Why Decision Making is the Real Secret to Successful Portfolio Management

Decision-making is often the biggest challenge in portfolio management. The process of making decisions is already complex, but in portfolio management – ​​and especially in public or political organizations – it becomes even more complicated. 📊 Many portfolio methodologies describe tasks, roles, techniques and products, but rarely delve deeply into the art of decision-making.

👀 PRINCE2TM, which is now completely unjustly vilified, “old world, we no longer do waterfalls”, described from 1996 onwards the decision-making process and the decision-making forms that the client and not, as is often misunderstood, the steering committee, must take and go through.

Interesting detail: in the 1996 version of PRINCE2TM, the Agile principle is already described as an option in Managing Product Delivery, so what do you mean by 'old world' and 'waterfall'?

🔑 The real problem: the art of decision-making itself

In organizations that embrace and professionalize portfolio management, the emphasis is often on methods, priorities, and reporting. But decision-making receives little attention. 🚨 The prevailing view? “Decisions need to be better substantiated.” However, this often leads to even more pressure on portfolio managers, while the underlying problem is often something else: many leaders have never been taught how to make decisions about a portfolio. The problem is not in the methodology, but in the skill.

In my recent article I explained that portfolio management is not an 'über-steering committee' or a collection of lists. 📋 It's about forward-looking strategy and making choices that extend beyond the short term. But which decisions really matter in the portfolio process?

📌 Two important decision streams in the portfolio process

1. Decisions on change initiatives: Decisions on the adoption, planning, execution and closure of initiatives, as well as deviation decisions for impactful changes.

2. Portfolio strategy decisions: This is about the long term – strategies, capacity and budget considerations, and scenarios for the years ahead.

Most organizations focus primarily on change initiatives. But it is precisely the strategic view, the choices over the longer term, that really make a difference in portfolio management. It is crucial not to get carried away by short-term problems and 'the here and now' - adjusting in the moment always costs more time and resources than looking ahead strategically. ⏳

🌍 How can decision making be successful within portfolio management?

✔️ Focus on the future : Not the here and now, but the horizon five quarters ahead should be the guiding principle.

✔️ Don't play 'über-steering committee' : Leave the micromanagement to the project and program managers. The Portfolio Board should focus on strategy and steering.

📉 Decision makers need to focus on strategic scenarios, not the details of programs or project plans. That is the failure of an effective portfolio process. As a portfolio manager, your role is not to be a quality advisor; you are there to set the course and provide direction. 📈

Why does it go wrong so often?

Portfolio boards that worry about program and project plans and deviation reports. Stop it! Waste of time and it is the failure of an effective portfolio process. This is the responsibility of clients/steering groups, etc. not the Portfolio board. A portfolio manager is also not a quality advisor to improve plans, that is a waste of the highly paid function.

📑 Organization of decision-making: an overview

In my experience, a structured approach is essential. 🛠️ Decision-making within portfolio management can be divided into decisions about change initiatives, such as:

• 📥 Take decision : Should this initiative be included in the portfolio?

• 📅 Plan decision : Should the initiative be developed and if so, when?

• ✅ Implementation decision : Can this initiative start? Prioritization plays a major role here.

• 🔄 Deviation decision : What to do in the event of an impactful deviation?

• 📤 Discharge decision : Was the initiative delivered in accordance with the agreements?

Portfolio strategy involves decisions that extend beyond the coming year:

• 📌 Strategy decision : What course are we going to follow, always at least 2-5 years ahead.

• 💰 Capacity and budget decision : Are there issues for the coming years that require action?

• 📉 Scenario decision : Which scenarios do we use to achieve our strategy?

• 🔄 Adjusting the scenario decision : What actions are needed to adjust our course?

🔍 Conclusion

Effective decision-making in portfolio management starts with focusing on the future 🌅 and stops at avoiding micromanagement. Make clear agreements about who makes which decisions, and ensure that strategy and change initiatives are always on the Portfolio Board's agenda.

🔗 Want to learn more about how to optimize decision-making within your portfolio? Drop me a line – I’d love to share my tips and tools to help you navigate the world of strategic choices! 📬