Are You Coping with Complexity and Want to Reduce it? Get a second pair of glasses for free! Eyewear shops are well known for their aggressive promotions, but I’ve never understood why I would need two pairs of glasses. I’m not the kind of ‘complex’ person who considers glasses to be an accessory that should match my outfit of the day. And I only recently discovered that different glasses can give you a different view of reality: With one pair I can read my iPad, and with the other one I can see traffic signs.
Portfolio management is complex. We can tell you about the many techniques, tools and approaches for dealing with the complexity and getting your portfoliomanagement under control. But hold on just a minute. Let’s switch glasses and look at the topic from a greater distance. Why is portfolio management so complex? We have seen organizations where it wasn’t. What was different there? What do we need to work on to create the same circumstances in your organization? Picking up on learnings from many dozens of organizations, in this article we suggest five tips to ease your portfolio management. But first let’s align on the meaning of portfolio management.
Portfolio Management: Focus on Strategic Goals
Portfolio management can have a different meaning to people. Composing the portfolio of initiatives to optimize the realization of strategic goals lies at it score. So, starting initiatives and setting priorities. Often, portfolio management also includes the allocation of human resources and budget, or making architecture and sourcing decisions. Portfolio management is a dynamic process. Once the portfolio has been defined, execution starts and reality will kick in. The new status needs to be reviewed and the portfolio adjusted. Actions to remove impediments will also be triggered. See Figure 1.
Portfolio Management Challenges in an Agile Organization
As agility is obtained in Agile organizations by reducing complexity and dependencies, one might expect portfolio management to become easier. It is—as long as you move from pushing projects and adjusting deadlines to starting initiatives and celebrating success.
The three main challenges you need to overcome are:
- Management sticks to project content.
- Teams act as if they are allergic to discipline and tosharing information in imposed (not invented here)templates.
- Teams are autonomous and focused on team goals only. Although this is a natural step when starting Agile organizations, it conflicts with the trans-teamportfolio management focus.
To counteract these challenges, we suggest putting ona different pair of glasses and following these five tips:
Tip 1: Nurture a culture of trust and transparency.
Reviewing the portfolio status is one of the areas in portfolio management that doesn’t receive enough attention. A lot of energy is wasted on chasing status information, challenging the validity of the status, and exposing impediments. Teams lack discipline, do not show ownership, and hide problems. You cannot trust them. Portfolio management is much easier in an organization where you can trust people and teams to:
- work passionately for your organization;
- try to solve (potential) problems themselves;
- collaborate with others; be fully transparent;
- pro-actively raise flags when something might go wrong;
- continuously improve.
Trust is a delicate two-way street, and you should pay ample attention to the pivotal role of leadership behavior in establishing this trust.
Tip 2: Scale down to independent units of max. 125 people
Portfolio management is far less complex in smaller organizations. There are multiple reasons for this:
- Teams find it easier to connect with the strategic goals in a small organization.
- It is easier to create a feeling of belonging, leading to more ownership and intrinsic collaboration.
- Strategy and realization are closely aligned, which makes it easier to have team representatives (typically Product Owners) participating in portfoliomanagement meetings.
- Management members can just walk around the work floor to get an understanding of what is going on.
Scale down and create stable teams within the units.It will dramatically reduce the effort needed for sourcing,budgeting, impact analysis and knowledge transfer.
Tip 3: Provide clear company-wide goals and priorities.
I remember a department that was led by two managers, each communicating the ‘highest priorities’ to the teams. Unfortunately, these priorities were many and different. We asked the managers to come up with a Top 10 list, ordered 1 to 10. After two weeks, they proudly presented their Top 20. With a flat ranking: all priority #1. A lack of direction invites teams to base their priorities on local information. And they are more vulnerable to indirect influence (side steering). Make sure you have clear company-wide goals and one unambiguous list of priorities. One point of reference will dramatically reduce the number of discussions and amount of frustration. Make sure, too, that policies, remuneration and cultural values all support collaboration toward the common goals. This prevents mutual conflicts among local or individual goals or conflicts with the common goals.
Tip 4: Focus portfolio management sessions on strategic choices and solutions for impediments.
Portfolio management sessions tend to sidetrack into individual project details, team performance or discussions about problems. Many times, participants just reiterate the problem without taking on the responsibility to solve it. Portfolio management sessions should instead focus on reaching strategic goals and solving impediments. This will lead to the following effects:
- Participants will internalize the strategic goals and take ownership.
- Participants will take responsibility for solving impediments. Most of the time the participants do possess the skills, network and powers to do so.
- Teams will feel they are trusted and supported.
Such effects help an organization reach the next stage in Tip 5.
Tip 5: Drive Performance Growth and Predictability.
Portfolio management should not be solely about team performance. However, team performance is an important prerequisite for light portfolio management. When teams perform better and are more predictable results are seen:
- Higher performance clearly leads to more output and potentially more value.
- Planning efforts make sense.
- Given the priorities, agreed dates are met. No effort is wasted on re-planning, making excuses and rebuilding relationships.
Portfolio management should influence performance growth by assigning priorities and driving the resolution of impediments.
Switching the ‘glasses’ you look through can provide anew perspective on the challenges that must be solved to achieve effective portfolio management. Coping with complexity is often the most common approach. Change your glasses and start with measures to reduce complexity. It will be more effective and make your portfolio management look better.