This is a fun blog post with tips on using gamification to teach portfolio management principles (PPM). Portfolio management is not rocket science, but quickly conveying key concepts to people not familiar with project and portfolio management disciplines can be difficult. I learned this the hard way recently through my participation at two business competitions in Seattle. As I was working to come up with a simple message to explain portfolio management, I was reminded of a game I used to play in high school called Klax that actually contained many portfolio management principles. Klax is similar to many other puzzle gamers requiring players to connect multiple objects together of the same color. The basic game play involves colored tiles coming down a conveyor belt and the player needs to catch the tiles before they fall off and successfully drop them into a holding container (5 tiles by 5 tiles big) where points are scored by lining up at least three tiles in a row of the same color. The player can hold up to 5 tiles in order to better plan when and how to drop colored tiles into the bin.  When colored tiles are lined up, points are scored and the tiles disappearing clearing up more space to drop more tiles. A vertical stack of three tiles scores the least amount of points, horizontal connections score more, and diagonal connections score even more. Skilled players can connect 4 and 5 tiles together to score more points and lining up tiles to form an “X” scores a massive bonus. The game becomes more and more challenging as the number of colored tiles increases and come faster down the conveyor belt. The game ends when a player has missed too many falling tiles or fills the container bin (demo).

Connection to PPM

As you can probably guess by now, such a simple game has some interesting correlations to help teach portfolio management principles. Each tile could represent a project proposal and aligning three or more proposals of the same type (color) to organizational goals or strategies drives greater value to the organization. The holding bin itself could represent organizational resource capacity to complete project work. Each vertical section of the holding bin could represent a different business unit or customer. Some projects (vertical stacks) focus only on a single customer or business unit, whereas other projects (horizontal and diagonal connections) are developed for multiple business units. Clearly, these sets of projects are harder to complete when multiple stakeholders are involved and represent higher risk to the portfolio. Vertical stacks of 3 tiles are the easiest to complete but score the lowest amount of points. Higher scores are generated by lining up 4 and 5 tiles together, which requires more skill and planning to make those connections. Players need forethought of when and how to place the tiles in order to generate maximum points. Certain levels also have certain goals that need to be achieved before the player can advance to the next level. For example, the player may need to complete five diagonals before the level is over. Creating vertical and horizontal stacks may still earn points and may be needed to clear space in the bin but does not directly achieve the required goal.

Portfolio Management Principles

Here are a few of the portfolio management principles that are easily displayed through the game:

1) Governance: the paddle that catches the tiles could represent a governance board that needs to decide which projects to do and when to do them. If too much work is proposed (on the conveyor belt), the governance board loses control, and chaos ensues.

2) Value maximization: a governance board should not only focus on getting work done, but ensure that the right work gets done at the right time to generate greater value. In the game, a vertical stack of three tiles helps clear the board and generates a few points, but nowhere near the value of larger horizontal and diagonal stacks.

3) Organizational goals: just as the game has a goal to be achieved before a player can advance to the next level, so organizations have their own goals and it is important to realize that not all projects support the goals of the organization. Appropriate portfolio planning is needed to achieve organizational goals.

4) Portfolio Risk: larger horizontal and diagonal stacks are harder to achieve and could represent organizational risk. Trying to get too much work done at once (setting up multiple diagonals or horizontals) jeopardizes the entire organization and could result in nothing truly getting done unless adequate attention is paid to managing the portfolio risk.

5) Pipeline management: the conveyor belt represents the current pipeline of project proposals and the speed at which the tiles come down the conveyor belt is a significant factor for determining the difficulty level of the game. Likewise, ensuring that there is a steady flow of projects that are dispatched appropriately is a success factor for portfolio management.

Try out the game and let me know what you think and how well it applies to portfolio management principles. A newer version of the game can be found here, but is only available for Apple products.

Too often, the modus operandi for many organizations is to receive requests and filter them through a stage-gate process in order to evaluate the merit of the request and select the right projects. If the project is selected, a project team is assembled and the project planning begins. There is nothing wrong with this process, in fact, it is an important component of portfolio management.  The shortcoming relates to the lack of strategic planning and portfolio planning.

Strategic planning occurs once a strategic direction has been established within the organization. It is beyond the scope of this book to discuss how strategy is developed. Rather, our focus is on executing the strategy. The primary assumption is that strategies have been developed. From here, the senior leaders should be able to outline the major items they believe are necessary to accomplish or fulfill the strategy. These major items help define what the company intends to do on a larger scale (“the big whats”).  Going one step further, the senior leaders may have an idea of when these major items need to be initiated. With this information, a strategic roadmap can be built to lay out when major components of the strategies should be executed. This strategic roadmap is a critical component of strategic planning.  At this point, we are looking at strategic components from a 50,000 foot view. Few details may exist for each major component listed. If more information can be provided, all the better. The critical point is that the senior leaders outline some of the major items needed for the completion of the strategy.

Before the traditional portfolio management practitioners raise their arms in protest, I would point out that all of these projects will be reviewed like any other project and need to be prioritized. The creation of a strategic roadmap does not violate key PPM principles. Rather, the strategic roadmap aids the portfolio planning process by acknowledging major efforts that need to be undertaken. Without this view, it is all too easy for decision makers to approve projects (perhaps the right projects) at the wrong time. The creation of a strategic roadmap is a proactive step of leadership to better manage the portfolio. It is far easier to anticipate resource shortages when you can see all of the major efforts on the horizon. It is also easier to acknowledge the need for strong prioritization when key strategic projects compete for resources with smaller projects. The strategic roadmap is a key deliverable of the strategic planning process and is a major input for good portfolio planning.

Portfolio planning at a more tactical level helps senior leadership know when projects will get worked. Portfolio planning improves overall portfolio success by taking into account the limited resources (financial and human) and comparing this against known project dependencies in order to properly sequence projects. Strategic planning is proactive work that outlines the major components needed to accomplish strategic goals. Strategic planning will not account for the numerous small projects that get requested throughout the year (that’s the role of the portfolio management process).   Portfolio planning utilizes select information from all project requests (large and small) to sequence the projects (based on dependencies, resource constraints, and priorities) in a way that creates an ideal portfolio at a given point in time.

The chart below highlights three parallel steps of the planning process: strategic planning, portfolio planning, and project planning. Strategic planning often covers a 1-3 year planning horizon (or longer) and is generally longer than portfolio planning and project planning (except for large and/or complex projects).

Portfolio Planning vs Strategic Planning

“A fascinating trend is consuming Silicon Valley and beginning to eat away at rest of the world: the radical simplification of everything.”

PPM vendors would be wise to take notice of this article by Fast Company. Portfolio management is not rocket science, yet many of the software offerings on the market can be difficult to use. Unfortunately, very few of the vendors have a user experience in place that matches the current expectation of software. As this article points out, this leaves the door open for better vendors to come in. There were several noteworthy quotes which I will share below:

“Ultimately, any market that doesn’t have a leader in simplicity soon will”

“If you’re not the simplest solution, you’re the target of one”

“Any product with an interface that slows people down is ripe for extinction”

A related article by the NY Times, stated that design now rivals technology in importance. These articles highlight the shift that is taking place with technology and software. Merely having the best technology or the most functionality is no longer good enough; design is critical. More specifically, user experience is critical for new software going forward. Unfortunately, for the current portfolio management vendors, this means some expensive re-designs of existing systems.

User experience is a key component of PPM 2.0. Companies need solutions that are easy to use and will garner strong user adoption. I know from extensive first-hand experience with one of the “leaders” in the portfolio management space, that being a “leader” means nothing, delivering useful solutions means everything. Powerful solutions need to  be simple. Simplicity is important because without it, user adoption suffers and the benefits of portfolio management decline. Many of today’s “leaders” led the charge as part of PPM 1.0. However, with the emergence of cloud, mobile, and social, PPM 2.0 promises even more value with easier to use solutions.

Data represents a major facet of successfully implementing project portfolio management (PPM). In a previous post, I discussed how data drives the portfolio management engine and some of the key components for getting good data into the tool. Some important portfolio data types includes: financial data, resource data, schedule data, and benefits data. Leadership plays a pivotal part in the whole process from determining which data is needed to using the data for better decision making. This post will concentrate on the last part of the process—using the data.

Use the Data
Data quality is never perfect at the beginning of a portfolio management process. Collecting data takes time and effort, and with so demand on individual’s time, people do not want to waste time collecting data that is unnecessary or won’t be used. This is why it is so important for senior leaders to use the portfolio data. Once the data gets used, leadership will better understand what data is needed for better decision making. Moreover, once the data gets used, the gaps in the data will be readily apparent and will give senior leaders an opportunity to reinforce the importance of the portfolio processes (that collect the data in the first place).  However, using the data is only the first step in a three step process. Next, leadership needs to communicate that the data is being used.

Communicate that You Use the Data
Communicating that the portfolio data is being used is a conscious effort on the part of the senior management team, but is something very easy to do. It can also easily be overlooked. Think about it. Project managers and resource managers can put data into the PPM system not knowing if it is simply going into a black hole or is actually helping the organization. Without communication, they may never hear whether the data is actually being used. A prime example occurs with resource data and capacity management. In order for capacity management to be successful, good data is needed, which takes a lot of effort by project managers and resource managers. If the project managers and resource managers do not believe that the data is actually being used, there will be less effort going forward in entering and maintaining the data. Even when an organization is mandated to use a PPM system, the data can be compromised by a small number of people who do not take the process seriously. Communicating that the data is being used is necessary for reinforcing the importance of the portfolio processes, yet senior leadership needs to take one more step—demonstrate how the data is being used.

Demonstrate How You Use the Data
Communicating that the data is being used is good, but demonstrating how the data is being used is even better. This will send a clear message to the organization of how important it is to maintain accurate and up-to-date information in the portfolio system. If the data is being used to drive decisions around strategic project investments, staffing plans, bonuses, etc., then people will be more likely to spend the time to enter, update, and maintain the data. However, if the data is used to create a report that merely scratches the itch of a curious executive, then the people involved with the portfolio processes won’t have much interest in making sure that the data is accurate and up-to-date.

Using portfolio data, communicating that the portfolio data is being used, and demonstrating how the data is being used are the responsibilities of senior leadership. None of these steps are difficult, but need to be taken on a regular basis if the organization wants to be successful with portfolio management. Collecting data comes at a price, and if the data isn’t being used, it is better for the organization to stop wasting its time and focus on things that move the organization forward. A small amount of effort on the part of the senior leaders can go a long way toward making portfolio management successful and useful. Data is the fuel that runs the portfolio engine. Bad data will clog the engine; good data will help the organization sail forward. Using the data, communicating that the data is being used, and demonstrating how the data is being used will not only make the difference in being successful at portfolio management, it’s also smart business.

In a recent LinkedIn discussion, questions were asked about the short-comings of prioritization matrices. I would like to highlight the strengths and weaknesses of using such a tool for portfolio management. Firstly, a prioritization matrix differs from a more traditional scoring approach in that it offers a limited number of priority selections. The most simplistic prioritization matrix has three choices, low, medium, and high. Of course, to be effective, every choice should have some predefined criteria. Otherwise, the matrix is of little value because decision makers can have wildly different views for what is of high importance versus low importance.

Strengths
Prioritization matrices have three primary strengths: simplicity, speed, and applicability to all types of work. Prioritization matrices are easy to understand and simple to use. Calculations are not required for determining the relative priority of a project. Basic criteria should be developed for each part of the matrix, but once complete, decision makers can apply the criteria to various types of work. Because of its simplicity, prioritization becomes a much faster exercise and allows decision makers to quickly distinguish important projects from less important projects. In addition, various kinds of work can be prioritized using a prioritization matrix. With a traditional scoring model, it is difficult to evaluate “keep the lights on” type of work, but with a prioritization matrix it is easier to compare priorities for project and non-project work.

Weaknesses
Prioritization matrices are unable to produce a rank ordered list of projects in a portfolio. At best, such a matrix can provide a categorical ranking of projects in the portfolio, but this won’t help prioritize projects within the same category. Prioritization matrices cannot do a good job of evaluating projects based on multiple criteria, and therefore cannot do a thorough job of distinguishing important projects from less important projects. When evaluating multiple large projects, a scoring system will provide a more accurate analysis over a prioritization matrix.

When Should a Prioritization Matrix Be Used?
Prioritization matrices are good for organizations new to the portfolio management process. Due to the simplicity, organizations can quickly get the benefit of prioritization without spending the time to do a thorough scoring of each project. Even in organizations where projects are scored and ranked, prioritization matrices can be used for “pre-screening” purposes to do a preliminary prioritization. This would be commonly used in a stage-gate process before a formal business case has been developed. A governance team could quickly determine a categorical priority for the project at an early gate review. Prioritization matrices can also be used to triage large volumes of project requests to focus the organization on the hottest projects. I have seen this approach used in an organization that received a high volume of small project requests. In this case, scoring would be an over-kill; the organization just needed to determine the most important work at that time.

From a very pragmatic point of view, getting the right data at the right time is at the heart of good project portfolio management. If the right data is not available for decision makers to use, the issue will be mediocre results at best. Portfolio management is about selecting the right projects, optimizing the portfolio to deliver maximum benefit, protecting portfolio value to ensure that that value is delivered, and improving portfolio value by maturing organizational processes. At every step, data is required. The quality and quantity of data correlates to portfolio maturity. Some less mature organizations will collect insufficient data which leads to sub-optimal decisions. Other organizations may try to collect too much data before they are ready to utilize it and can do more harm than good by burning out employees with burdensome processes. Mature organizations will have the discipline and rigor to collect the right amount of quality data.

Therefore, understanding the data needed upfront is a success factor for portfolio management. There are several types of portfolio data:

• Strategic data
• Resource data
• Schedule data (forecasts and actuals)
• Performance data
• Financial data (estimates and actuals)
• Time tracking
• Request data
• Etc.

Senior management bears the responsibility for identifying the right data to be used in the portfolio management process. In addition, senior leadership needs to drive the accountability for collecting the right data. Without active engagement and feedback from senior management, data quality can suffer.

Organizational processes are very important for ensuring that the right data is collected. Selecting the right projects requires that good data is collected about each candidate project. Such data must be relevant to the senior management team that makes portfolio decisions. Data that is not used for decision making or information sharing is considered a waste. Collecting data comes at a cost, and organizations need to put the right processes in place in order to collect good data. From this angle, portfolio management processes are about collecting a sufficient amount of the right data. Without good standards and processes, important portfolio data will be collected inconsistently resulting in confusion and possible error.

Portfolio tools have a very important place in the portfolio management ecosystem, but only after leadership has identified what is required and lean processes have been created to facilitate data collection. Portfolio systems store and transform project and portfolio data for general consumption (aka reporting and analytics). For less mature organizations with fewer data requirements, simple portfolio systems such as Excel and Sharepoint can be used in the portfolio process. Maturing organizations should select portfolio software that meets the needs of its data requirements.

Lastly, senior leadership needs to use the data in the system for making better portfolio decisions. Strong portfolio systems will generate the reports and analytics necessary to support better investment decisions. Good data is the fuel that makes the portfolio engine run! Without good ‘fuel’, senior management will be unable to drive the organization toward its strategic goals. The data perspective of portfolio management begins and ends with senior leadership.

What is the real value in tracking time for project and non-project work?  The fact is collecting accurate time measurements across an entire organization can be time consuming and potentially expensive. Collecting time for the sake of collecting time is a huge waste of good organizational energy. I have compiled a list of six reasons for tracking time with the corresponding assumptions for each benefit.

1) Calculate variance metrics (e.g. earned-value management)

Assumption:  managers or project managers actually use the variance reports to take good corrective action. Some organizations collect earned value metrics or other variance metrics but do little with the data. “Doing” earned value management is a waste of time unless positive action is taken as a result.

2) Calculate time to complete (based on effort-driven scheduling)

Assumption: project managers have built an effort-driven  schedule. I have never met a project manager that built a truly effort-driven schedule, let alone use time tracking to drive estimated completion dates.

3) Track overall project costs

Assumption: it is important to track actual project costs. If a customer will be billed for work done on a project, then it makes sense to track time. However, for many organizations that serve internal organizations, trying to track actual costs may not be the best use of company resources. Sure, it is nice to know the final cost of a project when it completed, but who is using that information? How many organizations look back at completed projects to get a better understanding of the cost of like future projects?  Let me know if you have worked in any.

4) Track capital expenditures

Assumption: capital expenditures are a recurring part of doing business. With the tax benefits associated with capital expenditures, time tracking here makes a lot of sense and can be limited to the people associated with development.

5) Collect historical data for future parametric estimating

Assumption: organizational discipline is in place to use reasonably use historical data for parametric estimating.  As good as it sounds, parametric estimating requires a certain degree of discipline and rigor to make it successful.  Good mature organizations will do it.

6) Collect resource data for capacity planning purposes

Assumption: capacity planning is being done in the organization. Even though capacity planning is done with forecasted resource estimates, using historical data can help managers better understand how much time a resource really spends on project work. This information can then be used to block out non-project time, with the balance of time available as the resource’s project capacity.

Benefits and Beyond: Rethinking the Strategic Value of Project, Program, and Portfolio Management (Mark Langley-PMI  and Matt Light, Gartner )

• We need to be able to answer the question, “Why did we do what we did?”
• Benefits realization is a process throughout the project management lifecycle (among high performing organizations) not just at the end.
• We have an increased need for leadership.
• We need two types of project managers: those who are project capable, and a select group of turn-around artists who can also train/mentor junior project managers.
• Benefits realization = ACCOUNTABILITY, which requires a ‘culture of PPM’
• Organizations should match talent with appropriate projects
• If you don’t have a business case, you are guaranteed to not know whether you achieved anticipated value
• Finally, it requires leaders to deliver benefits

Follow the Yellow Brick Road (Michael Hanford, Gartner )

Pros and Cons of Centralized PMO

• Pros: Can develop a better project management culture faster, everyone reports to the same director
• Cons: business knowledge ages, disconnected group from the rest of the business

Identifying and Harnessing Complexity in Projects, Programs, and Portfolios (Robert Handler, Gartner )

• See: A Leader’s Framework for Decision Making for more information on the Cynefin model
• Work in the Simple area of the Cynefin model should not be projectized
• 80% of projects reside in the complicated area
• 20% of projects are likely in the complex area (but drive 80% of the value).

PPM Marketscope (Daniel Stang, Gartner )

• Out of the box report is weak for many PPM vendors
• Most companies never get past time tracking
• It can take 3+ years to resolve resource management challenges
• With new implementations, start small and provide ‘just enough’ visibility

I am attending my first Gartner conference and have included some of the highlights from day 1 below:

AM Keynote:
It’s about risk. Don’t apply process overhead to low risk efforts.
Today’s status has something for pleasing everyone, but the full truth for no one.
Don’t ask everyone to ‘run’ when walking is ok.
Business cases may be ‘adorable’ but emotions still drive executive decision making.
Take a holistic approach–focus on outcomes first, process second.

Power PMO (Matt Light – Gartner )
Defective business cases lead to defective portfolios.
“Only when you see value are you able to tell what is waste and then start to get rid of it”
Portfolio value at the beginning of the project lifecycle is not approving wasteful projects
Portfolio value at the middle of the project lifecycle is cancelling or fixing poorly performing projects
Portfolio value at the end of the project lifecycle is reviewing the project benefits and results

PPM Maturity Workshop (Donna Fitzgerald – Gartner )
Don’t throw process at a level 1 organziation
Slow down just enough for level 2 organizations
“Real” portfolio management begins at level 3.
No individual heroic effort will get you to level 4.  The enterprise must go with you.
Level 5 (if achieved) only lasts a few years and will fail after key senior leaders leave.

PPM Governance (Robert Tawry – Gartner )
Either get your process well established first OR buy a tool that is easily configurable.
You can optimize resources for speed or efficiency. If you optimize for speed, contributors should only work on 1 project. If you optimized for efficiency, you should do 3 or less projects simultaneously.

In a previous blog post, I commented on doing portfolio management ‘by hand’ to learn the processes before adopting a robust portfolio tool. In a recent discussion on LinkedIn, one consultant commented that this most successful PPM software implementations occurred when companies took a phased approach to ease in the new solution. The first phase involved simpler tools to allow the organization to become familiar with portfolio management, followed by the full implementation with the advanced PPM capabilities.

After reading this I felt that there was a lot of wisdom in such an approach. Firstly, it gives the organization time to develop their own portfolio processes without the burden of learning a new tool upfront. Secondly, it allows stakeholders (ie. Project managers, steering team, etc) to understand portfolio processes and be comfortable using them. Third, based on the early experience with project portfolio management, the organization will better understand their own requirements for a full fledged tool.

In a great article on IT Project Portfolio Management, Jonathan Feldman asks organizations to consider the problem they are trying to solve and start with high level data rather than getting too detailed. “If you know what the end goal is, you can start to quantify how close you are to that goal”. Great advice as this too points to the need for a phased approach to implementing portfolio management.

What are your lessons learned with your portfolio management implementations?