Strategic Portfolio Management

Making the right decisions to do the right things at the right time for your investment to achieve the growth of your organisation are among the most complex decisions an organisation can ever undertake.

In the last few years, technology has revolutionised the way businesses operate and has led organisations to be more aware of their resource utilisation and rapid decision making process to remain competitive.

Program Portfolio management (PPM) represents the forum of company executives who have the highest-level strategy and decision-making accountability in the best interest of the shareholders. The member executives are those who understand the company's business strategy, technology and financial constraints, and take responsibility of making decisions about investment mix and policy, matching investments to company strategy, asset allocation and balancing risk against performance.

  • Name
  • Challenges

    What distinguishes companies that consistently harness the highest shareholder value from the limited available resources and ensure strategic alignment of the portfolio-program after program-from those that do not?

  • Value management and Decison management

    The focus is on delivery of programs rather than building the capability to make the "right" decisions and measure the value that is generated. The current business environment is characterised by both high uncertainty (turblence) and high ambiguity (complexity). Adding more information often increases confusion for an already complex issue and, by the time enough data has been gathered to make a decision, it has usually become irrelevant.

  • Misalignment with business strategy

    Lack of a method of choice to deal with the ambiguity of stakeholders’ needs and expectations and the complexity of a changing business environment. And, to strike the best possible balance among expected benefits vs required and available capabilities to offer the best alignment between expected and offered benefits while considering achievability, not specifically to reduce resources. Most entreprises still define business strategy based on potential value rather than the realised value.

  • Poor governance

    Large global Entreprises often struggle to develop a healthy collaborative environment at operational and management level, leading to too many projects running at the same time that do not deliver because of a lack of focus, right resources, poor prioritisation and unclear interdependencies. Too often today, low value projects, or projects in trouble, squeeze scarce resources and do not allow more valuable projects to be executed. There are also cases where, due to uncontrolled funding and strategy alignment, there are conflicting programs. And, a lack of controls on program and project management

    metrics lead to unclarity at management level to make prompt business decisions.

  • Focus on cost rather than investment

    It is not the potential value that should be the goal, but the realised value. Therefore value becomes more than a stakeholder satisfaction vs. resources used ratio; it must include the concepts of offered benefits and available capabilities assets, resources, funding, value, custome

  • Our Approach

    Based on our years of experience on several portfolio management initiatives, focusing primarily on investment governance and growth portfolio, across a wide range of industries and geographies—our experts believe that the key to refocusing organisation on "doing the right things" is a consistent governance model, clear communication; one that companies can easily adhere to and reap substantial rewards.

  • Name

10 commandments of Portfolio Management

  • Thou shalt have a decision conversation

    As with any successful organisation, communication is of utmost importance. Portfolio management is no exception. A successful portfolio management includes senior and middle management in a constructive conversations with various stakeholders, based on an analysis, to reach decisions. All the strategic decisions must be made with transparency and management confidence.

  • Thou shalt not abdicate strategy to operations

    Managing the projects in the portfolio takes a lot of time and effort. When making decisions about which projects to pursue, it is tempting to do more with project and program management. This tempting approach leads to mediocre results. Do not confuse priority setting with strategic decision making. Give strategic decisions their own time and process where you can really deliberate and decide. Don’t be so quick to give up Strategy to appease Operations.

  • Thou shalt not get hung up on precision

    With the vast quantity of data available in the digital age, it is a struggle for analysts to not get buried in small details. Our spreadsheets are often walls of numbers showing several years and many line items. A lot of time goes into servicing and maintaining this detail: At its worst, we end up arguing about the second significant digit on peak revenue for a product that has not even been invented yet. The key in strategic portfolio management is to not over-engineer, and not get too hung up on analytical precision. Of course, we want to look at the data collected, but our focus should be on collating meaningful numbers only.

  • Thou shalt kill white elephants

    White Elephants are difficult projects with incremental potential in the market. Most companies are littered with these projects yet few face up to it, rationalizing keeping poor projects with vague arguments about projects being “strategic” or “pet projects” It sounds far more brutal than it is, yet the white elephants in your business must die. Determine the long term value of your projects. Are they taking up vast quantities of time and resources with a low rate of return? Such imbalances must be addressed and eliminated to make room for the projects that matter. The cost of the White Elephant project is not its budget, it is the opportunity cost of the great projects that cannot be pursued.

  • Thou shalt embrace uncertainty

    Most project evaluations are based on a set of assumptions about what will happen, with a business case that nobody really believes. We all know it is wrong, but rarely to we face up to this uncertainty or incorporate it actively in our business process. When you embrace uncertainty, you prepare for next steps when the initial plan doesn’t work out. You minimize unwelcome surprises when you expect the uncertainties. Present viable alternatives to address the uncertainties. Discuss and agree on the value measure and embrace the uncertainty of exploration itself.

  • Thou shalt evaluate and calibrate

    Too often portfolio evaluation is a justification exercise to support the predilections of the powerful, or project evaluations are used as weapons in the battle to get funding. For your portfolio process to be meaningful, it is critical that project evaluations be done in a credible and compatible way, “apples to apples”, so people can make an accept decisions. The Calibration step, which most companies overlook, ensures that the project evaluations are comparable. Comparability is actually more important than accuracy in a portfolio evaluation! So don’t just ask for and accept business case justifications. Design evaluation and calibration into the way you make portfolio decisions.

  • Thou shalt pursue value

    Scoring rules, “strategic fit” and similar approaches substitute easy metrics for effective ones. Like the proverbial drunk looking for his keys where the light is instead of where he dropped them, these approaches rarely have the power to change people’s minds and drive decisions. Measuring economic value in a rigorous way does have this power. Value is not a business case built on assumptions nobody believes, but rather incorporates uncertainty. Figure out what makes makes the most value and do that.

  • Thou shalt fund oysters

    Oyster projects, those difficult and uncertain efforts with big potential need to be funded, nurtured and protected. Most companies do not have enough of these, and sell the future short. Too often they are squeezed out Bread & Butter projects are reliable, secure for the most part, consistent. But you need to fund oysters as well in order to remain competitive and to grow as a company. Do not kill the oysters, for the pearls lie within.

  • Thou shalt embrace uncertainty

    All great plans become great because they have built-in plan B’s. Always be sure to develop creative, viable alternatives and be sure to factor uncertainty into them. Too often companies treat their portfolios as simple “go / no go” decisions or prioritization. Creating and analyzing alternatives in your portfolio can often increase its value by 30% or more.

  • Thou shalt inspire

    We do not want to embrace ‘status quo’ when we strategize portfolio management – the point is to grow. To do that, we must not fear confrontation and change management. It is a part of the process! To analyze our progress, we must paint the picture, inspire with our heads, hearts and wallets, but remove emotion from the decision making.

Insights

Deal values and volumes remain significantly down on the record levels achieved in 2015, given the political uncertainty in the US and Europe.

  • Values and volumes down but not out

    Transaction values and volumes continue to be significantly down on 2015. The value of withdrawn deals has risen to an eight-year high, a reflection of increased activity by antitrust regulators but also the daunting complexity of some of the huge strateguc deals being undertaken. The sectors most affected are high-tech, financial servivces and industrials.

  • Politics takes its toll

    Transaction markets grew progressively quieter sa the year unfolded, with some - notably Europe and Asia Pacific - considerably less active in Q4. Above all, this reflects investor nerves about the deepening political and economic uncertainity caused by a number of factors, including the UK's vote to leave the EU and the U.S. election result.

  • Mega deals decline as mid-sized transactions dominate

    The overall volume of deals worth more than USD10 billion is 35% lower than in 2015, yet megadeals continue to be announced, as seen in Q4 with the proposed AT&T/Time Warner merger. But in some regions, notably the U.S. and Asia, we’ve seen good growth in mid-market deals.

  • Rise in Cross-border deals

    The largest increase in foreign investment of US-based targets was from Asia-Pacific countries, which increased from 8 deals (or 6% of total deal volume) in Q3’16 to 22 deals (or 11% of total deal volume) in Q4’16.

    source: PwC

Our Clients

We service large multi-national clients in technology, media, telecommunications, financial services and automotive industries.