So what is this strategic portfolio management? How is it different from project portfolio management? Let’s have a look!
Strategic Portfolio Management (SPM)
I have been reading through great articles related to Strategic Portfolio Management (SPM), and also a new book “Strategic Portfolio Management in the Multi-Project and Program Organization” was published in early spring 2023 bundled with the latest research. In the book, Strategic Portfolio Management (SPM), is understood as a collection of projects and programs delivering strategic objectives. Within strategic portfolio, there may be tactical portfolios, including programs, projects or sub portfolios. The definition for strategic portfolios takes even a wider approach of including all the “organizational work”, not only projectized development work:
I like this definition, as it is wide enough – development can happen today via projects and programs, but also via agile development or other work activities within the organization.
Taking Strategy to Action via Development Portfolios – Focus on Development outcomes and benefits
This is how I see it!
Strategic Development Portfolio is developing new products, services and offering, new or enhanced business models, transforming ways of working, enhancing processes, operations and IT tools and operating model, developing technology and platforms needed in future, and even impacting culture – moving the company towards strategic goals.
As a result of the development, development outcomes, such as new beautiful customer offerings are introduced to markets and deployed across the organization. Via the outcomes, such as enhanced business model or new offering or operating model, also business benefits are received. Development outcomes are contributing to the strategic targets, and transforming company towards the bright future – to wished to be state.
Strategic Portfolio View
So let’s have an illustrative example, what strategic portfolio could look like. In the example, portfolio is grouped into two sub portfolios focusing on business unit A and B strategic initiatives.
Within strategic portfolios, there may for example transformation programs, must win battles, individual projects or other initiatives, and different type of other development activities. Also work may be organized around value streams, and portfolio epics for agile development teams. Also product development may be organized around projects or via product development teams.
Work may be required from many different units and functions, and such other business units, IT, R&D, marketing, or finance. Thus, close collaboration with different units is required to ensure the smooth execution of strategic portfolios. Sometimes this is solved via cross functional development teams, and in some other cases, transformation programs may include projects delivered by different units. Read more about different view points from a previous post: Development Portfolios in Large Companies – Different viewpoints.
Building Strategic Portfolio – way of thinking
The thinking behind Strategic Portfolio Management is a bit different, even though Project, Program and Project Portfolio Management, and PMO activities are an important foundation for SPM. Here is the summary of Strategic Portfolio Management characteristics Garfein (2005); I think this is summarizing the way of thinking well:
Strategic Portfolio Management – It is all about saying NO
Strategy is all about making choices, saying YES to some of the opportunities, but saying NO to others, even though they are super interesting. This is especially important for strategic development portfolios: to be selective, to prioritize; this will help organization to focus on most important items. Read more about Prioritization from the previous blog post!
What does the strategy mean in practices for our development portfolio? Is our portfolio strategy driven, or can we loosely link all types of development to our strategy? One of the great tools, I recommend for strategic development portfolios is Objectives and Key results – if you want to learn more, have a look at OKR blog text too!
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I am super proud to present the first version, Minimum Viable Product, of Strategic Portfolio Management Fundamentals course via Udemy platform. Couse includes ~2 hours of video lessons, Strategic Portfolio Management maturity model, and an extensive workbook you can use to develop your portfolio management practices further!
References
Strategic Portfolio Management in the Multi-Project and Program organization. Edited by Katy Angliss and Pete Harpum.
Williams D., & Parr T. (2004) Enterprise Program Management: Delivering value. Palgrave MacMillan.
Garfein, S. J. (2005). Strategic portfolio management: a smart, realistic and relatively fast way to gain sustainable competitive advantage. Paper presented at PMI® Global Congress 2005—North America, Toronto, Ontario, Canada. Newtown Square, PA: Project Management Institute.
Strategic Portfolio Management 