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A relatively new but increasingly important role is emerging: the chief strategy officer (CSO). From Starbucks to Siemens, many organizations now have a designated CSO.

A CSO can be defined as an executive responsible for assisting the CEO with identifying, communicating, executing and sustaining strategic initiatives -- basically, what a portfolio manager does. 

And I would argue that the next CSOs will come through the portfolio management ranks.

Strategy itself is about renewal, and renewal is achieved through transformation. Therefore, a key part of strategy is innovation. That's not just technical or product innovation. It's also managerial, organizational and process innovation implemented through portfolios (and of course, the corresponding projects and programs). 

As with a portfolio manager, the core responsibilities of a CSO include translating strategy into execution:

  • Enabling and sustaining large-scale organizational change -- preparing the organization to accept the change
  • Communicating and implementing a company's strategy internally and externally so all employees, partners, suppliers and constituents understand the strategic plan and how it carries out the organization's overall goals
  • Driving decision-making that creates medium- and long-term improvements through the execution of portfolios, programs and projects
  • Ensuring the portfolio is delivering measurable outcomes, identifying growth and innovation opportunities, as well as monitoring the competitive landscape

There are four main types of CSOs:

  1. Change Enabler: change agent to facilitate cross-organizational initiatives or portfolios
  2. Consultant: a strategic planner and adviser; the formulator of strategy
  3. Specialist: may be focused on a specific type of strategic initiative or portfolio, such as mergers & acquisition
  4. Coach: facilitates the strategy development, consensus-building and translation into execution

What do you think? Are portfolio managers the next chief strategy officers?

In Good Company: Project, Program and Portfolio Management

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At the end of this month, Cloud Gate, a Taiwanese dance company, will celebrate its 40th anniversary with the performance of a new routine, "Rice." Its founder, Lin Hwai-Min, has received international recognition and awards, including the United States' Samuel H. Scripps American Dance Festival Award for Lifetime Achievement in Choreography in 2013, Germany's International Movimentos Dance Prize for Lifetime Achievement Award in 2009 and Time magazine's Asia's Heroes award in 2005. 

"Rice" looks to be a culmination of the company's past four decades of work. But it could not have happened without Mr. Lin's talents -- and his arts management team. Their involvement allows the choreographer to concentrate on his creative work. It wasn't always like that; in the early years, Mr. Lin was responsible for teaching and choreography, as well as staging, marketing and fundraising. This left him exhausted and unable to work creatively. 

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Mr. Lin realized Cloud Gate had to develop a management team. Nowadays, the company has divided its operation into three parts. Firstly, the performance of the routines. Secondly, the training and cultivation of artists, whether dancers or choreographers. And finally, the promotion of dance and taking part in wider cultural activities. The three divisions overlap, forming a coherent program of work that defines Cloud Gate as an organization. This is very much like portfolio management, dividing organizational objectives into different projects or programs.    

All of Cloud Gate's managers know they're there to allow Mr. Lin and the rest of the company to work creatively. They know their work helps fund performances for artists and also keeps Could Gate -- and them -- in work. This makes them both sponsors and key stakeholders. And since theater work is beset by a multitude of details, the managers have become skilled in tackling issues appropriately, discerning what is important for the business or for art. However, because ultimately they are part of a creative process, they know they have to be flexible in how they work with artists. 

An impressive archive of routines also contributes to the survival of the dance company. Cloud Gate has accumulated over 160 dance routines. Combinations of these can be used to stage a performance anywhere in the world. Routines based on well-known Chinese literature or folk tales, such as "The Dream of the Red Chamber" and "The Tale of the White Serpent," appeal to Chinese audiences. Those in a more abstract style, such as "Cursive," delight European audiences. The inclusion of different routines into a performance helps Cloud Gate develop new audiences or maintain the loyalty of existing ones worldwide.

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Mr. Lin also guides dancers' careers, cultivates young choreographers, and contributes to Taiwan's arts and culture. For example, Cloud Gate is the first dance company in Taiwan to provide its dancers with a salary and routine training. The company also regularly holds open classes and performances in all parts of Taiwan, using scholarships and awards to encourage young people to take up modern dance and choreography. 

Mr. Lin has spent most of his life searching for this: a sustainable way to run an international contemporary dance company. And project, program and portfolio management have helped get him there, delivering inspiring results. 

If you work in a creative industry, what's the role of your management team?

Embedding Portfolio Management Through Effective Communications

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Despite uncertainties in today's economic environment, organizations remain under pressure to successfully execute business strategies. These challenging conditions demand that organizations innovate and gain an advantage through projects. Yet launching a bunch of projects won't save the day. We need solid portfolio management to enable that competitive edge. It's not just about software, methodology and frameworks, after all. To perform well, portfolio management requires a cultural change and solid communications within an organization.

And yet, we still suffer due to poor communications. Many companies, for instance, invest significant effort and capital on projects and programs that do not directly align with corporate objectives because those goals are poorly communicated. Meanwhile, others struggle to balance risk and fail to seize opportunities because of ineffective communications that do not support informed decision-making. For example, I worked on a project of high complexity that had huge technical challenges. These challenges could have been better addressed if there had been more communication among different research teams in our organization.

The payoff to investing in project communications can be substantial, as many studies -- such as a recent one from PMI -- point out. Companies that excel at portfolio management are able to complete projects on time and under budget, increasing ROI and other benefits. But how do we consistently communicate the portfolio management strategy, policies, governance and benefits throughout the organization?

  • With clarity. Clarity is the most important factor for the success of portfolio management. People can't commit to what they don't know or don't understand. Clearly state and communicate the portfolio objectives, policies and procedures. 
  • With openness. On top of developing a nice-to-have framework for project selection, prioritization and portfolio monitoring, spread the word throughout the entire organization on why the company needs portfolio management and how it works.
  • With alignment. Corporate objectives -- and how portfolio management can help the organization reach those goals -- have to be part of the message. Alignment means credibility for portfolio management, because it shows how it adds business value. To communicate the value, show the organization the selection criteria and key performance indicators and their rationale.
  • With discipline. Portfolio management requires consistent feedback, information and reports -- mainly from projects and programs, but also from functional managers, senior managers and more. Discipline means setting up processes and procedures to push and pull communications in a dependable way for the organization. In other words, in-and-out communications have to flow without interruption, overcoming organizational barriers to get information needed and to provide useful, timely information.
  • With accountability. Everyone in the organization should be responsible, in one way or another, for the portfolio results. That means project KPIs and portfolio KPIs should align better. And the best way to achieve that alignment is by ensuring everyone is on the same page about the corporate portfolio strategy, through rigorous governance and consistent communications.

I'm a firm believer that the role of communications is to ensure that portfolio management is embedded in the corporate culture. What do you think is the role of communications in a portfolio?

Jen L. Skrabak, PMP, is a senior-level project executive, leading high-profile business transformation projects, programs and portfolios. She has more than 18 years of professional experience across industries such as healthcare, biotechnology, entertainment and financial services. She recently established a PMO Center of Excellence that includes both project managers and business analysts, implemented a global US$50 million program across multiple sites and managed a $500 million portfolio. Ms. Skrabak served as the committee chair for The Standard for Portfolio Management - Third Edition. 

Read her thoughts on portfolio management below:

Although PMI's The Standard for Portfolio Management was updated for its Third Edition earlier this year, I still find that there is much confusion over what portfolio managers do and how they differ from program and project managers. Having been a portfolio manager for over 10 years, I'm offering a few key differences that may help you.  

What portfolio managers focus on:

  • Strategic alignment. Portfolio managers are unique in that they are the only role focused solely on the future strategic intent of the organization.
  • Processes to assist the organization in prioritizing and selecting the right work -- including governance, developing the portfolio structure, and optimizing the portfolio.
  • Resource allocation. It's not just human resources that should be accounted for, but also financial, and equipment or materials. With staffing, it's important to take into account not just available capacity but also capability to do the work. For example, if there are new hires needed for a program, the appropriate training and onboarding ramp-up should be taken into consideration.
  • Continuous monitoring of the broader internal and external environments, including strategic changes. Strategic changes usually result from an organization's response to an external change. An example is the Affordable Care Act. It's an external change that may result in changes to the organization's strategy, which will result in portfolio changes and a review of what should be started, stopped, or sustained.
  • The aggregate -- by definition, the portfolio is a collection of projects, programs, and operational work.
  • Performance of the portfolio -- monitoring the planned vs. realized value.
  • Ensuring communications and stakeholder engagement, especially at an executive level. In addition to reporting the overall status of the portfolio, portfolio managers have a responsibility to communicate the overall portfolio vision to project/program leaders.
  • Risks as well as opportunities. A better way to state this might be to monitor for threats and seek opportunities 
  • Organizational change management. Enabling the future state of the portfolio and ensuring that the changes stick through the development of the right business processes is critical.
  • Ongoing operations of the portfolio. Unlike projects or programs, portfolios do not have a beginning and end.  However, they may evolve according to the strategic needs of the organization.
Now that we've level set the strategic responsibilities of portfolio managers, there are some key responsibilities that don't fall under portfolio managers.

What portfolio managers do not focus on:

  • Managing project/program managers. I've heard functional managers that have project/program managers reporting to them refer to themselves as portfolio managers, which causes unnecessary confusion.
  • Managing the execution of programs or projects. They are not focused on the execution of the work, but rather on the oversight of the collection of projects, programs, and operational work.
  • Managing triple constraints. They are not focused on the program or project scope, timelines, or budget, but rather the overall impact on the portfolio.
  • Managing the PMO. Although there may be aspects of portfolio management within the PMO, simply reporting on status, monitoring the budget, and holding governance meetings does not equate to overseeing the end-to-end process.
PMI Announces PfMP certification

Recently, PMI announced its new Portfolio Management Professional (PfMP)SM credential, which will be available in Q4 2013. 

Having served on the Steering Committee for the PfMP credential, and providing strategic direction and guidance to the team that was chartered to make the final recommendation, it is very exciting to see this launch.  

I know that many in the PMI community have been asking about this certification. Having also served as chair for the development of the portfolio management standard, I believe that it's an important credential that meets a key need (remember the "P" in PMI encompasses portfolio). It drives advancement of portfolio management as a profession by formally recognizing the importance of a standard set of skills, knowledge and abilities.  

Key requirements include eight years of business experience and at least four years of portfolio management experience. It's expected that The Standard for Portfolio Management - Third Edition will be used as a key reference for the exam.

The PfMP exam outline will be made available in September, with the first opportunity to take the exam in late Q4 2013. If you want to be one of the first to be certified for the PfMP, email portfolio.management@pmi.org.

The Secrets to Managing an Innovation Portfolio

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Managing a portfolio of innovation projects is very different from traditional portfolio management. Innovation projects hold more uncertainty. It is usually difficult, if not impossible, to provide good estimates and a detailed project plan. And while most organizations care about managing the development of marketable new ideas, few really know how to foster them for business results. 

The first step to managing a portfolio is determining the role and ROI of innovation in a business environment. Innovation, in essence, has to bring tangible results and a competitive advantage to the organization by generating new revenue, reducing costs, improving asset management and increasing reputation.

To achieve these goals, innovation portfolios aim for steady innovation flux, or a constant pipeline of new ideas, for a sustainable competitive advantage. That requires balancing short- and long-term benefits and costs of the following:

  • Incremental innovation: Developing new products, processes or services 
  • Basis innovation: Researching low-maturity technology
  • Radical innovation: Supporting efforts to create breakthrough innovation

For example, it would be shortsighted to generate only incremental innovation; in the long-term, there will be no breakthroughs. However, incremental innovation brings short-term revenue, which is important to keep the company going. Basis and radical innovation generate new products, but require significant time and effort. A good portfolio balance mixes incremental, basis and radical innovation projects in a way that best fits the organization.

Another important aspect of managing an innovation portfolio is selecting the right ideas. Selection is particularly crucial to innovation projects because of the commitment to a long-term "technology roadmap" (i.e., if you choose to invest in Blu-ray products, that means you have a Blu-ray portfolio). Investing in the wrong technology can put an organization in financial jeopardy. Complexity is also greater because you're creating something new and without precedent. So the challenge is choosing projects that support the organization's long-term objectives while still considering these aspects. In summary, innovation portfolios need different selection and prioritization criteria. Here are suggested criteria, ranked from most to least important:

  • Strategic alignment
  • Potential to generate innovation 
  • Level of risk
  • Technological maturity
  • Use of resources
  • Degree of complexity
  • Level of interdependence with other projects

The criteria above are mainly qualitative, so you should also use an enterprise-wide scale for grading each project's potential to generate innovation:

  • High: There are many potential ways and areas to apply this innovation
  • Medium: There is a specific use for this innovation; we are somewhat sure about market demand
  • Low: We are not sure how it will work

After selecting your innovation projects by balancing the above criteria, tailor key performance indicators. Here again, KPIs will differ from a more traditional portfolio. Some I have used in the past include:

  • Ratio between long- and short-term projects
  • Ratio between high- and low-risk projects
  • Number of new technologies created
  • Ratio between technologies applied to new products and technologies created
  • Number of patents created
  • Revenue generated by patents
  • Number of projects successfully transferred to market
  • Percentage of projects commercially successful
  • Return on product development expense
  • Number of new customers from new products or services
  • Market share growth from new products and services

Does your organization have research, development and innovation projects? Do you use an innovation portfolio? How are they managed? 

Share your thoughts below along with your Twitter handle, and Voices on Project Management will publish the best response as a blog post.

Troubled Portfolio, Troubled Projects

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Good portfolio results depend on a collection of integrated projects that align with and support strategic objectives. Obviously, poor project performance will hurt a portfolio's goals. What is not so obvious is that troubled portfolios can cause projects to fail. 

A troubled portfolio environment often results from an organization's misguided knowledge about portfolios. A bunch of projects thrown together doesn't make a portfolio. Through portfolio management, a portfolio should ideally consist of carefully selected, prioritized, monitored and controlled projects, and well-managed resources. If organizations don't have structured portfolios with guidelines and governance, they may, in fact, be creating projects doomed to fail. So the next time you face a troubled project, first assess if the portfolio is the problem. 

A good sign that you have a troubled portfolio is when you are facing troubled projects repeatedly. If more than 30 percent of your projects are troubled or challenged, you probably have a troubled portfolio. Other signs of a troubled portfolio include:

  • Lack or no support by senior management
  • Unclear strategic goals
  • Lack of objective selection and prioritization criteria
  • Poor guidelines and structure
  • Lack of standardized project and portfolio management processes
  • Resource allocation issues 
  • Poor key performance indicators (KPIs)
However, it's not enough to identify a troubled portfolio. You have to know how to fix it. Do you have a troubled portfolio because the projects are troubled, resulting in poor portfolio performance? Or do you have troubled projects because the portfolio is not well-structured, giving birth to projects troubled from the start? 

It would take many posts, maybe even a book, to discuss and analyze the answers to the questions above. However, here are some straightforward first steps for fixing a troubled portfolio. 

An executive should:

  • Define accountability and ownership of the portfolio
  • Provide visibility and transparency of the portfolio's performance
A portfolio manager should:

  • Obtain senior management approval and support for project portfolio management
  • Define processes and guidelines for portfolio management, including steps to approve project investments
  • Clearly outline measurements and KPIs for portfolio monitoring and controlling
To what extent do you think bad portfolio management can doom projects to fail? What first steps do you take when conducting portfolio recovery?

Build Sponsorship, Boost the Portfolio

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We've all been there. Portfolio managers have done their job of setting long-term objectives and a clear strategy. Projects have been selected and prioritized. And yet the organization is still having trouble gleaning real benefits — i.e., results that create business value and contribute to its strategic objectives — from projects and, subsequently, its portfolio. 

This disconnect is often rooted in weak sponsorship, and that's often a result of project sponsors not knowing their roles. When that happens, they aren't able to support projects in a way that aligns a portfolio to the organization's grand strategic plan. Project sponsors are instrumental in a project's selection and categorization, allocating resources, and monitoring and communicating its progress to the highest rungs of an organization. As a high-level decision-maker, an effective project sponsor gives the portfolio more agility and flexibility to adapt and absorb changes.

While fostering the right kind of project sponsor won't happen overnight, it can start right away. To do so, executive-level management — many of which could be sponsors — should:

  • Make strategic planning a continuous and dynamic process
  • Appoint and assign a sponsor responsible for every business objective 
  • Provide mentoring and coaching to sponsors, in addition to some portfolio and project management training
Project managers can also help sponsors support projects better by communicating in the same language. Project managers should translate technical issues (such as scope and deliverables) into tangible business results (i.e., return on investment, profit, revenue and costs) for sponsors. In this manner, sponsors and project managers together can handle the internal environment (project team and processes) and the external environment (organizational structure, strategy and market demands).

Do you have strong project sponsorship in your organization? In your experience, can effective sponsorship boost the entire portfolio's performance?

How Fit Is Your Portfolio?

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We all know a healthy project portfolio is aligned with an organization's overall strategy. But how do we get there? 

First, define "project portfolio." A bunch of independent projects does not make up a portfolio — it is simply a group of projects. A portfolio is composed of multiple projects aligned to help the organization execute its strategy. 

Second, define "portfolio management." Portfolio management enables organizations to identify, select and prioritize the investments that will maximize business value. The major components of portfolio management include supporting strategic objectives, ensuring value creation, prioritizing projects based on their relative importance, managing the flow of benefits and integrating stakeholders around business objectives. Here are a few questions to help determine how well your organization is managing its portfolio:

  • Does the portfolio reflect and support the organization's business strategy?
  • Is every project clearly aligned with the organization's strategic goals and objectives?
  • Does resource and investment allocation reflect strategic priorities and consider objective criteria?
  • Is the economic value of the organization's portfolio greater than the investment made?
  • Are projects efficient in terms of scope, time and cost?
  • Are the portfolio's indicators meeting stakeholders' expectations, especially regarding value and benefits?
If some of your answers were "no," don't worry — you are not alone. But implementing good portfolio management can be a great challenge. Enterprise project management professionals usually joke that it is a "simple" three-step process:

  1. Define all your projects and proposals.
  2. Identify your resources and categorize them. 
  3. Figure out your decision-making structure regarding selection and prioritization, and map it using a spreadsheet or enterprise project management software.
Step three, in particular, is very difficult — yet it is the core of portfolio management. Portfolio management is the art of getting more than the sum of its projects' results. 

To do so, corporate strategies must be laid out clearly. This helps portfolio managers to measure value that would not be generated by any individual project. 

While software tools make it easier to simulate portfolios to help in decision-making, portfolio management ultimately depends more on governance and appropriate processes than on calculations. 

The portfolio also needs to be flexible enough to cope with changes in strategy and environment, which is why portfolio managers must perform regular check-ups — a portfolio that fits your organization needs to link to its strategy at all times.

How healthy is your organization's portfolio? How do you monitor it?
Share your thoughts below, and Voices on Project Management will publish the best response as a blog post. 

Project and Portfolio Managers: What's the Big Difference?

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Frequently, I hear stakeholders confuse "project managers" and "portfolio managers."  
The misunderstanding may stem from the fact that although portfolio managers may seem to be higher in the organizational hierarchy, it doesn't necessarily mean that they supervise project managers. Also adding to the confusion is that today's project managers have more business acumen than their predecessors to compete in a global economy. 
To determine the difference, remember one thing: Portfolio managers help translate an organization's business strategy into a portfolio of projects' benefits and results, which are delivered by project managers and their teams.
Therefore, the portfolio manager works in a synergic way with project managers to realize business objectives through projects. 
A portfolio manager has to answer three questions about every project:
1. Is it interesting? All projects have to create business value. Consequently, alignment between project deliverables and business strategy is essential. 
By answering if projects are interesting from the point of view of the organization, we are assuring that we have a portfolio aligned with the strategic plan.
2. Is it viable? It is common to have many interesting project possibilities. However, we may not be capable of carrying them out. 
Therefore, a portfolio manager must determine a project's viability. Do we have the resources? Do we have the technical skills?
3. Should we do it? We may end up with a list of projects that are interesting and viable, but we cannot execute all of them at once.
Portfolio managers use scoreboards and other methods such as the analytic hierarchy process to select and prioritize the best projects.
To answer these questions, portfolio managers analyze business cases, project proposals and viability studies. Once there is an approved project charter, a project manager takes over to drive the completion of the project on time and in budget and to ensure that the project stays aligned with the business strategy.  
By the end of the project, the project manager's performance depends on how well he or she planned and managed the project (time, cost, and scope and quality). That is, a successful project would have satisfied stakeholders by delivering what was promised according to the project plan. 
Considering the performance of a portfolio depends on achieving business objectives through projects, portfolio managers use other metrics to measure success. These include:

  • ROI
  • Percentage of projects aligned with strategic objectives
  • Investment targets met
  • Percentage of facilities and personnel used
  • Percentage of financial resource utilization
  • Business value realized
  • Percentage of customer/stakeholder satisfaction
  • Total variances to budget and schedule

Project Goal Management: A Film Maker's Experience

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This year, "Warriors of the Rainbow: Seediq Bale," a Taiwanese film, was submitted for a nomination for a 2012 Academy Award, a top movie prize in the United States, for best foreign-language film.

Although the film industry is a particularly challenging and unpredictable way to attain success, the process of making the film provides a lesson project professionals in any industry can learn from.

Creating this film was like any project -- it faced unique challenges. To start, the Taiwanese box office is small, and the director, Wei Te-Sheng, needed financing for the film. But how could he find sponsors when he was a "no-name" director with a low budget?

The answer was obvious: Make a simple, yet successful film to create a good reputation and attract investment.  

To fulfil this goal, Mr. Te-Sheng directed "Cape No. 7" in 2008. It generated box office returns of more than NT$500 million (US$16,900,249) and won multiple awards. He was now in a position to begin producing his historical epic film. Financing opportunities came easily, and the end product was an film worthy of a submission for nomination to the Academy Awards.

Mr. Te-Sheng's progress should be recognizable to any business strategist as adhering to the principles of program management. The goal of Mr. Te-Sheng's program was to make  "Seediq Bale," but he had to complete smaller projects to achieve it:

  1. Come up with a plan or project that generates a desired benefit.
  2. Ensure the benefit can be realized with little compromise.
  3. Balance benefit-received and cost-paid, or the outcome may be compromised.
  4. Consistently aim for your goal.
This example reveals a lesson in terms of organizational strategy: Always remember to ensure the benefits of programs and projects align with the company's ultimate objective. Don't be distracted.

Have you ever completed smaller projects to prove to sponsors you could make a bigger project work?

Read more posts from Roger.
Read more on portfolio management.

Applying Portfolio Management as a Business Map

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It's the end of the year and many companies are reviewing how they performed over the last 12 months.

Portfolio management can help senior managers check how their products or services are performing -- and maximize benefits and opportunities to plan for next year.

PMI's Standard for Portfolio Management -- Second Edition defines a portfolio as "a collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives."

And "portfolio management is the coordinated management of portfolio components to achieve specific organizational objectives."  When we use a portfolio approach, senior managers coordinate how projects and programs are managed and gain deeper understanding of what they mean to the organization.

Where I have worked, a portfolio is organized as a collection of business operations that share the same purpose. Portfolio management serves as our business map, where different business packages are laid out according to risk, profit and time.
In companies, portfolio managers address products or services according to risk and profit factors. Products or services are divided into four types:
·    High-risk high-profit
·    Low-risk high-profit
·    High-risk low-profit
·    Low-risk low-profit

Taking their payback period into consideration, benefits can be maximized by reasonably allocating resources and financial investment for each of the four types of products/business.

For example, products that are "high-risk high-profit" require time to generate high revenue.

As for businesses or products that are already generating long-term and stable profits -- those in the "low-risk low-profit" category or basic business -- careful resource allocation should lead to eventual increased revenue.
"High-risk low-profit" products should also be given appropriate resources, as long as they bring in certain benefits, such as expanding or maintaining market share, and keeping up with potential competitors.

Take computer manufacturer Acer, for example. In the past, Acer has made large profits on PC products of the "low-risk high-profit" variety. By 2008, Acer was about to surpass its main (and only) competitor, Hewlett Packard, as the world's biggest PC manufacturer. But an unexpected competitor arose: Apple.

Acer's long-term reliance on this "low-risk high-profit" strategy meant that innovative "high-risk high-profit" or "high-risk low-profit" technology products, such as those that Apple makes, were ignored. Apple topped Acer because Acer failed to plan a complete business map. It didn't manage the risks arising from a "low-risk high-profit" strategy. Acer was only focused on pursuing market share by making and selling cheap PC products.
Even when your current business is generating high revenues, you should never ignore business plans and products that are still under development. You should always allocate reasonable resources to these business elements, and never solely depend on your successful products or services.
When planning your company's products or services for the upcoming year, be sure to check if your strategic plan is well balanced. Make sure no element of your business is over-exploited and no element is ignored -- no matter how little profit it currently generates. 

Achieving Success through Program Management

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A report detailing the impact of the 2010 Taipei International Flora Exposition estimates that Taiwan brought in more than US$1 billion during the six-month event. These benefits were created by synergy, which was cultivated through centralized program management.

What do I mean by synergy? Cross-related projects benefit from efficiency and control when activities are combined rather than performed separately. The exposition is a good example of the kind of synergy that program management should bring -- an example worth considering if you want to manage projects effectively within a program.

The event had an organizing committee, which was set up like a program management office (PMO). Endorsement from the International Association of Horticultural Producers (IAHP) gave the organizing committee the freedom and authority to be effective. IAHP provided the committee with clear objectives, which allowed committee leaders to establish concrete goals for meeting stakeholder expectations.

The exposition involved 377 projects and more than 23,000 participants. With so many stakeholders involved -- all of whom were eager to stage events, exhibitions, shows and displays -- the event's success required all of their coordination and cooperation.

All of these stakeholders' concerns needed to be understood and met. This was only possible through the organizing committee, which worked closely with local tourism and cultural bureaus, as well as the government. The committee had to negotiate, mediate and monitor the projects, and assist the stakeholders to achieve their own benefits, so as to maximize the synergy effect.

But it is not just strong, centralized management that ensures a program's success. The program manger must also correctly identify clear objectives around which individual projects are organized.

As exemplified with IAHP and the committee, objectives of a program can only be defined from top to bottom, which requires a higher level of governance. Once the objectives of a program are set up, every project under the program shall be carried out in accordance with the objectives to ensure alignment between the execution and objectives.  

What do you think? Does centralized management ensure a program's success?

Cost-down Activity: Portfolio or Project Management?

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Every project management office (PMO) should perform organizational cost-down activities, whether it's the overall business running cost-down by reducing inefficiencies or the cost reduction of projects or productions.

Some organizations think cost-down should be included as a part of portfolio management, while others regard it as just another part of project management. The answer depends on whether cost-down is executed to help realize the organization's objectives.

For example, let's take a look at Foxconn Technology Group, a manufacturing giant in Taiwan that manufactures several Apple products.

During the bidding process to manufacture the iPad, for example, Foxconn provides a quote to Apple that Foxconn's competitors are unable to match or undercut. Foxconn evaluates different efficiency plans in an effort to cut the price of iPad production as much as possible.

The design and specifications of the iPad are fixed. Choice of materials and manufacturing methods, however, can be managed in the way that Foxconn feels is most efficient. Foxconn can research less costly materials, more efficient production methods, and new vendors for less expensive services or components. Foxconn will also look to vertically acquire its competitors or vendors.

All of these factors allow Foxconn to calculate from quotes how it must manage production so that manufacturing matches the quote. This is Foxconn's organizational strategy: offering the lowest price to its buyer and attaining the most competitive cost.

This example shows how a cost-down activity meets the organization's business strategy of offering the lowest price. In this situation, the cost-down activity is absolutely part of portfolio management.

Projects, programs and portfolios are all about executive power. The appropriate use of a project, program or portfolio depends on its function. When a project, operation or task can be performed to further the organization's business strategy, it should definitely be regarded as a part of portfolio management, and not a part of project management.

Does your organization treat cost-down activity as a portfolio management activity?
The new year has arrived, and some senior managers may face the pressure of troubled projects. Which projects must be scaled down? Which should get more support? Which should be canceled because market conditions have changed? Portfolio management demands these kinds of tough decisions.

In the 2006 version of the James Bond film, "Casino Royale," for example, the character named M is responsible for managing military intelligence projects and programs. She has to make the best use of the resources under her governance, whether they are programs or projects. When one of her projects is out of control, she corrects the deviation by removing resources and support -- in this case, from Mr. Bond's personal revenge-oriented task -- because it may not align with the organizational objective.

In the meantime, she also has to define what each operation or action should achieve and in what way. Should it be an interception done secretly by the SWAT (special weapons and tactics) teams or a detainment in a sumptuous gambling casino? It all depends on what effects an action aims to achieve and at what costs.

The basis of portfolio management lies in its top-down logic. Depending on what objective you want to reach, you combine the resources and organize the projects and programs to move toward that direction.

When it comes to personal investments, people often combine different products and methods to gain the maximum benefit based on the risks and available financial resources.

Similarly, project portfolio managers consider the resources that should be allocated to projects and programs based on what risks and benefits they can generate for an organization.

Programs and projects sharing similar risks or benefits may be put together for better management. The grouping facilitates decisions on further investments and resource allocation, as well as adjustments amid changing market conditions and organizational strategic plans.

By following effective project portfolio management processes, you can put together a business operation that makes your investment objectives more achievable. Just like M -- but leave the SWAT team at home.

Strategic Project Portfolio Gives China a Competitive Edge

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The Shanghai Expo 2010 isn't just about putting on a great show for 180 days. It embodies a large-scale program, especially in terms of the economic and political synergy it created for a developing country.

Like the 2008 Beijing Olympics, the expo is a collection of projects whose collective purpose benefited the nation and fulfilled the government's strategic objectives.
The expo and the Olympics were part of a national portfolio aimed at achieving countrywide political objectives for boosting the economy. Both were planned and executed with the intent to cultivate high-tech skills and knowledge aimed at ensuring growth and competitiveness in the future.

For example, the Chinese government required every contractor carrying out individual projects to employ Chinese workers, including certified project managers. This has ensured that enough skilled workers necessary for national development have been trained.

By the end of 2009, the number of PMI certified project managers in China was 29,414  -- the second-largest number in the world.
The physical legacy these programs left is also notable.

Unlike games or exhibitions hosted by developed countries, both the expo and the Olympics were accompanied by massive infrastructure developments -- and not just the renovation or improvement of existing facilities. The Shanghai Expo re-developed areas in decline, and brought infrastructure and facilities to previously undeveloped areas.

Apart from the huge venues, China built airports, restaurants, hotels and 11 high-speed railways. Development plans also incorporated expanding and improving the service industry of Shanghai.

These projects, combined with the outcome of other national programs and projects, help advance the government's goal of growing and developing the national economy.

"Projects produce deliverables; programs output benefits so as to sustain, advance or achieve organizational objectives; while portfolios ensure the alignment of the diverse objectives and independence of programs and projects to organizational strategic objectives," according to page six of The Standard for Portfolio Management.

And that's exactly what the Shanghai Expo 2010 did.

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