The term “portfolio management” is a really confusing term. There are all kinds of portfolios: financial portfolios, R&D portfolios, NPD portfolios, innovation portfolios, insurance portfolios, and on and on. And then there are “strategic portfolios” — “operational” portfolios — “tactical” portfolios. Confounding the issue, within Project/Portfolio Management (PPM) systems, vendors tend to use the all-encompassing term “portfolio management” to include everything from ideation to resource management and everything in between.
In our work with clients, we consistently find that “portfolio management” means very different things to different people. To simplify discussions we historically made a distinction between “strategic” and “operational” portfolio management, which we have come to feel is not workable in the real worlds of R&D, NPD and innovation management.
My feeling, sure to be controversial, is that a portfolio — regardless of what you call it — must be based on the level of decision-making. When the decision is about selecting projects or opportunities in which to invest, the cast of characters is quite different from those who make decisions about how to allocate resources and budgets once a project is underway. In the former case, the financial function or general management function may be prime decision makers. In the latter case, project managers may be the decision makers.