Introducing portfolio management to senior managers will generate resistance. After all, putting a methodology in place to prioritize and manage projects typically requires humans to change how they work, and that's never easy. Plus, factors such as industry, market state, internal culture, and personalities vary so much among organizations that coming up with one magic approach for introducing portfolio management is bound to fall flat.
However, I've found several elements that, if taken into account, can improve the initial perceptions those decision-makers form of portfolio management and increase the likelihood of subsequent adoption.
1. Link Portfolio Management to Solving Current Pains
The first thing you have to accomplish is getting the attention of the person who can make portfolio management a reality in the business. Since senior managers have lots on their agenda and limited time for yet another meeting, it's vital to make the discussion immediately resonate with some of their current problems from the very beginning of the meeting. Therefore a good start would be linking the introduction of portfolio management to one of the current pains they're going through. Examples include the annual planning cycle most organizations go through; some new, major initiative; or budget reduction activities. These pains are quite typical for senior executives at any moment in time. Doing research in advance of the meeting and focusing the message you want to deliver on problems currently faced by the organization is vital and can transform a resistant person into an interested audience for what you have to say.
2. Share a Vision for the Future State
Once the connection between the focus of meeting and a current problem is established, the next step is to paint the picture of a future state where the challenge under discussion is solved. When talking about portfolio management, usually this picture includes a more efficient and controlled way to deal with the planning or re-planning efforts. Some of the more tangible benefits include process consistency, transparency around the portfolio of projects, agile response to change in market conditions, efficient resource allocation, objective project prioritization, and adequate controls in place for all steps in the process. The expected benefits should be presented in connection with the problem faced by the organization, as opposed to theoretical statements:
- Process consistency across the organization. A standardized approach for the activity, which would lower support cost and duration or effort required by the activity in the same time.
- Transparency into the portfolio of projects. Visibility into the pipeline of projects vs. both organization goals and resource needs.
- Agile response to change in goals or market conditions. Increased competitiveness by being able to reprioritize the current project portfolio and align it to changes in the market conditions or organization strategy in a rapid and efficient manner.
- Efficient allocation of resources. Distribution of monetary resources and personnel to the project work that is most important for the organization, when doing annual planning or at points when budgets are cut.
- Objective way of prioritizing projects. Being able to rank and compare project requests and on-going project work by assessing their financial, strategic, and risk dimensions.
- Adequate controls. Standard governance rules for how projects get ranked, approved, and funded and their execution monitored.
3. Allow the Message to Come from an Insider
From a more logistical perspective, the team introducing portfolio management to a senior leader needs to be able to inspire trust and expertise. Therefore the best dynamic for such a team is to be constituted with a person internal to the organization - preferably a direct report to the senior manager (for the trust part) - and somebody who's an expert on portfolio management (for the expertise part). This latter person could be either internal or external. These two individuals need to work well together, because expertise without trust is usually perceived as just another sales meeting, and trust without expertise is always perceived as incompetence.
4. Ensure Longevity
Once participants are sold on the idea of portfolio management, you need to put in place components to ensure it'll "stick" in an organization. That requires a long-term strategic plan to follow when allocating capital and resources. The strategic plan usually includes the major goals of the organization over a number of years (typically, three to five). And it's endorsed by all key people who are ultimately responsible for executing it. A problem common to large organizations is a "silo" mentality that grows up in different business units or functional areas. Each silo has its own perspective on what the crucial strategic objectives are. Therefore, a strategic plan can serve as a baseline for measuring how a specific portfolio of projects moves the organization towards one or more of its long-term objectives and also as an objective way of quantifying performance and progress for the organization and the senior executives.
5. Pursue Top-level Commitment
Since the main feature of portfolio management is to align project investments to the organization's strategy and to keep it aligned by reassessing project work periodically against changing market or industry conditions, it's appropriate to call it a top-down management methodology. Decisions are made on the entire project portfolio as a whole, rather than on an individual project basis. As such, for portfolio management to succeed, a vital element is support from the top of the organization - senior managers. Therefore, to ensure success, you need to bring those senior managers on board and get them committed to succeed in the portfolio management implementation.
The process I've just outlined really works. I remember an instance when I'd been brought in as a consultant to a group of internal people who were attempting to sell a particular executive on the idea of portfolio management. The team in charge of delivering the message to this executive presented a great overview of the methodology and focused on all the common benefits that such an approach could deliver, especially for efficient allocation of resources. The executive started challenging everything, declaring that there were enough resources available to fund all the project work as long as each had a good case, so he couldn't see the point in going through such an exercise. It was only after several meetings with his staff that it became clear that his big problem was a lack of visibility into what was going on. He was categorizing a lot of the daily operations as project work. Once the discussion zeroed in on the problem of visibility, the light bulb turned on for this executive and he opened up to portfolio management and its benefits.