Organizing and Managing by Portfolio: Different Focus Required
The organization of like products into portfolios is more than for convenience. According to the scholarly references listed below, these groupings enable the following attributes:
Facilitate the collection of specialized expertise to field and sustain related capabilities
Limit and focus the stakeholder set, creating working relationships that prove invaluable in meeting the challenges of leading initiatives through the program life cycle
Allow for unique or tailored processes necessary to address a particular product line, stakeholder set, or other feature peculiar to the grouping
Inform the optimal physical location of organizations supporting portfolio planning, execution, fielding, sustainment, and operation to enhance knowledge sharing
Establish portfolio governance participation and timely assessment rhythm
Portfolio management’s purpose then, according to the Project Management Institute’s Body of Knowledge (PMBOK) Guide, is to leverage these attributes through “the centralized management of one or more portfolios to achieve strategic objectives.” Portfolio management is not simply program management on a larger scale. Traditional measures of individual program success—scope, schedule, cost, quality—are only components of the specific program objectives to be met. The portfolio manager needs to scale these at a macro level to optimize integrated system-of-system capability outputs, meet need dates, make investment trade-offs, and balance portfolio risk and opportunity across the lifecycle.
References:
Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK guide) (6th ed.). Project Management Institute.
Levine, H. A. (2005). Project Portfolio Management: A Practical Guide to Selecting Projects, Managing Portfolios, and Maximizing Benefits. Jossey-Bass.
Sanwal, A. K. (2007). Optimizing Corporate Portfolio Management: Aligning Investment Proposals with Organizational Strategy. Wiley.
Working at the Edge of One’s Mandate
To reiterate, portfolios encapsulating the features described above permit far more than a singular focus on individual program execution through management of the classic program pillars: performance, cost, schedule, and risk. While tactical execution at the program level remains necessary, it is arguably not sufficient to produce portfolio synergistic effects. Irrespective of how portfolios are organized—whether by operational imperative, capability, mission area, technology, customer, or other construct–the requirement for increasingly integrated capabilities drives an increasingly complex acquisition environment demanding greater knowledge, agility, and innovation within and across portfolios. For the portfolio manager, successful management requires simultaneously working at the edge of one’s mandate strategically, operationally, and tactically to align one’s portfolio across multiple dimensions. Using an aircraft metaphor, these dimensions can be thought of as:
The “leading and trailing edges” of the product life cycle
The “wing tip to wing tip” span of portfolio programs where synergies can be found
The “formation flying” of inter-dependent portfolios to achieve synchronous movement and delivery of optimal, integrated system-of-system capabilities
Thoughtfully constructed road maps and their governance can serve as the tool to align portfolios across these dimensions.
Working with Leading and Trailing Edges: Aligning for Portfolio Product Life Cycle Effectiveness
On the leading edge of product life cycle, the portfolio manager needs to maintain cognizance of technology exploration and advanced development activities that can inform requirements leading to new programs as well as technology insertion opportunities within existing programs. On the product life cycle’s trailing edge, opportunities exist for aggregating product support strategy elements—product support management, sustaining engineering, maintenance, supply support, etc.—across similar systems to achieve cost-saving economies of scale. Working both the portfolio’s leading and trailing edges requires of the portfolio manager a working knowledge of laboratory and depot capabilities, activities, and plans as well as active governance of how those evolving capabilities, activities, and plans affect portfolio funding and execution decisions. Conversely, shared governance with lab and depot leadership can constructively guide enterprise product support decisions and align future investments.
Working from Wingtip to Wingtip: Capitalizing on Intra-portfolio Synergies
The interdependency of programs in delivering integrated capability is a known reality. The challenge of delivering that capability is in maintaining intra-portfolio alignment where change is the only constant. Funding shortfalls, contract delays, technical challenges, test event slippages, and supply chain disruptions are only a few of the myriad of variables causing misalignment that must be known and their effects assessed. To capitalize on potential synergies, the portfolio manager must maintain a broad enough aperture to ideally predict potential misalignment in time to effectively mitigate capability delivery delays.
Working Across the Formation: Synchronizing Inter-portfolio Movement
As challenging as it is to maintain program alignment within a portfolio, SECAF Operational Imperatives drive portfolio managers to collectively align their efforts. Explicit cognizance of interdependencies is essential as is knowledge of changes in availability for testing, production, and fielding. Again, this requires both a vehicle to share this knowledge across portfolios and an active governance process to assess changes and their effects lead time away from funding, planning, and execution decisions.
Visualizing the Edges: The Value of Creating Portfolio Views
Effectively working along the dimensions described above requires different portfolio roadmap views highlighting interdependencies and key status indicators that require active risk management, corrective action, or both. Sensitive to balancing portfolio data collection requirements with effective data-driven management decisions, interdependencies and key status indicators at the macro level may include:
Portfolio program Tier 1 schedules
Portfolio program funding forecasts
Portfolio program product support strategy implementation plans
Lab project schedules and projected technology readiness levels
Depot capacity and capability projections
Projected and/or known interdependencies—lab project to portfolio program, portfolio program to portfolio program
The above is certainly not an all-inclusive list. What ultimately drives the list are the questions to which the portfolio manager wants answers to make confident data-driven decision.
Bottom Line:
Effective portfolio roadmapping and governance eliminates blind spots, synchronizes efforts, optimizes investment, and delivers maximum capability.
Portfolio managers need tools, data, and processes to manage complexity and harness innovation. Roadmaps allowing different portfolio views highlighting key interdependencies, opportunities, and risks to ideally eliminate blind spots and facilitate proactive decision-making. Using and sharing common portfolio management tools and governance processes across laboratories, acquisition organizations, and depots facilitate synchronized planning and execution activities. At the very least, the possibility to scale the application of roadmaps with similar look and feel or at least permitting shared views will increase ease of communication and collaboration. Ultimately, the collective alignment of effort will deliver the maximum capability possible via optimal resource allocation. Today’s security environment and budget realities demand it.
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About the Author
Brian Waechter, Colonel, USAF (Ret), has over 35 years of experience as a senior acquisition officer, defense industry vice president and business unit leader, and consultant. During his career, Brian has managed multiple large scale portfolios spanning both US and international programs across the acquisition lifecycle. He has held key portfolio management positions including vice president and general manager, M7 Aerospace – Government Integrated Services; executive vice president, Interactive Process Technology Associates; and system program director, Air Force Airborne Early Warning and Control System (AWACS).
To learn more about Brian, visit his expert profile here.