Managing Portfolio Outcomes
It’s key to ensuring that every outcome is what you were actually hoping for.
Whether it’s financial, reputational, regulatory, or any other category label you want to apply, every investment has to produce a meaningful outcome or it fails.
An outcome, by any other name, still must deliver results
One must manage something to achieve a desired outcome. Until recently, many organizations projected benefits during the business case phase of a project in order to garner support and funding. But once the initiative was approved, the business case was archived or ignored, along with any further mention of benefits. But with the advent of a concept called OKRs – objectives and key results – the opportunity to actually manage outcomes was reborn. But to avoid outcome management simply becoming benefits management 2.0, some fundamental changes need to occur.
Aligning the work you do with your organization’s strategy
If in the pursuit of strategic portfolio management, the organization endeavors to gain a holistic view of all work, it will also need to ensure that the actual results of that work – the outcomes – are the focus of everyone’s attention. Because the only reason any of those investments are happening is to generate an outcome – the right outcome.
Outcome management is therefore a direct result of defining the right strategy and making the right investments. As you move from a project to a product or program-based investment approach and then on to one that’s capability driven, you can derive all of your work directly from your strategy. In parallel, as you move from annual planning to continuous and adaptive planning, you need to ensure that you are always adjusting the alignment of the work you are doing with the strategy and outcomes to ensure you are optimizing the value being achieved.
Combined, these factors make outcome management more straightforward and more attainable – as long as you decompose your strategies effectively. That has to start with clear and complete communication. Your various business functions have to take your corporate strategies and develop clear focus areas and departmental strategies of their own that map directly to the corporate objectives.
Identifying the right metrics, and then tracking them is key
OKRs must be defined for each of those strategies that not only demonstrate the alignment to corporate goals but also state the metrics – financial and non-financial that will be used to measure success. Apply targets to those metrics and you now have effective OKRs for each departmental strategy and a direct line back to your corporate strategies.
Continue the decomposition of strategy and you define actionable initiatives, projects and programs that directly relate back to business strategies and contribute to the attainment of the key metrics. You now have enough granularity to determine how each of those metrics will be measured – directly or through proxies, from the bottom-up or from the top-down. And you have a framework for outcomes that the portfolio manager can actually manage against. Sufficiency can be tested at every step to ensure the work being done, collectively and individually, is projecting to make the contribution that is required.
It’s important to visualize performance across the lifecycle
This isn’t a ‘one and done’ sufficiency check, it happens continuously to reflect the fact that environments, priorities and capabilities are continuously evolving. And to reflect the fact that you are actively tracking actual outcomes in addition to updating forecasts. Combined, those factors not only allow for early identification of issues, but also supports more effective adaptive planning and more effective execution because outcomes are not only front and center, but always directly tied back to the strategies they support.