Project Portfolio Management in

Dynamic Environments

Tathagat Varma, PMP, PRINCE2,CSP

Sr. Director, Yahoo!

The Problem: We’re Stuck• Technology and globalization

keep changing the game – Extraordinary opportunities, each also a

threat

• We must engage with these new growth opportunities– But face massive internal resistance to

reallocating resources

• Year in, year out, we end up with the same old portfolio– Nothing new ever achieves materiality—

we are well and truly stuck

• How can we achieve escape velocity?– How do we free ourselves from the pull

of the past?

http://www.zeislerassociates.com/VUCA.html

Living in “VUCA” Times

Success Factors in VUCA World

• Always retain a clear vision against which judgements can be made, with agility to flex and respond appropriately to rapidly unfolding situations.

• Provide clear direction and consistent messaging against a backdrop of continually shifting priorities, supported with the use of new virtual modes of communication where necessary. 

• Anticipate risks but don’t invest too much time in long-term strategic plans. Don’t automatically rely on past solutions and instead place increased value on new, temporary solutions, in response to such an unpredictable climate. 

• Think big picture. Make decisions based as much on intuition as analysis.

• Be curious. Uncertain times bring opportunities for bold moves. Seize the chance to innovate.

• Encourage networks rather than hierarchies – as we reach new levels of interconnection and interdependency collaboration yields more than competition.

• Leverage diversity – as our networks of stakeholders increase in complexity and size, be sure to draw on the multiple points of view and experience they offer. Doing so will help you expect the unexpected.

• Never lose focus on employee engagement. Provide strategic direction, whilst allowing people the freedom they need to innovate new processes, products and services.

• Get used to being uncomfortable. Resist the temptation to cling on to outdated, inadequate processes and behaviours. Take leaps of faith and enjoy the adventure.

http://www.impactinternational.com/blog/2012/01/leadership-vuca-world

PMI’s Pulse of the Profession 2012 – Focus Areas

• Organizations will renew their focus on talent development as they look to grow and gain competitive advantage in new markets.

• Tight economic conditions will continue to force the issue of good project portfolio management.

• As organizations continue to strive for agility in order to leverage ever-shifting market conditions, change management and project risk management will become even more important core competencies.

• The desire for organizational agility will also lead to increased use of iterative/incremental project management methods such as agile and extreme.

• Despite tight economic conditions, organizations have been and will continue to increase their focus on benefits realization (in addition to cost and time) as a project and program success metric

PMI Pulse of the Profession 2012 – PfM

Key issues around PfM

• Prioritization – Risk vs. Reward

• Planning horizon– Short-term vs. Long-term

• Resource allocation– All eggs in a basket vs. Peanut-butter

spread

• Manage Portfolio Value– Feedback, review and rebalancing

http://www.sciforma.com/image/us/resources/popular_risk_reward_bubble_diagram.gif

Managing a Portfolio The Three Horizons Model

Horizon 10 to 12 months

Horizon 212 to 36 months

Horizon 336 to 72 months

Current Businesses

Generate today’s cash flow

High Growth Businesses

Today’s revenue growth + tomorrow’s cash flow

Growth Options

Options on future high-growth businesses

Expected Window of Returns

Accu

mul

ated

Tot

al R

etur

ns

Figure 2.4

Long-term planning is dead!

http://www.chasingsunrises.com.au/images/chart1.png

http://leansoftwareengineering.com/2007/11/14/planning-a-month-or-less-ahead-is-not-enough/

Revenue Profits Growth Consumers

All woods behind one arrow!

How often do you review Portfolio?

http://www.patentpracticeliability.com/uploads/image/too%20late(4).jpg

To conclude…

“VUCA” is the new normal. Darwin at serious work!

Yesterday was more about Production and Operations. Today is more about Creativity and Design

Don’t put all your woods behind one arrow. Spread your bets intelligently

Rapid learning cycles and an ability to iterate fast are non-negotiable.

Constantly review and rebalance your portfolio before it’s “too late”

References• The Standard for Portfolio Management, 3/e, 2013• http://www.best-management-practice.com/gempdf/Capital_Investment_

Governance_White_Paper_Dec11.pdf

• http://esi-intl.in/download/Top-10-Project-Management-Trends-for-2013.pdf

• http://www.slideshare.net/hitesh447/portfolio-management-presentation • https://www.bcgperspectives.com/content/Classics/strategy_the_product

_portfolio/

• http://www.slideshare.net/msproject/gartner-be-prepared-for-the-future-of-ppm-v2012

• http://blogs.hbr.org/ashkenas/2012/09/manage-with-a-portfolio-mindse.html

• http://www.pmi.org/~/media/PDF/Research/Portfolio-Management.ashx • http://www.stage-gate.net/downloads/working_papers/wp_12.pdf • http://www.slideshare.net/anandsubramaniam/project-portfolio-

management

Finally…

“If one sticks to the idea that, once set, a plan should not be changed, a business can’t exist for long.”

– Taiichi Ohno

Thanks!

Twitter: @tathagatvarmaBlog: http://managewell.net

Slides: http://www.slideshare.net/managewell