance of the portfolio management process. Ultimately, portfolio management software with proper training, adoption, and facilitation offers many opportunities for an organization to become more productive by focusing on the right objectives and executing them well.

The online resource associated with this book is www.strategicppm.com, which contains further detail on many of the topics discussed.

CHAPTER 1

Obtaining the Best Ideas

Innovation is the central issue in economic prosperity.

Michael Porter

THE COST OF WASTED IDEAS

In any organization, every employee possesses a unique viewpoint. These viewpoints create a tremendous opportunity. Under Toyota’s production system, which is seen as world class, not utilizing these employee ideas is actually seen as a form of waste (Ohno, 1988). This waste is placed in the same category as using more raw materials than are required, or the inefficiency of having to repeat a process due to a poor quality outcome. Thinking of failure to act on employee ideas as a form of waste helps to define the opportunity for more effective portfolio management.

Employees have many ideas for improvement of the work that impacts them. Some of these may be raised in the form of questions to the manager. Why do we do it this way? Some may occur over lunch, in hallway conversations, or while the employee is performing routine tasks. Many of these improvements can be made by employees on their own without the need for additional resources. Some of these ideas might entail 20 minutes of work to implement; some might require a 20-year effort. Some ideas might not merit any action when compared with other business options that meet the same need.

Although there is clearly no shortage of ideas within an organization, unfortunately, these ideas are seldom captured in most organizations, except in the few cases where a handful of employees are sufficiently entrepreneurial to drive their own ideas through to implementation. This can happen in spite of the organization, rather than because of it. Organizations are effective at focusing employees on their daily tasks, roles, and responsibilities. Organizations are far less effective at capturing the other output of that process: the ideas and observations that result from it. It is important to remember that these ideas can be more valuable than an employee’s routine work. Putting in an effective process for capturing ideas provides an opportunity for organizations to leverage a resource they already have, already pay for, but fail to capture the full benefit of—namely, employee creativity.

To assume that the best ideas will somehow rise to the top, without formal means to capture them in the first place, is too optimistic. Figure 1.1 identifies the risks of such a process. This Darwinian view of the process, or of organizations, may work for a subset of ideas, but many of the ideas lost along the way have significant merit and do not get implemented for other reasons, primarily because the junior employee has no easy way to communicate an idea to the broader organization. Also, to borrow another idea from the natural sciences, rejected project ideas may be useful in the future as the starting point for new and innovative project ideas. If they are not captured, this cross-pollinating between different ideas cannot occur. Organizations must drive innovation to remain competitive, yet they often fail to take advantage of the resources they have to make that happen.

Historically, capturing, ranking, and processing these ideas in a simple way across a broad network of employees would have been a major undertaking. But today with simple, portal-based solutions combined with portfolio management tools, setting up a process for doing this is low-effort and low-cost. Yet, the results are dramatic.

FIGURE 1.1 Risks of Informal Idea Capture Processes

PROJECTS AND INNOVATION

Innovation is a high priority for most organizations looking to differentiate themselves from the competition. For many organizations, sustainable organic growth is the strategic Holy Grail. Yet organizations frequently achieve far greater success with incremental improvements than innovations and consistently lament their ability to innovate. This should not be a surprise because genuine innovation is much harder to deliver consistently than incremental improvements. For example, in the field of electricity, it is easier to improve the efficiency of a steam turbine incrementally than to develop radically new, less-carbon-intensive energy sources. It is easier to make a better scalpel than it is to develop keyhole surgery. Generally, innovation requires forecasting or shaping of future trends, which is notoriously difficult, often because a combination of different trends must come together to make the idea viable. It also requires changes in organizational alignment that differ from the current organizational structure. Today’s product may be contained in a single division of the organization; tomorrow’s product may require multiple divisions to work together on different aspects of an innovation, while at the same time working on something that potentially threatens in-market products.

Innovation requires taking significant risk, fostering a creative mind-set, and collaborating across organizational boundaries. None of which is simple to do. In combination, these challenges appear daunting. Indeed, true innovation is likely to be proceeded by many apparent failures (Farson, 1970). Conventional project management systems must share some of the blame for the lack of innovation. Application of consistent metrics across all projects may hamper innovative activity. Innovations will fail far more often than typical improvement projects. Indeed, for innovations, a 10 percent success rate is good and 20 percent is spectacular. Success rates of 20 percent or less would be viewed as a disaster for any project portfolio targeted at incremental improvement. To drive real innovation, more ideas must be captured, ideas must be allowed to feed off each other to create more ideas, and metrics for success must be relatively soft during the early stage of the process.

WHY A LONG LIST OF PROPOSALS IS NECESSARY

Many organizations I speak with have a list of projects only about as long as they can execute. This makes it almost impossible for that portfolio to be strategic. “The essence of strategy is choosing what not to do” (Porter, 2008). If your list of projects is about as long as you can execute, then clearly there is not much you’re not doing. Of course, those organizations with a meager list of proposals might argue that there are many ideas that do not become proposals because they run into one impediment or another along the way. That may be true, but that sort of informal process is far from robust portfolio selection. Impediments are quite different from well-thought-out decisions. Putting in place a simple but consistent mechanism for idea capture can help dramatically increase the number of ideas that could become projects within the portfolio and magnify the portfolio’s effectiveness.

Regardless of the differing levels of rigor applied to projects, if there are only a handful of formal proposals, then any idea that is given serious consideration by management is implemented. There may be some modifications to the proposal based on feedback but, nonetheless, most submitted proposals will be implemented. Sometimes, the idea list might be only slightly longer than can be executed, but this deficit might only be realized several months into portfolio execution. This is costly because even though some level of selection is occurring, there is a clear cost of starting projects only to quickly replace them when a better idea comes along.

THE RISK OF INFORMAL PROCESSES

Informal processes risk generating inconsistent outcomes. Sometimes proposals are written up and analyzed in excessive detail. Yet, in other situations, only a cursory analysis is done before committing a major investment of resources. It is also frustrating to those submitting the proposals if there is no transparency or consistent rationale as to why their projects are not selected. Without feedback, it is hard for participants to improve their proposals or even remain engaged in the process. Another problem is that sometimes the level of influence of the project champion can be more important than the quality of the project proposal itself.

A simple, transparent process is important because, in order to collect a large number of strong proposals, idea submission must be encouraged by building faith in the proposal system. Without it, there will be a reluctance to submit proposals in the first place. Greater formalization of the process can also be encouraged by including an element of employee compensation. There is an opportunity to tie employee compensation to successful proposals, whether through patent filings or a portion of the cost savings generated. Such compensation will encourage submission.

Without grouping proposals together and analyzing them, it is a leap of faith to believe that the organization has naturally developed a process to get the best ideas onto the table without anyone consciously taking any explicit action or making any decision at the aggregate level. The ad hoc process is likely to be inefficient and more time consuming than a more structured portfolio selection process. Portfolio selection offers the opportunity to analyze proposals en masse, which can make it easier to calibrate across the group and can create efficiencies through economies of scale.

To take an extreme example, batch prioritization might require one meeting for 100 projects, as opposed to 100 ad hoc meetings if each project were considered individually. Therefore, it is key not just to have more ideas but to group those ideas together to ensure meaningful prioritization that is efficient from a time-management perspective. The grouping together of ideas is also helpful because it provides the opportunity to group similar proposals together into larger, richer proposals, and for the combination of proposals to spur new thinking and proposals. If proposals are considered in smaller sets—or worse, on an ad hoc basis as each proposal comes in—much of this cross-fertilization may not occur and an opportunity for further innovation is lost.

Another level of rigor can be applied to particularly risky or critically important projects. Here, proposals can be held in reserve to be executed, should the primary project fail or go irretrievably off course—as will likely occur across a large portfolio. For example, new problems may arise that need addressing, or compelling new ideas may arise based on customer feedback or market and competitive analysis. Although these ideas are healthy and often superior to project proposals being executed, this can disrupt the process, since the attempt to configure the portfolio on the fly is unlikely to lead to an optimal outcome. Resources on a canceled project will have been wasted, and recalibrating the project portfolio too frequently as new ideas come up may not be an effective use of time and resources. Managing this balance is critical; altering the portfolio creates adjustment costs, but reacting to changing market conditions rapidly and effectively can differentiate an organization from its competition.

It is rare that organizations are able to develop a broad and extensive list of projects to truly prioritize explicitly. Nonetheless, it is a complete list that enables strategic alignment in project selection. Without an extensive list of options, how can you arrive at the best permutation? As Napoleon said, “To govern is to choose.” But how can you choose without options? The best ideas do not come from you. The best ideas emerge from within your organization, given the unique perspectives of the different divisions and functional roles. These ideas must then be consistently reviewed so that you can meaningfully rank them against each other. It is clear that any attempt to prioritize ideas must start with an effective mechanism for capturing a large number of potential project ideas. This must occur even before the formal project proposal stage.

LOWERING THE BAR FOR IDEA SUBMISSION

The main reason for a lack of good project ideas within most organizations is simply that it is hard for employees to know what to do with their ideas. Ideas are not asked for explicitly from a broad enough set of people, in a transparent enough fashion, and on a regular enough basis. Idea generation typically is something that is seen as being valuable, but until recently, the technology has not been available for broad and simple idea capture, and the significant implementation costs have made most organizations reluctant to explore the area. Executives are receptive to new project ideas and would like to hear more of them—especially within a streamlined, simple process—but often the process for submitting project ideas is too complex or, worse, not defined. If all ideas must be justified by a 20-page analytical report listing the expected financial benefits and strategic rationale, then the number of ideas submitted will be low and, indeed, very similar to the set of ideas management already sees.

Often, the person able to come up with the spark of a new idea may not have the skills to perform a full analysis to justify or flesh it out in rigorous fashion. However, others must do that analysis in order to ensure that the best ideas are executed, or at least reach the stage where that analysis can be done. Therefore, more important than having a process is making sure that the process is simple and available to all within the organization.

Case Study: Managing a New Product Portfolio

Scott is managing a portfolio of new product launches. The goal is to extend an existing international consumer products company into new geographies and markets. Scott is “aiming toward incrementality” and “trying to be very efficient with his spend.” As there are many existing competitors in the market, there are a lot of analogs to existing products that could be introduced, Scott says, “We could not invent for 5 years and still bring out new product.” However, Scott takes a “core-satellite” approach to the portfolio, first targeting higher-volume productsto lead well in new markets and build relationships with partners, and then focusing on innovation, particularly in markets where innovation is expected by consumers such as Japan.