I have a simple message for everyone involved in product development. This message is especially important for PMOs. These are the manager’s responsible for analyzing project portfolios. They calculate resources and priorities to determine who should work on which projects.
“Portfolio Balance” is misguided.
The problem is no one knows what the “balance” should be. Instead, we make it up. That’s right, the gurus and experts make up numbers to impress you. Portfolio balance is pure BS.
The idea behind portfolio balance is that it should help guide strategy. But to work through strategy conflicts using portfolio balance is dumb. If you’re trying to solve strategy issues through portfolio management, you’re too late. Those in the trenches of portfolio management understand this intuitively. Most portfolio managers are deeply frustrated when a top manager brings up using portfolio balance to resolve strategy issues. But how do you address problems related to priorities and uncertainties? What do you do instead?
A notable academic recently stated how over 80% of organizations have “unbalanced” portfolios. His research, he said, pointed to how these companies had too many small projects underway. His 80% statement exploits the prevailing view that balance is good and most companies have a “balance” problem. They’d be better-off with balanced portfolios. Balance is good and imbalance is bad.
But how do you know what “balance” should look like? Is it the ratio of small versus big projects? Are there other measures like risk and resources or markets and technologies needing balance? Managing multiple balances may itself be a balancing act.
What if someone inserts the word “strategic” in front of balance? Should “Strategic Balance” make it more important? And if “portfolio balance” is critical, who in the organization should decide what’s good and what’s bad?
Few companies have and use a portfolio balance criterion. Those who do created them by a declaration, not by endless analysis. And they treat balance as a ‘nice-to-have’ guideline, not compulsory metric.
Seeking portfolio balance is the same as wishing to work only on beautiful projects. Unfortunately, no matter how you slice your data and manipulate ratios, it’s tough to force beauty.
The Real Challenge
In portfolio management, the real problem is not balance. The real problem is a lack of good strategy, well communicated. The challenge is in how best to carry out smart product line strategies. It’s strategy success that matters, not portfolio balance. Who cares if a portfolio is balanced when product lines fail?
It’s time to deep six ‘portfolio balance’ from NPD portfolio management practices. In its place, the PMO should strive to answer these questions: Will the portfolio carry out projects that make product lines successful? And, are there non-critical-to-success projects underway? The PMO should focus on carrying out product line strategies, not seek a meaningless “portfolio balance.”
This demands communicating product line strategies with smartly defined roadmaps. Each roadmap should show the work to make a product line successful. The focus then is on carrying out the roadmap and achieving objectives.
PMOs should strive to answer one key question:
Does this portfolio carry out the roadmap work for our product lines?
In my book, The Profound Impact of Product Line Strategies, I share how a good product line strategy crucial to maximizing portfolios. I explain what it means to focus on strategy execution. It combines front-end scouting and concept work with development projects. And I make it clear the PMO’s job is not to enable top managers to voice a “correct portfolio balance.”
The challenge is to create great product line strategies. This means portfolio management should help drive front end work for creating new opportunities and not just oversee development projects. We must move beyond traditional portfolio management. We need to include strategies, objectives, innovations, and roadmaps.
But PMO’s can’t move beyond traditional practices on their own. Product line teams must create good strategies and sharp roadmaps. This takes work. It also demands product line teams learn how it’s done.
Smarter portfolio management comes from smarter product line strategies, not a meaningless “balance.” It’s time to move forward with a better understanding product lines and their strategies.
If you wish to learn more about product lines and good strategies, you’re in luck. You can take advantage of The Adept Group’s concentration on product line strategies. Consider getting my book The Profound Impact of Product Line Strategies. Or for team learning, consider attending my two-day interactive workshop.
Whitepaper– Good Product Line Strategy Matters. Here’s How to Create One.
- Whitepaper: Strategizing, Roadmapping and Executing the Product https://adept-plm.com/download-request-strategizing-roadmapping-executing-product-line/
- Upcoming Workshop on Product Line Strategizing and Roadmapping https://adept-plm.com/event/strategizing-roadmapping-product-line-workshop-2/
- Additional Articles:
New Product Development Product Line Roadmapping https://adept-plm.com/new-product-development-product-line-roadmapping/
- Maturing NPD Practices Beget New Processes https://adept-plm.com/from-portfolio-management-to-product-line-roadmapping/
- LinkedIn: Please connect with me and The Adept Group
As always, please feel free to contact me directly to discuss any and all aspects of improving organizational productivity toward new product development.
Contact me at: paul.oconnor at adept-plm.com
[i] Marketing email distributed on behalf of and signed by RG Cooper.
[ii] See Article at adept-plm.com https://adept-plm.com/from-portfolio-management-to-product-line-roadmapping/