Thursday, 20 December 2012 18:04

The Office of Strategy Management: a Response to the Failure of Portfolio Management in Strategy Execution

Written by  Fernando Santiago
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The recent Pulse of the Profession on Portfolio Management from PMI calls for elevating Portfolio Management to a strategic level. However, the term “execution of strategy” is not even mentioned in the report. PMI is saying many of the right things, but fails to make the connection: portfolio management should step up to the plate and become the natural owner of translation and execution of strategy.

Executives are accountable for formulation of strategy, but someone else needs to own translation and execution. Translation takes the strategy document and generates actionable, clear and measurable business outcomes or results and key capabilities that will allow the organization to achieve these outcomes. Of course, for this to happen, the strategy must be strong, not just a collection of tactics, goals and feel good statements.

Once translation has been done, execution starts with identifying all the initiatives required to deliver the capabilities and changes that will achieve the business objectives. This should be the foundation for defining a portfolio, from the top down, as opposed to the current practice of gathering proposals for projects and prioritizing them.

The practice of Portfolio Management so far has not helped companies with strategy translation and execution. According to Kaplan and Norton, creators of the Balanced Scorecard, nine out of ten companies fail to implement strategy. A most recent survey of over five thousand companies has this number as one out of three. It is still too high. Clearly, Portfolio Management has not fulfilled this role, and this explains why now corporations are looking at the concept of the Office of Strategy Management, or OSM, another creation of Kaplan and Norton.

The adoption of Top-down Portfolio Management can enable PMO’s and Portfolio Managers to step up to the plate and fulfil the role the OSM is starting to play. Starting with strategy, they can be a key player in the translation of the strategy and into execution through portfolios of initiatives defined from the top-down.  Tactical work still needs to be done to ensure delivery is successful, but strategy execution should be the main purpose of portfolio management.


Last modified on Thursday, 10 January 2013 11:12


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