Portfolio Management: The Engine of Enterprise Agility

Enterprise Agility—an organization’s ability to pivot quickly and adapt to changing circumstances—is essential to business growth and success. But how can leaders foster enterprise agility, sustainably, within their organizations?

One way is to develop a high-performing portfolio management function.

This was the topic a recent episode of Lenka Live, presented by Project Management Institute (PMI) and the Agile Network. Lenka Pincot, Chief of Staff to the CEO for PMI and a member of the Agile Alliance Board of Directors, discussed the critical role of portfolio management with three leading thinkers in the field, Essowe Abalo, Kevin Darbelnet, and Johanna Rothman.

Check out the full episode here.

Portfolio management as a driver of agility

Lenka began by framing the discussion and describing how portfolio management drives enterprise agility.

“Portfolio management can be seen as one of the engines for enterprise agility,” she said. “It’s the place where many decisions happen that should lead to greater value creation and should create the responsiveness that is needed for enterprise agility.”

She also touched on the key intersection of projects and products (a topic that was discussed on another recent episode of Lenka Live), and the role of portfolio management in their interplay.

Next, Lenka’s guests provided their input on portfolio management—what it is, how it works, and why it matters.

Johanna quoted her book, Manage Your Project Portfolio, which includes the pithy, yet powerful, line, “you can do it all. Just not all at the same time” She went on to explain how “portfolio management is a necessary and iterative approach that needs to be thought about often.”

“Real agility isn’t Agile vs. Waterfall,” said Kevin, the founder of Strategy Matrix. “To business leaders, enterprise agility is the ability to dynamically prioritize, reprioritize, or stop initiatives based on changing business conditions. That’s a portfolio management conversation, not a project delivery framework debate.”

The connection to digital transformation

The conversation turned to digital transformation. Lenka teed up the exchange by highlighting Bain & Co.’s Stages of Digital Transformation, which posits that leading companies see technology beyond digitizing and optimizing their work. Today, they see technology as a true competitive advantage.

Lenka mentioned how the line between projects and products is becoming blurred and wondered how portfolio management can help light the way for leaders and practitioners alike.

“Portfolio management can help start the conversation about why a shared platform is needed to achieve shared goals across teams and verticals,” said Essowe, an educator and consultant. “It gets people working in the same direction.”

Johanna pointed out the connection between technology and product cost. “I think we can rethink what a product is,” she said. “The initial release of a hard product is a different problem them software or firmware updates. Product portfolios are different than they were in the past.”

The cost of poor portfolio management

Kevin brought up the flip side of value-driving portfolio management when he answered the question, “what happens if your portfolio management is poor or non-existent?”

“Leaders need to consider what everyone is working on,” he said. “Bad portfolio management is letting teams work in siloes. Poor prioritization. Not looking holistically at all of your initiatives and resources to make sure they’re all focused on the right things.”

Making the case to the C-suite

Persuading leaders to invest in or prioritize initiatives can be a challenge. To that end, Lenka asked her guests for suggestions on how to communicate the value of portfolio management to executive.

Johanna shared an elevator pitch: “Do you want everyone in your organization going in the same direction? Working on the most valuable work. Taking a holistic view of everything you have to do. That is the fastest way to move, the best way to make decisions, and the only way to get the outcomes you want. That is the promise of real portfolio management.”

Kevin focused on governance: “The opportunity is in role clarity and governance. How can we push as much decision making to the front line as possible? Teams need clear governance when they’re stuck and need support. The executive sponsor is critical to manage, prioritize, and help the team when they hit roadblocks.”

Essowe likened portfolio management to a family: “Just like a family, a portfolio thrives when diverse needs are met with unified vision and disciplined care. Every member of a family needs to manage their own portfolio. Portfolio management can help you see the vision, see the areas that you can improve.”

Sourcing and prioritization

Portfolios are often large, with multiple projects and teams being managed at once. Considering that complexity, Lenka asked the question, “How should we handle sourcing and prioritization?”

“We need to allow project managers to have input into resource allocation,” said Johanna. “Don’t predict the COST, focus on and assess the VALUE. This can help in making portfolio decisions.”

“When setting up a project, it’s a challenge to assign one budget,” added Essowe. “If you want people to be innovative, you need to use an iterative approach.”

Kevin agreed. “The funding process needs to go through a progressive elaboration process. It’s the notion of agile funding. We set aside funding to help develop ideas. Once we know enough about an idea, we can lock it in and fund it.”

The end of transformation?

Lenka then wrapped up the discussion with an interesting point about the future of transformation.

“Because we are in a constant state of change, organizations need to build a strategic capability to be transparent, understand how to make decisions, and respond quickly,” she said. I wonder, then, if the word ‘transformation’ will become obsolete.

“If that is the case, portfolio management will be crucial to navigating this new paradigm.”

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