I’m still digesting that Accenture research on what companies that emerged strongly from the 1990-91 downturn did differently during the bad times. As I said in my previous post, this is one of those business news articles that is all about portfolio management, without ever mentioning it.

I suspect that is because a lot of companies - and many management researchers - don’t know there is a name, a history, a set of standards and best practices - for what they are trying to do.

A key finding, for me, was that the most successful companies had a keen insight into their business. Now, this might sound elementary, but 15 years in business journalism have taught me that business is not as rational as you might think. Companies frequently have no idea what is going on within and across departments; duplication of effort is therefore the norm rather than a fluke; and lacking any systematic measurement system, they also have trouble knowing what is working and what isn’t.

That’s why implementing project portfolio management (PPM) usually results in some AHA! experiences. “You mean … we were doing THAT? … three times?” and the resulting cost savings.

So, PPM is one of those project management tricks that both saves money … and allows companies to invest in some “blue horizon” projects that will carry them forward. A tuck here, and let out a seam there, and you can take the “stitch in time” that lays the ground for growth.

But, there’s another aspect of PPM that’s also in line with the research linked to in my earlier post. With apologies for the resolution on this graphic, check out the Portfolio Scorecard model we proposed in our book, Seven Steps to Strategy Execution:

Balancing with realism means taking resources into consideration

Now, usually, you’d see the profitable projects (”bread and butter” projects is one nickname for these) and the necessary ones in two blocks of that square. But, in fact, they fall into the same category. You are going to do these things … no matter what. Either they are required, or they make money (rarely both) and so they are IN.

What’s missing from the balance equation in many models is the upper left quadrant: Do we have the capacity to do this? The people, the skills, the cash … the software, the space, the ideas: the resources that, without which any list of projects is just a wish list.

No, this post isn’t about the Rockies … except in the sense that projects face a rocky road when confronting with resource management challenges … which is, according to our research, the most common challenge in project management.

No, the divide I’m posting about is the one between projects and the executive level … the divide between decision makers and reality. That divide is legend, but it’s also apparently very real: in our latest study on Resource Management Challenges (to be released soon at www.cbponline.com) respondents indicated that executives commonly believe that there are enough resources to accomplish projects–when the reality is quite the opposite.

Resource Management literature is filled with descriptions of “best practices” and software vendors rave about the resource management capability of their sophisticated tools. Yet study after study shows that resource management issues continue to be the number one challenge to organizations that practice project management. What are the root causes of these resource challenges and what can be done about them? And how do best-in-class organizations manage their resources differently from the rest of us? The Center for Business Practices recently conducted a survey in order to understand the issues surrounding resource management challenges and to see if we could find some possible answers to those questions, and here are some of the findings:

• Resource management maturity is low in organizations
• There is a direct connection between the level of resource management maturity and the performance of organizations
• There are significant challenges particularly in resource planning and estimating

What’s particularly puzzling is that organizations fail to practice many of the resource management standards noted by the Project Management Institute. In fact, organizations don’t seem to even practice some basics consistently — like creating staffing management plans for their projects. But high-performing organizations are significantly more likely to practice these standards than low-performing organizations. Those standards in particular include:

• Resource career plans used to effectively utilize and train employees
• Information about potentially available resources used for estimating resource types
• Staff assignments are effectively negotiated with functional managers
• Scope of work and resource data is used in estimating activity durations
• The organization has a centralized pool of resources
• Resources required is used to determine the duration of activities
• Project performance reports provide information on resource performance
• Resource leveling is used to keep resource usage constant
• Resource reallocation from non-critical to critical activities is used

It isn’t hard to imagine how bad resource management can cause otherwise good strategic planning and portfolio management to implode. High-performing organizations (as identified by our study) address strategy, the portfolio, AND resource issues wholistically by centering project personnel in a strong, effective PMO. They have a resource-sharing culture as well as a project management culture.

So, to us it looks like the enterprise PMO is the pass across the Great Divide: a place where strategy management, portfolio management and resource management meet and synchronize.

You can read more about my PMI paper on this subject at: Resource Optimization: The Most Significant Challenge to Project Management Effectiveness

I’m presenting it at 2:30 today. Or, stop by the booth and chat with me about it if you are in Denver this week.

Every organization wants to effectively execute strategies, but many struggle to implement a process for doing so. This struggle is one reason that the Balanced Scorecard has had such a wide following and impact on business. Simply put, the BSC emphasizes the linkage of measurement to strategy. For the first time, the details of the project portfolio (what the Balanced Scorecard creators call “strategic initiatives”) become important to a company’s strategic thinkers. Companies that have implemented this model have seen measurable bottom line successes, according to research by Scorecard creators Kaplan and Norton.

Such alignment resolves thorny project management problems. Many studies have cited the lack of executive support as a key contributor to project failure. Project managers complain that their projects do not receive the resources they need. Projects completed “successfully” by project management standards (on time, on budget, to spec) have been considered failures because they did not address a business need.  All these issues are alleviated in a company that ties strategic planning to portfolio selection and project execution. In our 2007 book, Seven Steps to Strategy Execution, we call this an “execution environment”: one where strategic vision waterfalls down through the organization, linking corporate direction to goals, objectives and performance measures at every level—providing each team member with the “zest” of understanding how their work contributes to the organization. Meanwhile, excellent project management provides the data that executives need to make adjustments to the overall strategic plan.

If you’re in Denver at the PMI Global Congress North America in Denver, Colorado, come talk with me in more detail about these ideas! My presentation based on our Seven Steps book is on Monday, October 20, 2008 from 12:45 pm – 2:00 pm.

Meanwhile, here’s a question for you: Isn’t “the strategic plan” just another way of saying “the project portfolio”? And, if not … why not?