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3 Low-cost Ideas to Transform Performance of Your Project Portfolio

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Sep 23, 2014 11:03:00 AM

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I’m an executive coach and trainer with a special interest in decision making. I’ve worked with many companies, both large and small, and over the years and have come to see that the link between strategic decisions and their execution is the project portfolio. The PMO is, therefore, right in the center of the organization’s strategy.

Picking the right projects and executing them well is critical for any organization’s long-term health.

So, given my enthusiasm for better decision making, I wanted to share some thoughts on how better decision making can dramatically affect your portfolio… for the better! And the good folks at TransparentChoice have even given me a soapbox to stand on and talk about it.

Well, okay, it’s a webinar, but I will be looking at how you can transform your portfolio’s performance by focusing on three main areas of decision making. 

Focus on Good Decision Making Practice

Decisions, decisions.

There’s a branch of academic research called decision science and there is a lot of “science” in various decision methodologies, but steering a decision through a diverse group of stakeholders is more art than science. And every stage of a project or portfolio lifecycle is an endless stream of decisions. Portfolio decisions, design decisions, vendor decisions…

We all bring bias to the table. We know that, but did you know that decision scientists have identified over 150 forms of decision bias? Some biases comes from unexpected places. For example, last year, Mullainathan and Shafir, wrote a book called Scarcity, in which they discussed how we become obsessed with the things we are lacking. This concept is very obvious with hunger - when we are starving we are unable to think about anything much other than food – and the hungrier we are, the more short-term our thinking gets. Critical thinking and creativity go out the window.

But interestingly this concept can also be applied to time. The more rushed and overworked we feel, the more our minds plays on repeat unhelpful thoughts like “I’ve got so much to do for this project and so little time” thus unnecessarily using up our mental capacity and ironically further slowing us down! We also start to have tunnel vision and focus on what is in front of us, and forget that we can/should take a moment to see the bigger picture.

Sound familiar?

So take a rest sometimes. It will improve the quality of your decisions.

Let’s get back to the difficulty of making decisions. What can we do about reducing bias and increasing creativity?

There are more formal ways to structure the decision process specifically to reduce bias and increase creativity. If you’re working in a group – and every PMO works in a group – mutual understanding, consensus and buy-in are also important. In that case, analytic hierarchy process, or AHP for short, is a good tool to improve the quality of decisions. The best thing is that AHP doesn’t cost a lot. You can find free spreadsheets out there (which can be tricky to use and interpret), or buy low-cost decision making software from vendors such as TransparentChoice, who make it easier to help your team to make better decisions. 

Focus on Project Prioritization and Selection

Within a PMO, one of the biggest decisions is project prioritization. Picking the right project is critical to the value you deliver to the organization. When selecting projects, it’s crucial to have a clear set of priorities, yet very few organizations do. Instead, each executive has their own set of priorities and they “fight it out” in the Big Prioritization Meeting: obviously, fighting it out is not a good way to make a decision that is both strategically important and complex.

A small investment in a better process will have a massive effect on the value of your portfolio. Taking the trouble to pick right projects will have some obvious benefits. You will reduce your obsolete project rate and increase strategic alignment (and so increase the value delivery) of your project portfolio.

But there are other benefits too. You will have a clear set of priorities that team members can use to make day-to-day decisions and to allocate resources. A robust and transparent project selection process increases the confidence of the team in those decisions. Researchers at Stanford University have shown that higher confidence has a positive effect on the execution of a decision – so your project teams will go the extra mile to implement a great project if they “believe”.

This stuff adds up to a massive increase in value. I’ve heard examples where the increase in value simply from having a really clear and transparent process around project prioritization was over 30%. This was on a €20m portfolio, so that’s a big number.

Once again, AHP is a good tool for project prioritization.

Make Strategic Goals Central

Yes, having a clear set of priorities and goals at the corporate level can help you pick the right portfolio, but can it help you with more than just that?

Yes!

By putting these goals at the heart of every project, you will dramatically change the way people think about their decisions. You will push your team to think beyond what affects them directly.  You will encourage them to think how each and every decision they make can have an impact on the organisation’s strategic goals. By making this a front-and-centre consideration you will help your project team deliver maximum value against those goals.

One simple way to start is at the kick-off meeting. How many project kick-offs begin with the PM standing there saying, “We’re all here to implement a new FizzBang system”? Well, I’ve news for you – that’s not why there are there.

They are, in fact, there to support a few key, strategic goals. Implementing a new FizzBang system is one way they will affect those strategic goals and making this clear at the kick-off will really set the tone for the whole project. The goal is to have everyone use those strategic goals as the lens through which every key decisions is made.

Getting Started With Better Decision Making

So, how to get started?

Well, the TransparentChoice blog is a good place to start and I’d also recommend my own blog. Sites like www.TDI3.org are also a great resource for knowledge on decision making. But of course, the best starting point would be to come along to the webinar!

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