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Lesson
40

The strongest tool for strategy realization of any company

by Iľja Iliť

Success Problem

In many companies including some large ones, Board members risk do not use or, underuse the strongest tool for strategy realization of any company – management of project & program portfolio.

Impact

Risk of being not re-elected as Board member by Supervisory Board for the next term and potentially getting the company in troubles. Board members are responsible for strategy realization of the company. The most important part of strategy is about changes and the biggest changes are performed via projects or, programs (cluster of projects which brings additional benefits via synergies) to increase the competitiveness of their company. None company in the world has enough human and technical resources to perform all intended projects & programs “P & P“ in parallel. This has to be done via P &P portfolio management (including – sometimes – very hard decisions). Handing over the strongest tool for the strategy realization to their subordinates with less power and (usually) less experience is dangerous for the future of Board members and for the company success, too.

Recommendation

Boards of successful companies usually manage portfolio of P &P regularly – monthly (or, quarterly, if the company has 10k+ employees). Correctly setting priorities (and changing them, if needed) of P & P for the usage of resources (human, technical) helps lower ranks to do efficient resource management. Making proper decisions regarding portfolio risks (even stopping particular project(s) in case of extreme risk) helps company to pass through hard times successfully compared to competitors. Being flexible when business opportunity (or, new legislation) comes is much easier if their most important managers are present, so the form of extended Board session is very effective (in person or, via web communicator). We can name it Portfolio Committee for short. Usual first step - after getting Board buy-in - is to include into the portfolio IT P & P and respective resource management (first - specialists with scarce know-how, IT environments for development and testing, controlled updates of IT systems), so IT manager (CIO) should be a member of Portfolio Committee. If you aim to introduce new product, created by project/program, you would need to have trained human resources in place (sell, service, claims,...) and to ensure that the new product would be successful you need to have some place in relevant media and events (electronic, printed, trade fairs,...), so managers of HR and Marketing would be helpful members of Portfolio Committee. We should not forget about Portfolio Coordinator – best under CEO due to the importance of the agenda. Portfolio Coordinator should be also minutes keeper to be clear about the decisions including subsequent control of their fulfillment. Beware the right size - above certain threshold (usually 9 people) the efficiency of such sessions goes down. So, how to? Start small, make regular amendments, get more mature step by step by using best practice and customize them to your situation and business environment – you will be positively surprised by the results when your re-election time would approach (if done properly, of course ;-).

Category

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5 Comments

  1. Good points raised. I would agree with portfolio management approach might be useful and helpful for implementing strategy. What I see, from my experience, as also hampering strategy implementation is too much focus on that change you mention. Trying to be permanently ready for everything often ends up with being too distracted and eventually failing when a change comes. What I find a good tool to help with application of portfolio approaches is the philosophy (or method) of OKR’s. Objectives are usually fine and Easy in any company or board. However, the key results are often more problematic. Where I was able to use them, the KR’s forced the boards to be more specific, more tangible about how they want evaluate progress on any projects or portfolio items. Combining something like long term KR’s with shorter term results often helps to embrace that change in more specific language. In lay person’s terms - it helps the board recognize whether the envisioned change is here, is happening or we started diverging... Anyway, good topic for discussion :-) Thank you.
    Reply Upvote post

    1. Thanks for raising good point, Martin (answering after my return from vacation). Tracking of benefits to be achieved by output of project or program - loosely corresponding to your Key Results "KR" - is the most problematic point in project & program "P & P" portfolio management, especially if the tracking of such benefits are included in annual performance review and related to annual bonus of specific managers by specific weight(s). Mastering benefit tracking of P & P outputs shows very high maturity level of P & P portfolio management of such company (e.g., Google mastered it, no wonder they are so successful).
      Reply Upvote post

  2. Please accept my apology for the mistake in the first sentence – omit the word „risk“ (correct wording should be: „In many companies including some large ones, Board members do not use or, underuse the strongest tool for strategy realization of any company – management of project & program portfolio.“). It happened during the last simplification of the sentence (nobody is perfect, sorry :-).
    Reply Upvote post

  3. Highly appreciate sharing of such insider knowledge and fully agree with the program and project portfolio approach utilization in a business strategy execution. However still the magic mantra "DO THE RIGHT THINGS RIGHT" tells me that even an excellent program implementation and most effiecient resources allocation, the right strategy setting is the corner stone of success. If we talking about priorities setting, this is just the moment when an auditorium is turning their heads to the side of a room where a "strategos" is sitting. Correct knowledge of own advantages/disadvantages in relation to competitors performance and surrounding requires years and years of very sensitive and systematic monitoring of own business, market and trends. Proper SWOT analyze and definition allows to achieve competitive advantage with less resources than a competitor would need to get to the same point or business efficiency.
    Reply Upvote post

    1. Fully agree, project & program portfolio management is just the tool to execute the strategy - but correct strategy needs to be defined as first. If the strategy is flawed (or weak), even efficient use of the strongest tool for its realization does not help much ;-)
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