Previously, we introduced the Six Principles of Strategic Portfolio Management. In this issue and the next five issues of this newsletter, we will discuss each of the principles in detail, starting with “Aligned Decision Forum.”
The credibility of a company, both internally and externally, rests largely in the abilities of its decision makers to make sound, strategic decisions that will benefit everyone from the corner office to the mail room and stretching out to its clients, vendors and customers. Do decision-makers embody the values and mission of the company?
A company’s C-suite executives’ ability to make decisions that impact its profitability, efficiency, and long-term goals determines their success in their roles as decision makers. Decision making for companies can be an arduous task unless a process is in place that organizes the data that is gathered and structure is put in place to control how the data is used to arrive at informed decisions. An aligned decision forum provides an environment that drives decision-making at all levels of business and is key to providing a foundation for business planning and analysis.
Without the structure of an effective forum by which to make joint portfolio decisions, players can find themselves in conflict with other players over competing ideas, or be driven by the desire to advance their own agendas. Multiple players that may not be the right people for the project at hand—from different backgrounds—may bring conflicting processes to the table, making it unclear how to proceed, confusing matters, creating an environment where decision makers are talking past each other. Rather than arriving at decisions that are well thought out or based on hard data, decisions are made based on “gut” feelings, or worse, on anecdotal information. An aligned decision forum brings things out into the open, including acknowledgement of the uncertainty that surrounds planning for the future.
When decision processes are aligned, players work together under one umbrella process to analyze data, deliberate, resolve conflicts and take actions based on cooperative discussion, rather than being distracted by individual agendas or competition. It also brings the right people to the table for effective communication and decision-making.
Players have the opportunity to objectively analyze the top-down aspirations of their company within the existing economy and market climate. They can then leverage those aspirations against the bottom-up reality of the company’s product, its competitiveness and financial status.
vp principles of spm
Within an aligned decision environment players are able to strategize and prioritize based on data, available information and informed judgment. Quality decisions are made using meaningful and relevant information that is summarized at the appropriate level of detail for the decision at hand.
A portfolio manager is challenged to set funding priorities, allocate resources among segments, balance innovation and incremental projects, meet corporate financial goals and assure a steady stream of successful new products. By working through the process the group can address the important questions about where the company wants to go, what are the goals, what is needed to accomplish them, what kind of resources, funding, technology are needed, what already exists in the company’s portfolio and what should be kept, modified or shut down?
An aligned decision environment provides the setting and structure to bring people and information together, resulting in better, faster and cheaper decisions that benefit everyone.