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For decades, large organisations have relied on traditional hierarchical structures to manage their projects and programs. However, as the scale and intricacy of operations increase, organisations face mounting pressure to innovate and adapt to new ways of working.
In order to create more agile, responsive, and efficient project management structures, silos must be broken down, communication needs to be improved, and decision-making processes should be streamlined.
Across all levels of the organisation—from executives and department heads to team leaders and frontline employees—the burning question is: how?
TBH Principal Melanie Becker discusses how often overlooked, strategic portfolio governance is an essential element of organisational management that can help leaders establish clear expectations and drive more balanced performance across portfolio priorities.
An Interconnected Ecosystem
Leadership, decision-making, organisational structure, people, work processes, and culture are deeply interconnected within an organisation. Each element influences the others, creating a dynamic ecosystem that shapes how an enterprise functions and evolves. However, this system can only be understood and improved by looking at things in their entirety from a portfolio perspective.
A shift to portfolio-based governance offers organisations the opportunity to optimise the projects they are delivering at an organisational level. This in turn, provides a means to adapt to market changes, navigate future disruptions and ensue new opportunities for growth and development.
By taking a top down and holistic approach, leaders can design strategies that align these elements to support organisational goals effectively: management capabilities across the portfolio can be shored up, clear governance structures and decision-making processes can be developed, and multiple projects and programmes can be overseen and coordinated.
In this way, organisations can move to a place where the resources, budget and priorities are in place to achieve the desired outcome of strategic efforts.
Portfolio Optimisation
Governance provides vital oversight that can shape the projects within and the direction of an organisation’s entire project portfolio. This helps organisations make better informed decisions about which initiatives to pursue, how to allocate resources, and how to manage risks, interdependencies and constraints across the entire portfolio.
This ensures optimisation of the portfolio because key factors are considered at the outset including resourcing, benefits, and timeframes.
This overarching authority ensures that high-level decisions are made with a comprehensive view of all ongoing initiatives which in turn provides leaders with a better understanding of interactions that are occurring, so they can pinpoint the most valuable projects as well as any that have gone off course.
Portfolio Governance Vs Portfolio Management
Unlike portfolio management, which encompasses the roles, processes, systems and deliverables responsible for day-to-day portfolio management, governance roles are those that take ownership or stewardship of the portfolio.
In other words, portfolio governance practices make critical decisions, set the strategy, and guide management for successful outcomes and strategic oversight.
As opposed to standard project governance, which is individual project-focused – portfolio governance ensures that an organisation’s initiatives and projects are all aligned with its strategic goals as a collective whole. This recognises that some trade-offs between individual projects will be necessary but allows decision making about these trade-offs that achieves the optimal organisational outcome.
This is important – because a lack of visibility and oversight at the portfolio level can quickly turn into a lack of organisational control, increased risk exposure and internal ‘competition’ between projects.
Benefits of Oversight
By looking at projects in a portfolio as interconnected components of a larger puzzle that fit together rather than just as individual pieces, leadership can ensure that every piece – no matter the size and shape – contributes to the organisation and its strategic direction.
Without line of sight to the overall strategic direction and portfolio-level control into how each specific priority advances, the risk of failure increases significantly.
Interdependencies between projects may not be identified, cumulative and compounding risks can go unnoticed, and high priority or redundant projects may not be identified, leading to delays and failures.
Conversely, strong visibility across the board can lead to improved budget management and a better understanding of patterns and interactions that contribute to consistency and improving levels of productivity.
Breaking Down Siloes
Portfolio governance is especially important when silo mentality takes hold of an organisation. Silo Mentality causes a lack of information sharing and collaboration between different departments or projects within an organisation’s portfolio.
This mindset is always detrimental to overall organisational performance and efficiency because projects, programmes, and people need to be intricately interconnected to succeed. When organisations treat these elements as separate entities – dividing them behind invisible walls, they will begin operating in isolation.
In isolation, projects risk developing a limited perspective and a failure to recognise how their work contributes to the broader organisational goals and objectives.
Valuable insights and potential innovations are therefore overlooked because information is not shared across the organisation freely, negatively impacting workflows, delaying projects, and causing delivery consistency issues.
As a result of silo mentality, organisations often suffer from a duplication of efforts and wasted resources.
Portfolio governance works to improve visibility and communication across the organisation – but it also provides a framework for monitoring and reporting on the performance of projects and programs, enabling organisations to adjust and hone their strategies, and clarify communication processes as needed.
What is the Purpose of Portfolio Governance?
The purpose of portfolio governance is to serve as a guiding framework that aligns an organisation’s people, structure, processes, and culture with its strategic objectives.
Here are some key characteristics:
Value is Prioritised Over Output
By shifting the focus from outputs (completing tasks) to outcomes (delivering tangible business value) projects with the highest potential or future value are given precedence.
Agility in Resource Capacity Planning
Real-time capacity monitoring and forecasting tools help people work more effectively across departments or groups and allocate resources with precision, flexibility and agility.
Data Cohesion for Strategic Visibility
Integrated dashboards offer decision-makers a unified view of resource allocation, financials, risk, and performance and verify which projects are delivering tangible business value and contributing to long-term success.
Long Term Improvement Cycles
The use of feedback loops at both strategic and execution levels ensures that strategies, processes, and execution evolve in line with growth and shifting market demands.
Why Portfolio Governance Helps an Organisation Become More Productive
Governance from the portfolio level is a scalable, manageable, and more equitable framework than attempting to govern repeatedly at an individual project level.
This is because, when done properly, portfolio governance creates a ripple effect of benefits throughout an organisation, where the combined efforts of the portfolio achieve more than the sum of individual project contributions.
Without clear oversight of the link between projects in a portfolio to the overall strategic direction, or an understanding of how each specific project contributes to the organisation’s vision, decision-makers cannot make informed decisions, or establish a cadence that allows for speedy resolution and escalation when bottlenecks occur.
On the contrary, with structural mechanisms in place to make coordination across functional lines or geographies easier, an organisation is able to clearly define, monitor, and assess project performance to prevent mistakes and inconsistencies, thus improving control.
Benefits of Portfolio Governance include:
- Resource Optimisation: When capital, talent, and technology are allocated to the most important projects, these resources are not wasted on less impactful tasks, leading to cost savings and improved output. Optimised resource allocation also helps in balancing workloads, preventing employee burnout.
- Risk Mitigation: Balancing high-risk, high-reward projects with more stable investments minimises disruptions and cost overruns, ensuring smoother project execution which in turn enhances productivity and promotes stakeholder confidence.
- Standardisation: When processes, tools, and means of communication are uniform across projects, businesses can achieve greater consistency in their outputs, which directly contributes to improved productivity and profitability.
- Improved Employee Morale: When employees feel supported to share ideas, collaborate and work in a culture of open communication and respect they are more like to make decisions that align with organisational values.
Change Approach
Implementing the right organisational structures and processes is not just about risk management; it is about enabling better communication and decision-making, while maintaining a focus on organisational objectives alongside project and portfolio outcomes.
By taking a proactive approach, an organisation will insulate their ecosystem to the punches of economic and geopolitical uncertainties and capitalise on opportunities as they arise.
Since there is no one-size-fits-all solution for creating an effective portfolio governance framework, organisations should resist the urge to adopt a pre-packaged approach that might not align with their ecosystem’s unique requirements. Instead, it would be wiser to let specific characteristics – the organisation’s size, scope, level of maturity, and in-house expertise – shape the portfolio governance structure implemented.
A tailored organisational change management strategy can not only streamline decision-making but also ensures fiduciary responsibilities are fulfilled effectively. The plan might include implementing rewards systems, engaging stakeholders, and adapting communications to each stakeholder group to ensure that changes are effective and sustained.
TBH offers unique external expertise to oversee specific change management functions, allowing organisations to concentrate on core areas that demand more attention.
TBH: Portfolio Governance Specialists
By partnering with experienced professionals that understand both strategic portfolio management, tactical project delivery, and change management, leaders can work to position their organisations for sustained success in an ever-changing business landscape.
At TBH, we are committed to working closely with organisations at the portfolio planning stage to drive transformational productivity improvements. By fixing things at this overarching level and implementing best practices consistently, we help organisations unlock the full potential of their investments and initiatives both now and in the future.
By implementing and monitoring strong governance frameworks, organisations can gain enhanced visibility across their portfolio to focus on activities that enable projects to deliver consistently, reliably, on time, and within budget.
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