Putting a strategy together is very rewarding. Whether it’s for your division, department, or small business, it gets you thinking about the future and all the possibilities. Hard work has brought your team to a point of consensuses; and, you now have a structured plan that has documented goals, objectives, and initiates. Now is the time for action.
Developing a strategy is hard, executing it is exponentially harder. That is because strategy, which is made up of future possibilities, has to merge with the day-to-day business environment, which is driven by immediate needs. Projects that are initiated from both realms compete for attention and recourses. It’s a problem rooted in organizational priorities and resources capacity.
Many managers leave the decision of which projects are higher in priority to a subjective process. This almost always leads to the projects driven by immediate needs, those with an inflated importance, to be given the higher priority. This is because they tend to be related to keeping the business running smoothly. Strategic projects will never hurt you today; and therefore, receive a lower priority in the moment. Tomorrow always seems further off than it really is.
In the fall, Mike received his department’s objectives for the upcoming year. They were key drivers in his company’s strategy and his bonus was based on achieving them. He took his senior team off-site and identified a number of initiatives that would support the department’s objectives. They also put together a timeline that included the specific launch date for a number of key projects in support of the initiatives.
Spirits were high when his team returned to work the following week. The projects that were scheduled to start in the beginning of the year were launched as planned and progressed well. However, as the year went on, the remaining projects’ start dates began to slip. Other work seemed to come out of nowhere: a client asked for some unique customizations, an older product that was rarely sold started receiving some bad press and needed to be upgraded, and an equipment recall came out that required a replacement to keep it under warranty.
When the year ended only half of the department’s objectives were met resulting in Mike only receiving a portion of his yearly bonus. It seems like Mike had reasons for not completing his department’s objectives, but the reality is he had no basis for his decisions.
Portfolio management is concerned with ensuring that projects with the highest value are completed ahead of the rest, while balancing an organization’s capacity for work with the work it desires to complete. To ensure projects with the highest priority are completed ahead of the rest, requires knowing the overall value each project creates and what each project’s unique priority is in relation to all of the others. That means being able to rank projects sequentially (1, 2, 3, 4, etc) without duplication. This is crucial to being able to manage the flow of work through the organization without overwhelming its resource capacity.
When you prioritize projects this way some day-to-day business projects will be higher priority than strategic projects because not all strategy projects are of the highest priority to the organization. Also, the priority list is a living list. Projects get completed and drop off the list, some new projects are added and placed ahead of other existing projects, and some projects will switch priority based on business circumstances.
What must hold true is that a project with a lower priority can never receive resources ahead of a project with a higher priority. If a high priority project’s completion date is slipping and requires resources to stay on schedule, the resources must be taken from a lower priority project. A lower priority project may need to be cancelled so as to allow a higher priority project to start on time. These are hard decisions to make but it is the only way to do things to ensure your organization is balancing strategic needs with day to day business needs.
Going back to Mike’s situation above, customizing a product for a key client may be a high priority project that scores ahead of a strategic project, but upgrading an older product that has rarely sold should not.
Incorporating a portfolio management process requires intentionality and discipline. The rewards will come in the future when you look back and see what was once a possibility is now a reality. The rewards will also come in lessons learned where what seemed so imperative in the moment turned out to be a minor inconvenience in the end.
Successfully executing a strategy is exponentially harder than developing one. But incorporating portfolio management into your organizational processes is a necessity to turning a strategy into a reality.