Portfolio is a second level, just below the strategy. A portfolio consists of all investments undertaken by an enterprise (projects and programmes), be them internal organizational change initiatives or projects carried out for clients. All these undertakings have certain business objectives and benefits, risks profiles and resources requirements. The key function of Portfolio management is to bring all information about the ongoing and planned initiatives onto a single platform (a dashboard), in order to allow the selection of the best initiatives, their ordering and balancing. But what are the best initiatives. These are the initiatives that generate the highest value in terms financial gain (Return on Investment appears here) but also in terms of the achievement of strategic objectives. Don’t forget that sometimes de-selection may be needed too. This means, weak project should either not go into implementation or projects in progress that go wrong should be considered for a termination.
A portfolio design process would go through a possible process consisting of:
- initiative mapping, to see all projects and programmes that are on the table, started and planned
- categorization, prioritization and balancing of the portfolio, to have manageable sections, to know the priorities and to keep a balance between costs, risks and benefits
- establishing a portfolio governance structure, to have clear decisional paths and competencies
- formulating the selection criteria, to have clear measures by which the initiatives are appraised, approved or disapproved for implementation
- portfolio level planning, to see when a given initiate takes place, what it costs, what resources are employed, and what the benefits are
- establish a consistent following system, to have a complete information on the portfolio developments, supporting the decision-making