Organizing portfolio management

A common  question in my work on innovation portfolio management is the so-called governance question:

Where should the portfolio manager(s) report in the organization?

Some of the more common options include: reporting in the R&D function, in marketing or product management, or as a separate project and portfolio office. The question which is the best solution remains, since good portfolio management is inherently a cross-functional decision process based on cross-functional data and analysis. Since different organizations differ in their goals, operational processes, and competences, there does not seem to be one right answer or best practice.

In short: “it depends”.

Let’s have a look at the main pro’s and con’s of the different options I have seen working in a wide variety of implementations.

Portfolio management governance options

Where to organize? Pro Con
In R&D:
  • R&D has longest time horizons and most resource conflicts.
  • R&D has competence to do the analytics.
  • Technology push may be overrepresented


In Marketing:
  • Voice of the customer embedded in the process
  • Priorities linked to market needs and priorities
  • Sufficient capacity for strategic marketing (versus operational marketing priorities)
  • Marketing pull may be overrepresented (insufficient breakthrough)
In Finance:
  • Process discipline inherent for approvals and monitoring
  • Competence in (financial) analytics
  • Lack of technology and market/customer context
  • Financial drivers may be overrepresented
In Strategy:
  • Alignment of portfolio with strategic goals
  • Competence for business analytics
  • Insufficient attention for operational bottlenecks
As a separate office:
  • Independent position towards different functions
  • Process and data focus, cannot force decision-making
  • Reporting to whom?

What is the best solution for you?

From the above options, I believe it is best to jointly decide how the portfolio decision-making is best supported. Which option best links all the information available, and turns portfolio management in a joint problem-solving or optimization process, instead of a turf war towards compromises.

I would like to hear your practical experience about pro’s and con’s if you are in one of these settings. Even better, let me know if your organization implemented a different approach.