Why Project Managers Shouldn’t Run Your Portfolio Management Effort
So I recently spoke at a conference in Amsterdam where I heard an executive from Air France, (Marco Vd Poel), talk about their portfolio management effort. It was a refreshingly honest and well-articulated presentation. It was one of those presentations that only a practitioner can give because it was based in reality and showed the good and bad of their portfolio management efforts.
Marco had one line in his presentation that was simple, to the point and absolutely SPOT ON. I’m not sure if it’s a line he came up with, but he’s the first person I’ve heard say it so he gets the credit. He stated:
“Project Management is about doing projects right. Portfolio Management is about doing the right projects.”
Now let that sink in for a second.
How money is that line, eh? It is absolutely 100,000% correct and elegantly simple. So the next logical question is why are project managers running portfolio management efforts within their organizations if it is a different skillset altogether. It’s a bit like having Eliot Spitzer teach a class on abstinence. They don’t go together.
Undertaking the right projects and investments is about measuring value, considering strategy, risk and financial returns, etc and optimizing the portfolio based on those inputs and factors. Plain and simple - this is not what project managers know how to do nor what they are trained/supposed to do.
Portfolio management in the corporate setting especially IT has basically evolved like this. If you have enough projects, they roll up into a program. If you have enough programs, you all of a sudden have a portfolio. Somehow having a portfolio defined this way gives you the skills to do portfolio management. Wrong.
I’m not sure when folks will realize this. When they do, it will let project managers do their job better because they won’t have to do these portfolio exercises. And it will let organizations get the right people to head up their portfolio management efforts and actually get the value they can from such an effort - instead of the glorified project management that it currently is.
This is not meant to disparage project managers. I just think they’re being asked to do things that they’re not best-suited to do. Picking the right projects as part of a portfolio is a strategic, financial and risk discipline and very different than the skills possessed by project managers. If you are in the handful of project managers who can do it all, please don’t write to tell me this. You are awesome and a rare gem. I’m talking about the average project manager who doesn’t have the project management + strategy, finance, risk, etc skills.
Thoughts?
Tags: , portfolio management, project management, project manager, project portfolio management
April 19th, 2008 at 6:00 am
[…] Posted April 18, 2008 Anand Sanwal poses an interesting question on his blog, investildysfunction: why are project managers running portfolio management efforts within their organizations if it is […]
June 22nd, 2008 at 11:42 pm
You are absolutely right in separating the two. I wish more project managers read your blog and thought about this issue! It would save a lot of grief.
I have studied strategic planning and the personality and approach of a good strategic planner is very different from a good project manager. Project managers tend to be practical and concrete. Strategic planners are often visionary and abstract.
A good portfolio manager will typically be concerned with the overall vision and goal first, and the methods to achieve them second. I know few project managers who can effectively create and innovate around strategy and vision. There is nothing wrong with that; it is just a different skill set.
I sometimes teach project managers about strategic planning, and I structure the course entirely differently than a typical course for strategic planners. Strategic planners like to hear about the process and the vision. Project managers usually prefer to start from their own projects and understand how they build up into programs and build up into vision and mission. Neither approach is wrong or right, but they are very different.
If you find this interesting, take a look at my site, http://www.alexsbrown.com, at some of the articles on strategic planning and portfolio management. I think you will find a similar perspective.
July 25th, 2008 at 9:39 pm
Alex,
Thanks for your comment. As you mention, the skills are very different - not good or bad - just different. It’s unfortunate that many organizations fail to realize this and as a result, they put people in jobs they’re ill-equipped to do. Ultimately, when the project fails, it may not be because the idea is the wrong one, but because the wrong person was at the helm.
Thanks,
Anand
December 20th, 2008 at 8:32 pm
[…] Sanwal poses an interesting question on his blog, investiledysfunction: why are project managers running portfolio management efforts within their organizations if it is […]