A relatively new but increasingly important role is emerging: the chief strategy officer (CSO). From Starbucks to Siemens, many organizations now have a designated CSO.
A CSO can be defined as an executive responsible for assisting the CEO with identifying, communicating, executing and sustaining strategic initiatives -- basically, what a portfolio manager does.
And I would argue that the next CSOs will come through the portfolio management ranks.
Strategy itself is about renewal, and renewal is achieved through transformation. Therefore, a key part of strategy is innovation. That's not just technical or product innovation. It's also managerial, organizational and process innovation implemented through portfolios (and of course, the corresponding projects and programs).
As with a portfolio manager, the core responsibilities of a CSO include translating strategy into execution:
There are four main types of CSOs:
What do you think? Are portfolio managers the next chief strategy officers?
At the end of this month, Cloud Gate, a Taiwanese dance company, will celebrate its 40th anniversary with the performance of a new routine, "Rice." Its founder, Lin Hwai-Min, has received international recognition and awards, including the United States' Samuel H. Scripps American Dance Festival Award for Lifetime Achievement in Choreography in 2013, Germany's International Movimentos Dance Prize for Lifetime Achievement Award in 2009 and Time magazine's Asia's Heroes award in 2005.
"Rice" looks to be a culmination of the company's past four decades of work. But it could not have happened without Mr. Lin's talents -- and his arts management team. Their involvement allows the choreographer to concentrate on his creative work. It wasn't always like that; in the early years, Mr. Lin was responsible for teaching and choreography, as well as staging, marketing and fundraising. This left him exhausted and unable to work creatively.
Mr. Lin realized Cloud Gate had to develop a management team. Nowadays, the company has divided its operation into three parts. Firstly, the performance of the routines. Secondly, the training and cultivation of artists, whether dancers or choreographers. And finally, the promotion of dance and taking part in wider cultural activities. The three divisions overlap, forming a coherent program of work that defines Cloud Gate as an organization. This is very much like portfolio management, dividing organizational objectives into different projects or programs.
All of Cloud Gate's managers know they're there to allow Mr. Lin and the rest of the company to work creatively. They know their work helps fund performances for artists and also keeps Could Gate -- and them -- in work. This makes them both sponsors and key stakeholders. And since theater work is beset by a multitude of details, the managers have become skilled in tackling issues appropriately, discerning what is important for the business or for art. However, because ultimately they are part of a creative process, they know they have to be flexible in how they work with artists.
An impressive archive of routines also contributes to the survival of the dance company. Cloud Gate has accumulated over 160 dance routines. Combinations of these can be used to stage a performance anywhere in the world. Routines based on well-known Chinese literature or folk tales, such as "The Dream of the Red Chamber" and "The Tale of the White Serpent," appeal to Chinese audiences. Those in a more abstract style, such as "Cursive," delight European audiences. The inclusion of different routines into a performance helps Cloud Gate develop new audiences or maintain the loyalty of existing ones worldwide.
Mr. Lin also guides dancers' careers, cultivates young choreographers, and contributes to Taiwan's arts and culture. For example, Cloud Gate is the first dance company in Taiwan to provide its dancers with a salary and routine training. The company also regularly holds open classes and performances in all parts of Taiwan, using scholarships and awards to encourage young people to take up modern dance and choreography.
Mr. Lin has spent most of his life searching for this: a sustainable way to run an international contemporary dance company. And project, program and portfolio management have helped get him there, delivering inspiring results.
If you work in a creative industry, what's the role of your management team?
Despite uncertainties in today's economic environment, organizations remain under pressure to successfully execute business strategies. These challenging conditions demand that organizations innovate and gain an advantage through projects. Yet launching a bunch of projects won't save the day. We need solid portfolio management to enable that competitive edge. It's not just about software, methodology and frameworks, after all. To perform well, portfolio management requires a cultural change and solid communications within an organization.
And yet, we still suffer due to poor communications. Many companies, for instance, invest significant effort and capital on projects and programs that do not directly align with corporate objectives because those goals are poorly communicated. Meanwhile, others struggle to balance risk and fail to seize opportunities because of ineffective communications that do not support informed decision-making. For example, I worked on a project of high complexity that had huge technical challenges. These challenges could have been better addressed if there had been more communication among different research teams in our organization.
The payoff to investing in project communications can be substantial, as many studies -- such as a recent one from PMI -- point out. Companies that excel at portfolio management are able to complete projects on time and under budget, increasing ROI and other benefits. But how do we consistently communicate the portfolio management strategy, policies, governance and benefits throughout the organization?
I'm a firm believer that the role of communications is to ensure that portfolio management is embedded in the corporate culture. What do you think is the role of communications in a portfolio?
Jen L. Skrabak, PMP, is a senior-level project executive, leading high-profile business transformation projects, programs and portfolios. She has more than 18 years of professional experience across industries such as healthcare, biotechnology, entertainment and financial services. She recently established a PMO Center of Excellence that includes both project managers and business analysts, implemented a global US$50 million program across multiple sites and managed a $500 million portfolio. Ms. Skrabak served as the committee chair for The Standard for Portfolio Management - Third Edition.
Read her thoughts on portfolio management below:
Although PMI's The Standard for Portfolio Management was updated for its Third Edition earlier this year, I still find that there is much confusion over what portfolio managers do and how they differ from program and project managers. Having been a portfolio manager for over 10 years, I'm offering a few key differences that may help you.
What portfolio managers focus on:
Now that we've level set the strategic responsibilities of portfolio managers, there are some key responsibilities that don't fall under portfolio managers.
What portfolio managers do not focus on:
PMI Announces PfMP certification
Recently, PMI announced its new Portfolio Management Professional (PfMP)SM credential, which will be available in Q4 2013.
Having served on the Steering Committee for the PfMP credential, and providing strategic direction and guidance to the team that was chartered to make the final recommendation, it is very exciting to see this launch.
I know that many in the PMI community have been asking about this certification. Having also served as chair for the development of the portfolio management standard, I believe that it's an important credential that meets a key need (remember the "P" in PMI encompasses portfolio). It drives advancement of portfolio management as a profession by formally recognizing the importance of a standard set of skills, knowledge and abilities.
Key requirements include eight years of business experience and at least four years of portfolio management experience. It's expected that The Standard for Portfolio Management - Third Edition will be used as a key reference for the exam.
The PfMP exam outline will be made available in September, with the first opportunity to take the exam in late Q4 2013. If you want to be one of the first to be certified for the PfMP, email email@example.com.
Managing a portfolio of innovation projects is very different from traditional portfolio management. Innovation projects hold more uncertainty. It is usually difficult, if not impossible, to provide good estimates and a detailed project plan. And while most organizations care about managing the development of marketable new ideas, few really know how to foster them for business results.
The first step to managing a portfolio is determining the role and ROI of innovation in a business environment. Innovation, in essence, has to bring tangible results and a competitive advantage to the organization by generating new revenue, reducing costs, improving asset management and increasing reputation.
To achieve these goals, innovation portfolios aim for steady innovation flux, or a constant pipeline of new ideas, for a sustainable competitive advantage. That requires balancing short- and long-term benefits and costs of the following:
For example, it would be shortsighted to generate only incremental innovation; in the long-term, there will be no breakthroughs. However, incremental innovation brings short-term revenue, which is important to keep the company going. Basis and radical innovation generate new products, but require significant time and effort. A good portfolio balance mixes incremental, basis and radical innovation projects in a way that best fits the organization.
Another important aspect of managing an innovation portfolio is selecting the right ideas. Selection is particularly crucial to innovation projects because of the commitment to a long-term "technology roadmap" (i.e., if you choose to invest in Blu-ray products, that means you have a Blu-ray portfolio). Investing in the wrong technology can put an organization in financial jeopardy. Complexity is also greater because you're creating something new and without precedent. So the challenge is choosing projects that support the organization's long-term objectives while still considering these aspects. In summary, innovation portfolios need different selection and prioritization criteria. Here are suggested criteria, ranked from most to least important:
The criteria above are mainly qualitative, so you should also use an enterprise-wide scale for grading each project's potential to generate innovation:
After selecting your innovation projects by balancing the above criteria, tailor key performance indicators. Here again, KPIs will differ from a more traditional portfolio. Some I have used in the past include:
Does your organization have research, development and innovation projects? Do you use an innovation portfolio? How are they managed?
Share your thoughts below along with your Twitter handle, and Voices on Project Management will publish the best response as a blog post.