After having touched the importance of senior management commitment, and the need for aligning the portfolio governance with the overall organizational governance, this time we address the importance of the alignment with the organizational strategy.

Given that portfolio management is about balancing the running costs with the investment in change in order to achieve strategic objectives, the alignment with the organizational strategy is clearly key in portfolio management.

There are two prerequisites for this:

1/ an organizational strategy exists, including measurable objectives and targets

2/ projects and programmes have a reliable business case stating expected benefits

Looking back to your private budget exercise, do you know where you want to be in 10 years, 5 years…? And do you have a clear view on how each investment helps you achieving this? Note there is also the fun part needed in life, so investments in holidays do help you stay healthy!

Having the above two aspects in place allows to map the expected benefits of projects to the organizational strategic objectives. This also allows to identify which objectives of the strategy are not addressed through projects.

But what if no clear strategy exists…? A few options exist. One of these is to put a rating system in place. Score each project against the assumed strategic objectives. Is the project critical to survive, or a nice to have? Another option is to apply pair-wise comparison so that a relative importance of projects amongst each other becomes available.

The other prerequisite is not less a challenge. Having reliable business cases is not straightforward. Are the expected benefits measurable? Can the benefits clearly be linked to this project and not partially to other projects?

Once there is a clear view on the importance of each project to realize the organizational strategy, it is key to keep monitoring this alignment and take actions as necessary. The market is changing rapidly and budgets must be use optimally. If a project is no longer important for the organization, stop it. If another project becomes more important, reprioritize resources. If a new idea proves crucial, add it to the portfolio and ensure it receives the resources it requires.

Have a good hunt for the organizational strategy!

 

Next time in Portfolio Management-back to the basics: the portfolio office.

Other articles in the series back to basics:

  • Senior management commitment
  • Align with the organizational governance

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