Focusing Our “Grow the Business” Initiatives: Portfolio Management

Last week we talked about Governance as the first tool to use to align our “Grow the Business Initiatives”.

The second tool for optimizing our business is a Portfolio Management Process.  Our portfolio of projects can be thought of just as we think of our financial portfolio.  Part of our portfolio is an investment in our future, part is insurance against potential unfortunate events, and part is necessary to cover our day to day needs or “just to keep the lights on”.

There are two steps to setting up a Portfolio Management Process:  A Process and Method for Ranking Projects and a Resource Rationalization Process.  Let’s explore each in more detail.

  1. A Process and Method for Ranking Projects

A set of criteria every project can be measured and ranked against should be developed and agreed upon by the Governance Team.  Typical criteria for ranking include whether a project:

  • Increases Revenue or Margin
  • Improves Customer Satisfaction
  • Improves Safety
  • Improves Quality
  • Improves Manufacturability
  • Improves Productivity
  • Reduces Risk
  • Reduces Overhead
  • Addresses Obsolescence

All of the active projects in the company should be ranked against the weighted set of criteria and a prioritized list should be developed as the starting point of the organization’s Project Portfolio 

2.  Resource Rationalization Process 

Resource rationalization is a process that allows us to determine what percentage of time our employees are spending in their “run the business activities” and who has available time to help us to pursue “grow the business opportunities.”

At many companies there are systems in place for employees to enter how they’ve spent their time.  It goes without saying that most employees will account for the amount of time they spend at work with no slack time.  For these systems to account for that behavior we should insure that both routine activities and projects can be selected when employees are reporting their time   This approach, over time, provides us with a picture of how much “grow the business time” is really available. because when a project is completed we can readily determine the average amount of time each member of the project team was allocating to that project and make the assumption the same amount of time is now available to work on another next project.

Of course, availability isn’t the only criteria that must be considered when allocating individual resources to a project.  The functional skillset and the level of expertise should also be considered.  Many organizations use project management software that allows them to build and manage their resource pool so they can determine if and when resources will be available.

If no such system is in place but there’s an automated payroll system, that’s a good place to extract the names of the employees, often by department and skillset, then work with the leadership of each department to determine who’s spending what percent of their time on what project.

If we’re doing this exercise for the first time it’s not unusual to find there are hundreds, if not thousands, of hours every week being expended on dozens of projects that have little visibility at the executive level.  More often than not, this is an indicator of a healthy organizational culture with committed employees who are working to grow the business.

Communicating to our organizations that our intent is to harness and focus that energy so the organization can support those projects that are most important is essential to avoid demoralizing those who have shown initiative.

When we have to put a worthy project on hold because there aren’t resources with the required skill set available to complete the project, we need to communicate, particularly to the people who have invested time and energy in that  project, that the project is still in the approved  portfolio awaiting resources.

When enough resources of the correct skillset are not allocated to each active project, it creates resource churn.  We’ve all been in the position where we had multiple projects or activities to complete.  The time it takes to move from one activity to the next and remind ourselves where we left off is unproductive time.  The more projects or activities we try to work on the higher the amount of unproductive time.

This is where the Governance Team begins to make their real impact.  Suspending projects that are  not resourced, based on the priority set by the team, increases the velocity of the active projects, providing a higher level of predictability of when those projects will be complete.

Published by Leah Ward-Lee

Leah Ward-Lee, the author of "$1,000 Start-Ups", is a serial micro-entrepreneur. She opened her first business at ten after lobbying for and receiving a shoe shine kit for Christmas. She pulled her wagon through the neighborhood, going door-to-door, offering to shine her neighbor’s shoes for twenty-five cents a pair. Once her wagon was full, she took the shoes home and polished them. Unfortunately that business was short-lived. She hadn’t tagged the shoes and couldn’t remember whose shoes were whose, so her dad went with her to retrace the route until every pair was returned. Since then she’s had businesses developing and teaching college courses, instructing aerobic classes, owning half a plane that was rented to a flight and maintenance school, and renting homes. She’s also owned a consignment store, a gift shop, a gift basket business, a consulting firm, hosted The Executive Toolbox (a weekly radio show), and a publishing company. She also spent twenty years in the US Army, served as the Chief Information and Technical Officer for two major insurance companies, and has a second career as a management consultant. Leah resides in Dallas, TX and on Amelia Island with Sammy and Goliath, her two rescue dogs.


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