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.

Everyone is writing about how business can thrive in spite of the downturn … including me. We’re working on a new white paper on the ways that project management discipline can help companies contain costs and become more efficient. (You’ll be able to read it here on or before August 13). But something about the whole idea made me antsy, because merely cutting and thinning and pruning isn’t enough. You’ve got to add the sunshine and fertilizer, too.

And, in fact, research into the ways strong companies have survived previous economic upsets, shows that, indeed “You can’t shrink your way to greatness.”

I was reminded that great Tom Peters quote from Circle of Innovation many times this spring as I watched the unemployment figures rise.

So I went looking for other evidence that greater success - or at the very least, a more sustainable form of success - is created when companies both prune judiciously and invest creatively in their own future.

And I found it.

It’s pretty extensive research, so explore the link yourself, but just to give a precis, companies that flourished coming out of a recession in the early 90s:

• They cut the RIGHT costs .. and did not engage in self-defeating cost-cutting.
• They leveraged their IT systems to gain insight into the business
• They collaborated with stakeholders … instead of pursuing projects/products dreamed up in a vacuum
• They killed or refused the RIGHT projects and opportunities … also based on insight into their own finances, markets, capacity, and so on.
• Rather than merely shrinking - via cost and headcount cuts - they invested in innovative products and processes.

This is one of those articles that never mentions project, program, or portfolio management. You wouldn’t find it if you searched under those terms. Yet, take another look at that list … are we not talking project and portfolio management here?

More rants on why PM/PPM can not just save, but grow, your business … coming soon.

I’d like to tie those last two posts together with a couple of thoughts engendered by listening to Kent’s keynote, and by some of the conversations I shared with PMO directors at the Summit.

“Governance” is in danger of becoming a buzzword. It’s one of those ideas that many corporate leaders accept is important, and necessary, without having the time to really drill down into what that will mean for their organization’s processes.

Yet, like most profoundly important ideas, governance is pretty simple. I liked the definition Kent used in his presentation, from the IT Governance Institute:

“A set of responsibilities and practices in use by executive management with the goal of:

• Providing strategic direction
• Achieving objectives
• Managing risks
• Using resources wisely.”

When I read that list, I thought: sounds like simply what executives are supposed to do. Yet how easy it is, especially in public companies with the pressure to boost stock price; or in public agencies blown about by the winds of politics; to forget that wisely providing direction is what it’s all about. Every now and then we need a new word to buzz in the ears of management, waking them up to thier true path.

When the buzz of governance is paired with the concept of the PMO, I think we are really getting somewhere, however. The definition of governance above asks leaders to rise to the occasion. The PMO gives them a structure for doing that.

Why do I say that? –in part because I’ve read, heard and seen that, without a PMO, the portfolio management process goes astray … and without portfolio management, you don’t really have a mechanism for governance. In our 2007 book Seven Steps to Strategy Execution, Jim Pennypacker wrote:

“Each level within the organization must apply the same principles of setting objectives, providing and getting direction, and providing and evaluating performance measures. A common governance framework ensures that decisions are made the same way up and down the organization …”

True. And some entity within the organization must specialize in making these processes flow up and down the organization; must be the seat of metrics collection and analysis; must red flag what isn’t working and grease the wheels for what must work. And if that entity isn’t a PMO … then what is it?

Any alternative structures I should know about, readers, for governing the portfolio of projects that is today’s organization?