Portfolio Health

By David Close

17 Mar 2014

Many corporate portfolios and their underlying change initiatives continue to fall short of their full benefits. Yet many of the common traps could be avoided by undertaking a Portfolio Health Check regularly and acting early on the intelligence. Whilst it’s prudent to conduct health checks on projects, it is equally important to health check the portfolio.

Performing a portfolio health check on a regular basis is a relatively simple and inexpensive exercise when compared to the large corporate investment at stake. A portfolio health check provides peace of mind to the executives, stakeholders and program/project managers the projects are pro-actively identifying issues and implementing improvements.

Key Tips for Portfolio Fitness

1. An apple a day

Many of us limit our visits to the doctor only when unwell. Likewise many businesses limit health checks to when they suspect major issues are in the program or projects. Taking a closer look, we realise there are better alternatives. People can be involved in activities and health check themselves and their peers along they way — how do I feel, my heart rate, weight, how do my colleagues look? Taking regular exercise and health checks on the way is likely to reduce many medical issues. Essentially proactive exercise and health checks along the way on themselves and their team leads to a health regime of “an apple a day keeps the doctor away”.

Similarly businesses who exercise with regular health checks on their portfolio along the way can proactively keep the portfolio and programs in shape. Regular exercise on the portfolio includes checks at quarterly intervals or as a criteria for stage gate entry. Frequent results from the portfolio health checks allow management and teams to regularly act on the issues and actions and keep the portfolio on track and the expensive rectification doctor away.

2. My area is fine … but what about the collective whole?

A common trap when a project health check is conducted is each project takes corrective action in isolation of each other. Each of the projects believes their actions will rectify the problems. But what about the rolled-up portfolio problems? Often the root cause is at a higher level with conflicting business priorities across the portfolio. This particularly comes to light when divisional KPIs are involved and each program/project manager maintains loyalty to their own CxO stakeholder and objectives.

With a portfolio health check it’s important to involve divisional executives to drill into cross-program priorities and emerging issues/risks. Whilst the executive team initially established the portfolio with minimal conflicts, as time passes it’s important the executives remain closely involved to resolve cross-program issues for early re-alignment.

3. Be agile and ready to change portfolio direction

Executive teams invest vast effort and cost to develop a corporate strategy and associated initiatives to be competitive in a global environment. This large effort can give leaders a false sense of we’ll be right while we deliver the portfolio. Taking your eye off the ever-changing global environment and not being able to change the portfolio direction can see massive amounts of benefits eroded by competition due to new advances. The erosion of benefits are compounded further when warning signs of internal issues are visible and a tendency is taken to carry on with a project in the belief that issues can be resolved by doubling efforts or by throwing more resources at them.

A portfolio health check that includes “challenge and change” reflects a healthy approach in proactively managing a portfolio. Rather than challenging only whether the program and project objectives are being achieved, a broader aspect challenges how is the portfolio responding to market forces? Companies that seek to tune their portfolio management to the ever-changing global environment keep themselves in good shape. It’s well known a major mobile phone company that continued their original portfolio delivery course regardless of the global environment, only to suffer the consequences when the market took a major leap forward.

In closing, consider the thoughts of Tom Stoppard, “A healthy attitude is contagious but don’t wait to catch it from others. Be a carrier”.

More by David Close

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