During the last six months we have discussed five of the Six Principles of Strategic Portfolio Management that enable companies to derive the most value from their investments in R&D, NPD, NPD and other business opportunities. In this issue we address the sixth and last in the series, Clear Communications and Learning.
When organizations lack a value-based process to support strategic portfolio management decisions, they risk treating project/portfolio evaluation as an analytic exercise rather than as a collective conversation around value creation, supported by analytics. Because there is no inclusive process, they may not involve key stakeholders, resulting in lukewarm support for implementing decisions. Even worse, results may be used to blame, punish, or otherwise hold people accountable for performance when they have had little or no involvement in the decision-making process.
In their best-selling book “The Smart Organization: Creating Value through Strategic R&D,” SmartOrg co-founders David and Jim Matheson address the topic of “open information flow,” which directly relates to clear communication and learning.
In a “smart company,” they assert that “Virtually all information is available to whomever wants it. Information is used in surprising ways to create value. The flow of information crosses functional boundaries. In such an organization, people feel safe in sharing what they know and feel obliged to contribute to information-sharing systems. They are excited about teaching and learning.”

The decision-making process in smart organizations is dynamic, following the principles of agile development, wherein the information that informs decisions is routinely updated to provide feedback to adjust decisions about further investment and changes in direction based on improved knowledge.

When a strategic portfolio management process is in place, results are used specifically to improve the project and develop a level playing field to support effective portfolio evaluation and management. Uncertainties are tracked and updated based on new evidence, and decisions are updated appropriately. Information is gathered as needed to fill information gaps.
To recap: strategic portfolio management is all about honest and open assessment and communication with a focus on creating the highest possible return on investments in R&D, new products and innovation.
  1. An Aligned Decision Forum drives quality decision-making at all levels
  2. Value Creation Focus means that everyone in the organization understands how their decisions and actions create value for the organization and its customers
  3. Credible, Comparable Evaluations allow participants to assess and compare value on an objective, level playing field
  4. Embracing Uncertainty and Dynamics means that uncertainty is understood, communicated and managed
  5. An Inclusive, Collaborative Process aligns everyone around the strategic goals of the organization
  6. Clear Communication and Learning allow information to be shared freely, assessments to be routinely updated and project direction modified as knowledge increases