Reflection on “All Things Considered, By Swanson, February 2011”

The article “All Things Considered” keeps discussing the portfolio management practices. It talks about the challenges that executives face in managing portfolios when they try to answer the following question; what projects should be selected? How to rank projects within the company’s portfolio? And how to align portfolios with the organization’s strategic objectives? And because answering those questions takes a great responsibility, we find many executives unfortunately focusing on low-risk projects that are aimed solely at sustaining the business, basically to avoid losing their jobs when they fail to manage those portfolios.

One of the biggest dilemma that companies face when prioritizing projects is that active project priorities change frequently, which leads to resource churn, and that is why organizations try to establish a documented assessment process across the company, because having a standardized methodology helps the company to have the flexibility needed to overcome those changes, and to align resources with the organization strategic goals. Additionally, in portfolio management it is very important that the levels of formality and complexity of process to be matching the maturity of the organization, taking into consideration the company’s culture to make sure that it is adopted for real in practice.

Some of the lesson learned from this article are that project decisions should not be only based on the bottom line; project managers should understand the benefits that the firm will realize from such project; besides the bottom line, the firm could be aiming to improve working conditions, work force satisfaction, improving corporate morale, improving quality, or even ensure business continuity. So the ROI is not everything; to look beyond it, many companies consider multi-criteria decision analysis, following the four basic steps; alternatives definition, criteria definition, comparisons, computation of the projects’ ranking.

Personally, I noticed that the business structure affect the companies culture; where the sole ownership, professional partnerships can be found operating without a clear culture, without a vision or strategy, those focus mainly on generating profits, and when organization does not have a strategy, it is not easy for the managers to evaluate projects and to rank them. The main reason behind the limitation of such organization is presented by the old-school owner mentality, where all decision have to go through the same person, and with the complexity of the market place these days, a single-man-show does not work very well. On the other hand, corporations have a great advantage, which is the separation of ownership from management, and that gives the organization a great flexibility to adopt and function in such complex market place. That also can reflect on the culture within the organization which is the key element to have in order to achieve a successful portfolio management practices.

The company that I worked at, AIC, has a capital of multi billions, however, the general manager of the company is the owner, and no matter how smart and experienced he is, this is not a single-man-show; the top management usually is too busy with the processes and the details, and has no time for any strategic planning. Additionally, the owner views all expenses to be coming out of his personal bucket, and that is why he is too careful about where to spend the money and how, and that gives a feeling of lack of trust in the company, and I don’t view that as a healthy thing to have in any business environment.