Portfolio decisions and implementation

What if  we do not do as we are told?

Flightmap personMay it is because I am dutch. Apparently, we (the dutch) have a bad reputation in not just doing as we are told. Instead, management decisions are analyzed, discussed, challenged and only executed if they pass our (personal or group) tests. Ever since my first managerial assignment, I tried to understand how not to just get decision quality but also decision acceptance. Sometimes to the surprise of  international colleagues from a much more obedient culture.

Anyway, in a long line of process and tools posts, I  felt this one should address culture. Have a look at the post on the key elements of portfolio management process to see how portfolio decisions (step 4) flow into execution (step 5). 

Portfolio decisions and their acceptance

There is always the example this one project, that was formally cancelled, but informally continued and then turned out to be hugely succesful. I cannot resist the temptation to ask for the number of projects that were also continued “under the portfolio radar” and that failed. Rather than working on projects under the radar, I recommend improving communication between project team and portfolio decision-makers (in both directions).

In the seventies, Vroom and Yetton already studied decision quality and acceptance from the leadership point of view. In their terminology, portfolio decisions require information from various “followers” [project teams], conflicts between followers are inherent  [projects compete for resources], and they may or may not share the same organizational goals [portfolio value creation and strategic alignment]. Their normative model suggests approach C2 or G2 for this type of decisions: consulting the group, letting them discuss alternatives jointly and then either let the group decide (G2) or decide as a leader (C2). G2 will get better decision acceptance, C2 will get better decision quality.

Addressing rational and emotional acceptance

Portfolio decisions have a big impact on people’s work life, directly (reallocation across projects has a big impact on daily work) and indirectly (getting it right may make a big difference in success of the organization). Good portfolio management links strategic choices to execution, and each individual involved somehow realizes this.

To properly engage everyone in executing on portfolio decisions, they need to be addressed along both rational and emotional dimensions:

  • Rational: can everyone involve understand how the portfolio decision is the best one, how it maximizes value and strategic alignment, how it properly balances risk and resources, and how its executability is verified?
  • Emotional: are the personal drivers of project owners and team members properly addressed, especially when running projects are stopped or popular new projects not started? If we have first selected champions to push their projects (no matter what), we need to work with them if we do want to stop them. We may need to address the mourning of a project’s death, as well as celebrating the birth of a new project.

Communication and transparency create the environment where everyone can contribute to, challenge, understand, and from there deliver on portfolio decisions.

On top of communication, a portfolio management control cycle has to be in place to monitor compliance. I am curious to further study “trust and control” frameworks to see what they can contribute to better understanding of portfolio management.

One thought on “Portfolio decisions and implementation

  1. Jac raises a key issue within decision making, whether it relates to a portfolio or other strategic decisions. Making decisions stick is a cultural issue, but not based on geographic differences, it relates to how the organisation operates.

    We see the issue of creating acceptable decisions as being primarily a cultural one and so recommend a true top down / bottom up approach. Using the leadership to set the strategic direction (not the decisions yet) in itself needs to be done in an open and collaborative manner – we are not looking for consensus, but working on exploring differences and reaching agreement. Consensus can indeed be a factor in decisions that don’t stick, so should be avoided at all costs. We would never advocate letting the ‘group decide’, there needs to be debate and agreement or no one owns the decision. By taking the bottom up approach, we ensure that organisation is involved in the development options and alternatives, enabling the assessment of what’s happening today and what opportunities exist at all levels in the process. This is an effective and ‘open’ process, so that everyone understands the parameters of the decision making approach.

    Next it’s key to have a supporting decision model that is equally transparent in how it will use the data and judgements coming from various levels within the organisation. A good decision model can also simulate scenarios and look at the impact of data sensitivities – exploring these in real-time with the decision makers enables different perspectives to be explored and an agreed executable (accepted) decision to be reached. It’s also key that any decision model is used to support the social process and not drive it.

    It’s not easy, it’s a journey that the organisation needs to embark on and it’s something that evolves the culture over time. It does need clear leadership, guidance and openness within the organisation to get to alignment and decision acceptance. With the right social design it will work, even with the Dutch!

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