Big Growth Goals
Unlike most portfolio management forums, which focus on operations and emphasize project management and resource management, the Community of Practice focuses on how to make portfolio choices and drive growth. Participants have the opportunity to build networks, expand their horizons and ultimately increase their effectiveness as they learn from each other in this intimate peer-to-peer forum. This year’s event was held virtually for four days in November.
- Applied Materials
- Corteva Agriscience
- Donaldson Filtration Systems
- DuPont Electronics and Imaging
While most of the time was spent discussing individual situations, problems and opportunities, we also explored several thematic topics to compare and contrast and see if we could develop new insights.
- Front End—how to ensure a stream of good new growth proposals enters the portfolio.
- Oyster Farming—managing high risk / high return opportunities in the portfolio.
- Scaling and Sustainability—making SPM last in a large organization.
- Balancing Strategic and Operational—keeping a strategic perspective while still meeting operational needs.
- Driving Change—using SPM to create and support positive change in the company.
- The New Normal—finding the right portfolio to support post-COVID growth.
Balancing Strategic and Operational
- How do we show visibility to the upside and invest for great innovative growth while still having accountability to deliver?
Accountability to deliver drives conservative estimation and reliable promises. Upside is all about creating unreasonable returns. The dilemma is that tremendous wealth is created when projects hit the upside, but this doesn’t happen that often.
- What cadence best balances short-term accountability and long-term aspirations?
Monthly or quarterly check-ins makes sense operationally, but this creates a near-term focus that prevents understanding the longer-term picture. Yet the long-term prospects for opportunities don’t change that frequently. Additionally, the detail in the short-term perspective can obscure the long-term implications and scenarios.
In the second case, the portfolio process allowed for a major pivot to success. The project was charging along on its strategy when the portfolio process interrupted operations for a fresh look, creating a strategic interlude. At that point, changing circumstances became clear, and the company selected a new direction. The portfolio process then provided the framework for reallocating resources to deliver on the new opportunity.
The Peer-to-Peer coaching is one of the most valuable parts of the CoP, as rated by the participants each year. As this coaching is done under strict confidentiality, it won’t be discussed here.
A Natural Tension
There is a natural tension between the operational focus on achieving immediate goals and the strategic focus on identifying opportunities to pivot to bigger wins. We mapped this out according to a framework called Polarity Management. No organization can afford to focus solely on one or the other, because short-term execution is key to keeping the lights on and long-term aspiration is key to adapting and thriving in a changing world. Successfully maintaining this balance leads to sustainable growth and the achievement of the company’s vision, but slewing to one pole or the other often leads to performance regressing to the mean and political infighting. That kind of polarization can also lead to an overcompensation that swings to the other pole, setting up an oscillation with disastrous long-term effects.
- One company was working to shift its culture from incremental to innovative. Replacing declining revenues from aging products wasn’t enough. SPM helped them create new investments opportunities with real potential to drive growth.
- Another company underwent a major merger. SPM allowed them to harmonize their governance and evaluation processes and align fairly quickly on the best portfolio for the merged entity. This in turn helped forging an integrated organization focused on future growth rather than legacy protection.
- Another participant described the challenge of migrating from a hardware-led business model to a software-enabled model. SPM helped drive conversations about not only software as an add-on to hardware, but also considering bigger shifts to business models.
The ultimate conclusion of the Driving Change track is that SPM must be put in service of the largest business objectives. By doing so, you motivate the adoption of SPM as a way to make a big positive difference, and thus you have support to use SPM to further those business objectives
- We have an excellent operational portfolio, but the strategy side is weak. We need to use SPM to drive better choices and alignment.
- We need to get better at identifying project upsides and putting resources into seeing if those can be delivered.
- From portfolio management to portfolio maximization: We’ve been treating portfolio as a roll-up. We need to get better at evaluating projects and using SPM to set and drive growth goals.
- Use the portfolio to provide better visibility to emerging opportunities, improve their development and smooth the transition to BU-led full projects.
- Our history has been funding based more-or-less on a percentage of revenue. But our best opportunities are often not in our high-revenue lines of business. We need to use SPM to fund these new growth areas.
- Our organization is large and decentralized. We need to create a larger scale community of practice within our organization and across companies to build momentum and reach critical mass for transformation.