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Digital Transformation and Strategic Portfolio Management: From Ambition To Implementation

Transformation has always been a subject of fascination for business leaders. The interest in business reengineering and business transformation really went into overdrive in the 1980s. And the current focus on the digital transformation trend is merely the latest in this continuing saga.

To be clear, business transformation represents management ambitions and strategy. But it is only the tip of a much larger portfolio management iceberg, which incorporates all the aspects of Strategic Portfolio Management frameworks and processes.

Everywhere that new management concepts are involved, fear and anxiety seems to follow. The underlying reasons for those concern have to do with the inability to answer some very fundamental questions:

  • Which business model style do they intend to pursue?
  • What are the digital ambitions? The vast majority of enterprises follow three classes of investments: transformation, optimization, and technology enablement.
  • How to get organized to pursue their digital ambition? What is the best Strategic Portfolio Management operating model?

Does the Strategic Portfolio Management operating model influence the investment’s effectiveness? One obvious answer is that investment management theory matters because selecting the proper management framework matters. Put simply, it changes how companies prioritize, select, plan and manage their investments. Unfortunately, most organizations have to wait many years to see the practical impact of their investment decisions. We can start by identifying the pitfalls of using standard Strategic Portfolio Management frameworks.

The first place to start is to understand what business transformation is. The second question is, what is unique about business transformation? What, then, should organizations separate the investments into transformation, optimization, and enablement and manage the selection and planning separately? What is the risk of not treating the transformation, optimization, and enablement separately?

There are many more questions. Some will argue that all the questions indicate that most organizations are not ready to manage digital transformations. One of the most fashionable words in management theory is “trust the process.” What do organizations do to make the process trustworthy? Nothing – is precisely what makes the management insecure. Meanwhile, the person who could sort out these flaws is the one that has the least time to do it.

Dig into any portfolio management theory, and you will find some valuable insights. The problem is that you have to complete an enormous job to find these nuggets. This blog is an attempt to extract these nuggets.

We will begin by looking at the science behind managing investments in business transformation.

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