Beyond financial value: managing
uncertainty and change to
enhance strategic portfolio
decisions
Prof. Miia Martinsuo
Tampere, Finland
UTS Sydney 31 October, 2017
Tampere University of Technology,
Center for Research on Operations,
Projects and Services (CROPS)
31.10.2017 2
Production and
operations
management
Supply chain and
network
management
Services, service
management,
service business
Projects, project
management,
project business
Organizing,
managing and
developing
value creating
processes
Repetitiveness
/ continuity
Uniqueness /
discontinuity
Companies /
organizationsNetworks of companies
/ organizations
M. Martinsuo
Beyond financial value in
strategic portfolio decisions
1 Doing the right projects makes a difference
2 Why structured portfolio management
methods are not enough
3 Leading towards optimized portfolios
31.10.2017 3M. Martinsuo
How can you consider strategic value to
achieve portfolio balance, strategic fit
and value maximization?
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Project
Project
control
Idea / Need
Project
sales and
marketing
Use
Services, support of use
Disposal,
recycling
Project
deliverable;
Project price
Benefits;
Use costsCosts
Value through
innovationValue through
efficiencyValue through
performanceValue through
re-sale/use
Strategic value
is specified already very early in the project
Drivers of strategic value
(example)
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Internal
Technical and service
capabilities
Sales process
Local agents (both sales
and delivery capabilities)
Solution scope
Trusted subcontractors
Reputation
External
Political drivers:
sustainability, national
policies, laws, standards
Local business and market
features and conditions:
culture, tempo,
distances…
Customer’s activities and
experiences
Competitors’ actions
Martinsuo & Killen 2017
The various stakeholders’ interests need to be negotiated not just
for the single project, but with the purpose of optimizing the
portfolioM. Martinsuo
Alternative futures for value
creation in the portfolio
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Business impact
Customer impact
Social impact / knowledge sharing and learning
Environmental impact
Technical / product impact
Reaching goals
Typ
ica
lstr
ate
gic
cri
teria
for
alig
nm
en
t/ b
ala
nce
/ m
axim
iza
tio
n
Portfolio-level criteria, assessments and
evaluations may drive completely different
alternative futuresM. Martinsuo
1 Doing the right projects makes a difference
2 Why structured portfolio management
methods are not enough
3 Leading towards optimized portfolios
31.10.2017 7M. Martinsuo
Structured idea to project
portfolio management
8
Project
proposals
Project
evaluation
Describing
and balancing
the portfolio
Portfolio
decisions
Strategy
Goals, methods,
resources
Opportunity
screening
Strategy renewal
Impact on projects;
project decisions on
(decision) gatesDye & Pennypacker 1999, modified
31.10.2017M. Martinsuo
Sources of uncertainties
affecting project portfolios
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Organizational
context
(realized
uncertainty)
• Organizational
complexity
• Portfolio
autonomy
• Managers’
competences
External context
(realized uncertainty)
• Macro-environmental
developments
• Customers’ needs and
actions
• Developing markets
• Environmental and
safety regulations
• Competitors’ actions
Single project
changes (realized
uncertainty)
• Customer
requirements
• Delays
• Learning
• The use of project
portfolio routines
Project portfolio
management in practiceMartinsuo et al. 2014
M. Martinsuo
Managers interpret and negotiate the
uncertain portfolio environment in
making decisions
Reaching goals … Achieving business
impact
Business level
Project level Project managers
Business
controllers
R&D directors
Product
managers
Portfolio
selection domain
Korhonen et al. 201431.10.2017 10M. Martinsuo
Project portfolio leadership requires
sensitivity to the context, stakeholders’
interests and situational demands
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Portfolio leader’s
interpretation and
negotiation:
Applying the rules and norms
and making decisions that fit
with the situation and context
Observing
others
Situation,
context
Learning
Project
portfolio
management
as a system of
rules and
norms
Practice and
success of
project
portfolio
management
Christiansen & Varnes 2008
M. Martinsuo
1 Doing the right projects makes a difference
2 Why structured portfolio management
methods are not enough
3 Leading towards optimized portfolios
31.10.2017 12M. Martinsuo
Need for new approaches to
project portfolio management
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Portfolio
management as a
rational decision
process
Martinsuo 2013
M. Martinsuo
Portfolio
management as
negotiation and
bargaining
Portfolio
management as
structural
(re)configuration
Portfolio
management as
entrepreneurial
capability
markets
Parent organization
Leading the optimal project
portfolio calls for good ”bundling”
and interface practices
31.10.2017M. Martinsuo 14
Project portfolio / program
External
business
environment
Summary: Key messages
1. Finding the right projects requires looking “outside” and defining and negotiating carefully what is of strategic value
2. In an uncertain environment, effective portfolio management requires managers’ sensemaking- interpretation and negotiation - to make adjustments and also tough decisions
3. We need good practices for steering and integrating, to make the complex portfolio and the multi-level decision process feasible
31.10.2017 15M. Martinsuo
References
• Artto, K., Martinsuo, M., Dietrich, P. and Kujala, J. (2008) Project strategy – strategy types and their contents in innovation projects. International Journal of Managing Projects in Business 1 (1) 49-70.
• Christiansen, J.K. and Varnes, C. (2008) From models to practice: decision making at portfolio meetings. International Journal of Quality and Reliability Management 25 (1), 87–101.
• Dye, L. and Pennypacker, J. (Eds.) (1999) Project Portfolio Management. Selecting and Prioritizing Projects for Competitive Advantage. Center for Business Practices, USA.
• Korhonen, T., Laine, T. and Martinsuo, M. (2014) Management control of project portfolio uncertainty: A managerial role perspective. Project Management Journal 45 (1) 21-37.
• Martinsuo, M. (2013) Project portfolio management in practice and in context. International Journal of Project Management 31 (6) 794-803.
• Martinsuo, M. and Killen, C.P. (2014) Value management in project portfolios: identifying and assessing strategic value. Project Management Journal 45 (5) 56-70.
• Martinsuo, M. and Killen, C. (2017) Decision making on strategic value at the front end of system delivery projects. Paper presented at EUROMA European Operations Management Association Conference, 3-5 July, 2017, Edinburgh, U.K.
• Martinsuo, M., Korhonen, T. and Laine, T. (2014) Identifying, framing and managing uncertainties in project portfolios. International Journal of Project Management 32 (5) 732-746.
• Martinsuo, M. Suomala, P. and Kanniainen, J. (2013) Evaluating the organizational impact of product development projects. International Journal of Managing Projects in Business 6 (1) 173-198.
• Müller, R., Martinsuo, M. and Blomquist, T. (2008) Project portfolio control and portfolio management performance in different contexts. Project Management Journal 39 (3) 28-42.
31.10.2017 16M. Martinsuo
Program integration in multi-
project change programs
Doctoral candidate Lauri Vuorinen
Tampere University of Technology
Tampere, Finland
Based on the article Vuorinen, L. & Martinsuo, M. (in review) Program
integration in multi-project change programs: agency in integration
practice.
Programs as vehicles for
organizational change
31.10.2017Doctoral candidate Lauri Vuorinen 18
Organization’s
change
objectiveProjects
A multi-project
change program
• Projects managed in a
coordinated way…
• …to reach benefits not
reachable by managing
the projects separately
Program integration: why and how?
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(Source: Turkulainen et al. 2015)
Why program integration?
• Division of work between subsystems:
1) organization and program, 2) projects of the program
• need for achieving unity of effort and ensuring alignment between the subsystems
What is program integration?
Three interfaces for program integration
1. Program-to-organization integration
2. Project-to-project integration
3. (intra-project integration)
The practice of program integration
• Integration mechanisms
• Roles and actors in pursuing program integration
Integration tasks and mechanisms:
program integration in practice
Program-to-parent integration
Integration tasks:
1. Creating and communicating a
change vision
2. Supervising a program’s progress
3. Exchanging information in the
program-parent interface
Program’s internal integration
Integration tasks:
1. Coordinating work in a multi-project
change program
2. Coordinating and supporting individual
projects and project managers
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Example integration mechanisms:
1. Documents, meetings and workshops
– clarifying and defining the change vision
– communicating the change vision
2. Steering group meetings
3. Representativeness
Example integration mechanisms:
1. Centralized program meetings
(for program and project managers)
2. Discussions, formal and informal
– between project managers
– between program manager and project
managers
Actors in program integration: program
manager in change programs
• The “traditional program manager”:
– Planning
– Control
– Coordination
• The role can be wider:
– Championing or visionary (change vision)
– A support person and discussant for the individual project managers
– An authority towards and a representative in the eyes of the external
environment
• The need to tailor program management between and within change
programs.
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