Your Organizational Environment
The major organizational boundaries that we just spoke of are those between the classical divisions in most organizations. These divisions that make up the organization may be characterized in three parts as follows.
- Executive: That part of a whole organization or Business Unit that is responsible for stewardship, i.e., strategic planning, administering and managing the whole unit. It includes such roles and responsibilities as administration, business development, finance, human resources, information technology, legal, marketing, and so on. It should also include the responsibilities of portfolio management.
- Project Management: In its general sense, that part of an organization responsible for managing a project from inception to closure as evidenced by successful delivery and transfer of the project's product into the care, custody and control of the Client or Customer. This part of the organization may include program management or a project or program management office depending on how this part of the organization is structured.
- Operations: That part of the organization responsible for the on-going deployment of products and services and realizing the corresponding business benefits.
We have highlighted the main parts of an organization in this way because each of these groups has a very different management responsibility and perspective that you need to understand to see how portfolio management fits into the overall scheme of things. It is also important to understand that without the full cooperation of all three, it is not possible to reap the full value of portfolio management.
Of course, if portfolio management is being deployed on a limited basis in a single department, these three parts may all come "under one roof" so to speak, and cooperation may be easier to manage. However, the different perspectives will still exist in the minds of those with the different roles within the department.
While we have suggested that the Executive, or senior management, should be responsible for portfolio management, that may be a hard sell because any additional management is an overhead and costs money. Moreover, the Executives of most organizations are typically encumbered with scarce resources, too little time and too much information. This is particularly true when they are faced with more project proposals or opportunities than they can handle.
In many organizations, no one quite knows how many projects are currently active, the "project pipeline" is getting choked, management is fragmented and projects are not getting done. In all of this, the chances are that optimum value is not being obtained from the whole effort. In short, no one is making value assessments about what the projects will yield and whether all of this is pointing in the right direction for the organization.
So the tendency is to push the responsibility over to the project or operations levels. This may be sound on a trial basis, but sooner or later this will not be sufficient. That's because a very important factor in deriving success, is the type of people who make the selection decisions. Portfolio management is very senior work because the purpose is to yield a focused corporate payoff and gain superior or competitive advantage.
Portfolio management is not just about selecting and monitoring individual projects - it's about keeping the whole of the work of the portfolio in perspective, focused and optimized.