The future of Project Portfolio Management: Value-oriented strategy execution

How can your business extract the greatest value from its strategic objectives by optimising the way strategy is executed within the project portfolio? By organising around value generation, you can transform your strategic initiatives into tangible results. Discover how to align your long-term ambition with strategic themes.

Download paper

In today’s fast-moving and complex business environment, companies are under increasing pressure to maximise the value on their investments. The intersection between strategy and execution is crucial: a project portfolio management set-up effectively organised around value creation can make the difference. By adopting a hybrid lean portfolio management approach, organisations can translate their differentiating business objectives into measurable results that drive the future state of their portfolio.

The challenge of bringing strategy to execution with existing portfolio management approaches

Many organisations face the question of how to disclose the actual value for money of their project investments to their stakeholders. In pursuit of their overall investment aspirations, companies usually formulate overarching three-to-five-year organisational strategies designed to align with the entity’s vision. On the basis of its defined strategic direction, the company defines targets for its business units. Targets related to changing or optimising the business are translated into portfolio initiatives.

There are two common approaches for companies seeking to connect strategy with execution within their organisational set-up. The first is traditional project portfolio management (PPM). This provides ways of balancing shared resources and risks between multiple projects to maximise business value and achieve strategic alignment. The second approach is agile portfolio management (APM). Set up by some companies to cope with today’s dynamic environment, APM has emerged as an approach for planning and delivering projects in iterations. Since it’s organised around value, it addresses many of the shortcomings of traditional waterfall IT and software development projects.

Managing multiple agile projects under traditional project portfolios, however, is challenging and troublesome. In reality, both traditional PPM and APM are insufficient to serve the full needs of traditional, agile and hybrid approaches in execution.

The future of Project Portfolio Management

Hybrid, lean, and value-driven

Download paper

The remedy: factors to consider

To address these portfolio management challenges it’s worth zooming out and reflecting on your organisation’s overall ambition. As a foundation, it’s key to have a shared vision encompassing your business strategy, operating model, technology and personnel. Starting from there, you need to be clear about how your strategic direction and corporate governance are guiding both the running and the changing of your business. Your portfolio management should provide the settings for realising the investments you foresee to translate strategic objectives into innovations (in other words the “change”), pursued through transformation initiatives and the respective projects.

Factors to consider when setting up a hybrid, lead and value-driven portfolio management function

In this article, we are zooming-in on the first two steps out of the sequence:

Vision and strategic goal-setting

Setting up an organisational vision and strategy and aligning it with lean portfolio management is crucial for success. Strategic themes derived from 3- to 5-year strategic plans, which include objectives and key results, should be formulated in line with yearly planning cycles. To see which initiatives should be further pursued within your portfolio initiatives, you should establish a transparent view. The activities required can be structured into investment horizons mapping the different stages of prioritised portfolio components, such as evaluating, emerging, investing, extracting and retiring. This approach ensures that resources are allocated to initiatives that deliver the highest value, fostering agility, transparency and dynamic planning.

Organisation around value generation

In a lean portfolio, an entity is organised around value and customer centricity rather than traditional cost centres. The portfolio vision, supported by a canvas stating the value proposition, should reflect this approach. Activities from the project portfolio should relate to the investment horizons, to ensure products or investments are pursued at the right point in time. Your company should establish development value streams to pursue your innovation or development ambitions, reflected within a canvas.

Taking agile thinking to the portfolio level can provide an additional means of maximising value, prioritising the right investment decisions and sequencing requirements efficiently. Many entities are seeking a solution suited to their individual needs. This often entails hybrid elements. In our next post, we’ll also be looking at how to set up the budgeting processes and portfolio flow so that the execution of deliverables can be measured and steered – making sure that your hybrid, lean and value-driven project portfolio management set-up is delivering on its promises.

Summary

The key to maximising value when strategic ambitions need to be delivered lies in a future-oriented hybrid, lean and value-driven portfolio management approach. Therefore, strategic themes are broken down within a portfolio delivery approach where activities revolve around end-to-end value generation. This gives you greater transparency on the actual delivery of objectives and key results. Executing within well-elaborated value streams coupled with an iterative and incremental approach enables dynamic planning that constantly prioritises the highest business value while realising your organisation’s vision in a fast-changing environment.

We’re helping clients achieve these improvements in practice. To find out more, check out our latest white paper and reach out to us to talk about the challenges you’re facing and how to resolve them.