Changing Strategic Direction
So far we have only dealt with improving the portfolio internally, that is, alignment of portfolio work with established corporate strategy; maximizing selection; balancing portfolio components; efficiency of production and of product transfer; and so on. What if the organization's environment changes substantially? This may be due to a merger, an acquisition or disposal of a Business Unit, or a redirection following a change at the senior executive level. Or, what if the feedback from Operations demonstrates that the benefits from products produced as a result of existing strategies are simply not coming up to expectations? Clearly, these call for changes in strategy at the Executive level.
Hence, strategic reviews should be held at longer-term intervals, perhaps biannually or annually. A portfolio strategic review could consider any or all of the following:
- The extent to which Benefit Realization Management is working at the Operations level and returning the benefits expected according to the organization's strategic plans
- Impacts of latest business forecasts, portfolio resource utilization, balance points, and capacity constraints on portfolio performance
- Changes to the organization's strategic vision, goals and direction as it applies to its portfolio management as a consequence of this feedback
- Governance standards, and component sponsorship, accountability, and other ownership criteria set according to these standards, especially if revised
- Priority setting, dependencies, scope, expected returns from the latest enabling products, the risks, and financial performance, including retention or deletion of component categories and/or programs in the portfolios
- General changes in the way portfolio components are managed
Strategic Change Reporting
The status of the corporate management practice of its project portfolio management in general is of considerable importance to the future of the organization as a whole. Therefore, a brief summary of the status of the portfolio as a whole should appear in the organization's annual report. This is especially true if there has been a particular change in strategic direction during the reporting period.
Project portfolio management is neither simple nor easy, but it helps if you understand the big picture and where it fits in the overall scheme of management science.