While the portfolio
methods vary greatly from company to company, the common denominator across
firms are the goals management is trying to achieve. According to 'best-practice'
research by Dr.
Cooper and Dr. Edgett, three main goals dominate the thinking of successful
firms:
Value Maximization
Allocate resources to maximize the value of the portfolio via
a number of key objectives (such as profitability, ROI, acceptable
risk). A variety of methods are used to achieve this maximization
goal, ranging from financial methods to scoring models.
Balance
Achieve a desired balance of projects via a number of specific
parameters (i.e. risk versus return; short-term versus long-term;
across various markets, business arenas and technologies). Typical
methods used to reveal balance include bubble diagrams, histograms
and pie charts.
Align with Business Strategy
Ensure that the portfolio of projects reflects the business strategy
and that the breakdown of spending aligns with the company’s
strategic priorities. The three main approaches are: top-down
(strategic buckets); bottom-up (effective gating and criteria)
and top-down and bottom-up (strategic check).
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