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 Effective Portfolio Management

Identify and Map the Next Mountains to Climb

Unlike the Business Constraint Analysis, effective portfolio management identifies the next mountains, rather than how to better climb the current one.  Both are important issues, but they require significantly different processes.

Knowing which project is the "right mountain to climb" is not a trivial question.  In fact the "right" project can change over time.  When this happens the real issue is that our criteria have changed.

It's a Process not a Numerical Financial Formula

The classic portfolio management tools attempt to create a single universal numerical metric for ranking the candidate opportunities.  This loses the most important factor in this complex decision process - the critical conversations of the management team to ensure that the complex set of business needs are not being missed through a rote application of a precise numerical formula.

We see Portfolio Management as a process rather than a simple numerical ranking.  Yes, when we are done a numerical scale is used, but routinely the criteria that makes up the scoring process have been revisited to ensure that they are still the right ones.

So portfolio management is a three step process requiring significant amount of team participation:

  1. Determination of the selection criteria and their relative weights
  2. Ranking of the projects in the queue using a blended measure
  3. Use the team's final review to ensure that the numbers haven't created a nonsense result.  The critical conversations focused on the ranking are where the spice of experienced management shines through.

See the January 2006 Newsletter for more details.  Also the White Paper - Portfolio Management as a Process Not a Numbers Game contains more detailed discussion.



Copyright Velocity Pointe, LLC 2005

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