In an earlier blog article, I discussed why you need a solid demand management process. Demand is what others are asking you to do. It is your “to-do” list or backlog of activities. From this list or backlog, you must be able to select the right work. The other part of what you do for a living is executing the work: doing work right. Therefore, “right work” (what is best to do next) vs. “work right” (what people, processes, or tools will be employed to do the work in the most effective way).
The world of “right work” (demand) and “work right” (ways to work) can be divided into three main categories: operations, projects, and initiatives. That is, all demand and work that a company may have will likely fall into one of these categories. In my last two blog articles, I covered the work operations category: Doing Work Right – Part 1: Operations and Doing Work Right – Part 2: Projects.
In this article: Doing Work Right – Part 3: Initiatives, I will focus on the approaches and processes for “work right” in the initiative’s category.
Is There a Right Way?
Of course, there is no one way or right way to do anything, I suppose. But I do like the phraseology of “right work” vs. “work right.” It helps to quickly differentiate between demand and work. So, what I mean by “work right” is really employing the optimal people and practices to get the job done in the most efficient and productive way while adding value to the business for each work type.
What’s an Initiative?
In my previous blog articles, I covered two other types of work: operations and projects. Initiatives are different, much different. In the chart below, you will see that the work type of operations covers small, short levels of effort focused on keeping the business running. The work type of projects is a larger level of effort with a beginning and an end to the work. Projects focus on achieving medium-size goals. Initiatives, in contrast, are large-scale and C-level-management focused. They propel a company forward towards strategic outcomes.
Here are some very simple examples so you can get a better perspective on just what an initiative is:
- Smaller level of effort
- Example: Add a new drop-down to the web page and populate with product code values
- Medium level of effort
- Example: Add a new module or system to our ecommerce platform
- Much larger level of effort with senior executive and large budgets
- Example: Increase revenue by 15%
You can easily see the difference between adding a drop-down list and growing revenue by 15%.
Where Do Initiatives Come From?
Typically, initiatives come from the senior leaders of a company or organization, such as:
- The corporate board of directors
- Steering groups comprised of cross functional departments
- Senior executives (CxOs)
- Business leaders responsible for LOBs (lines of business)
These leaders and managers are responsible to create and design the strategic business initiatives such as grow market share by 25% within 12 months. So, who or what is going to manage all the myriad of initiatives? Let’s look at the organizational construct of a portfolio management office.
What is Portfolio Management?
First, let’s define what I mean by a portfolio: a portfolio is collection of operations, projects, and initiatives managed as a group to achieve a strategic business purpose. Wow, that’s a lot of stuff. In my last blog article, we discussed the Project Management Office which provides the oversight for a collection of projects. Typically, the Project Management Office does not provide oversight of any operations. Here, we will introduce the Portfolio Management Office which is responsible for managing the corporation’s initiatives, and encapsulating projects and operations are necessary.
Let’s further clarify just what the Portfolio Management Office (PMO) does. The PMO does not literally run the projects or programs (collections of projects with synergy). Instead, its purpose is to design the portfolios and choose which programs and projects are to be executed (approved and implemented).
Why Have a Portfolio Management Office?
Most businesses have similar challenges. A solid portfolio management structure will go a long way in solving these challenges. Some may be familiar to you in your organization:
- Too many projects to invest in – There is always too much work, so how do you decide which are the best things to work on?
- Difficulty aligning projects/programs with initiatives – There needs to be a central place to help ensure projects are aligned with the company’s strategic initiatives.
- Inadequate measurement and approaches to benefits, costs, and risks – Everyone wants their project or projects to be approved, but you really need to also look at benefits to the business, costs and risks, and this takes an independent group.
- Overemphasis on project execution vs. project selection, grooming, and alignment – This is why we discussed the difference between ‘demand’ and ‘work’ management. Everyone seems to focus on the execution side (work management) and not on proper project selection (demand management).
- Operations could be ignored, when they should not – Again, there is a desire to focus only on projects. Most times projects must include, be aware of, and or in some fashion, relate to, existing operations to be successful. For example, you may need some of the resources in the operations groups, or you may be implementing a new system that affects the operations groups. So, don’t forget about operations when working on your initiatives.
- Lack of the complete picture of business investments – Typically, many projects don’t see the world from the top down, but rather the bottom up. It is best to manage the initiative-driven project process with the entire business, or a large segment of the business, understood from an investment perspective.
What Does a Portfolio Management Office Do?
The portfolio management office is like the project management office we talked about in my last blog article except it is on steroids. That is, it is tackling very large and complex company initiatives. We will look at six key activities of the portfolio management office:
- Initiative demand management – The PMO will manage project planning, selection and prioritization.
- Governance – Establishment of initiative management policies.
- Execute the initiatives – Via projects, programs, and operations on-time and on-budget.
- Define and maintain standards, metrics, and the process for the running the PMO office and its activities.
- Perform cross-functional reporting and communication – Effective communication is even more important and the PMO needs to communicate with the CxO offices and throughout the entire company.
- Maximize the company’s investment dollar – Basically, this is one of the main goals of the PMO: to get the greatest bang (business value) for the buck (for your investment dollar).
Is the Portfolio Management Office of Value?
Well, yes. The Project Management Institute performed a study in 2016 and here are the results:
The success of initiatives—those very large, complex and strategic chunks of work—must be managed by leveraging the best practices of portfolio management.
The Bottom Line
A company without initiatives is a company without purpose. For a company to thrive and grow, it needs to be purpose driven. Those end-state purposes are achieved through the implementation of your initiatives. So “choose wisely.”
Without the PMO, the business tends to believe that the goal is to achieve project success. Yet it is found that many projects do not fit well, or align to, the strategic initiatives and hence do not represent the best use of resources.
Basically, the term ‘does not fit well’ really means to either stop the project, maybe reduce the resources, merge portions with other projects. I want to emphasize this, since management seems reticent to stop projects. Remember the goal is the best allocation of resources and maximizing the investment dollar while achieving your strategic business initiatives.
Want to Learn More?
As I mentioned at the beginning of the article, this is a follow-up article to my last three blogs: “Why You Need Demand Management,” “Doing Work Right – Part 1: Operations,” and “Doing Work Right – Part 2: Projects,”
If you want to learn more about demand and work management, please check out one of my Pluralsight courses: Demand and Work Management: A Practical Guide by Michael Krasowski. URL: www.pluralsight.com/courses/demand-work-management.
Fairway Technologies Inc.